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Get Ready for Oil Deals: Shale Is Going on Sale

A gas flare burns as a driver monitors a water tank while loading saltwater from an oil well storage tank near Sidney, Montana, U.S. The value of about 75 shale-focused U.S. producers based on their reserves fell by a median of 25 percent by the end of 2014 compared to 2013, according to data compiled by Bloomberg. Photographer: Daniel Acker/Bloomberg (Bloomberg) — A decision by Whiting Petroleum Corp., the largest producer in North Dakota’s Bakken shale basin, to put itself up for sale looks to be the first tremor in a potential wave of consolidation as $50-a-barrel prices undercut companies with heavy debt and high costs. For the first time since wildcatters such as Harold Hamm of Continental Resources Inc. began extracting significant amounts of oil from shale formations, acquisition prospects from Texas to the Great Plains are looking less expensive. Buyers are ultimately after reserves, the amount of […]

Posted On : Published By : Tom Whipple
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EIA: Eagle Ford, Bakken oil production to fall in April

US shale oil production is expected to increase by a mere 1,000 b/d from March to April, according to the Energy Information Administration’s Drilling Productivity Report (DPR), signifying a slowdown in growth caused by reduced company budgets and a shrinking rig count. Total oil output from the most prolific shale areas in the Lower 48—the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian, and Utica—will remain virtually unchanged at 5.6 million b/d in April. The DPR focuses on those seven plays, which accounted for 95% of US oil production increases and all US natural gas production increases during 2011-13. April growth will be pushed down by declines of 10,000 b/d in the Eagle Ford to 1.7 million b/d, 8,000 b/d in the Bakken to 1.3 million b/d, and 5,000 b/d in the Niobrara to 413,000 b/d. Production from the Permian, meanwhile, will expand 21,000 b/d to nearly 2 million b/d. […]

Posted On : Published By : Tom Whipple
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EIA raises 2015 U.S. oil production forecast, cuts 2016 outlook

NEW YORK (Reuters) – The U.S. Energy Information Administration revised upward its 2015 domestic oil production outlook, but lowered its 2016 forecast because it expects the slump in global prices to weigh on the country’s shale boom next year. Expected total oil production in 2015 will rise to 9.35 million barrels per day, slightly higher than the 9.3 million bpd forecast last month, the EIA said on Tuesday in its monthly short-term energy outlook. The revision comes a day after the EIA released data showing that oil production from U.S. shale fields will grow at its lowest pace in over four years starting in April, on the back of low prices and company spending cuts. An EIA spokesman said the revision is due to an increase in baseline expectations for the fourth quarter and to production in the Gulf of Mexico. Offshore production in the Gulf is more resistant […]

Posted On : Published By : Tom Whipple
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« ExxonMobil CEO Wrong About “Resilience” of Tight Oil Production

Posted in The Petroleum Truth Report ExxonMobil CEO Rex Tillerson is wrong about the resilience of U.S. tight oil production. “…Mr. Tillerson pointed out that the collapse in natural-gas prices similarly had led the number of rigs drilling for that fuel to drop to 280 from north of 1,600 in 2008. Gas output jumped 50% in that time, he said. That is what you call resilience…While he didn’t see a perfect parallel between shale gas and shale oil, he said there were “lessons” to be learned.” His point is that we should not expect a big drop in U.S. tight oil production just because the rig count is falling. He bases this prediction on what happened with gas production in 2008-2009 and afterward.  That is wrong. The fact that gas production didn’t decrease much in 2008-2009 despite a huge drop in rig count is incorrectly attributed to the high productivity of shale gas wells.  The […]

Posted On : Published By : Tom Whipple
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US shale oil output growth grinding to a halt: EIA data

London (Platts)–9Mar2015/420 pm EDT/2020 GMT US shale oil production is expected to see a net gain of just 1,000 b/d in April, according to the US Energy Information Administration’s latest Drilling Productivity Report published Monday. The data shows net production from the Bakken, Eagle Ford and Niobrara shale plays all falling in April — the first time they will have contracted since the EIA started publishing the DPR in November 2013. Only the Permian region will show a significant projected net gain in April, at 21,000 b/d, compared with the February report’s projection for March growth of 30,000 b/d. The DPR uses recent data on the total number of drilling rigs in operation, along with estimates of drilling productivity and estimated changes in production from existing oil and natural gas wells. The projection is based on seven key shale plays — the Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian […]

Posted On : Published By : Tom Whipple
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U.S. Shale Oil Growth Slows as Price Crash Idles Drill Rigs

Analysts are watching the rig count to help forecast U.S. production. Photographer: Brittany Sowacke/Bloomberg The EIA’s oil-production estimates are based on the number of drilling rigs in different plays and calculations of how productive each piece of equipment is. The number of rigs drilling for oil fell to 922 on Friday, according to oilfield service company Baker Hughes Inc. Oil rigs in the U.S. peaked in October at 1,609. To contact the reporter on this story: Dan Murtaugh in Houston at [email protected] To contact the editors responsible for this story: David Marino at [email protected] Richard Stubbe

Posted On : Published By : Tom Whipple
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OPEC Chief Says Cartel Is Hurting U.S. Shale Producers

ENLARGE A worker caries oil well piping in Sweetwater, Texas, at the Cline shale formation. The U.S. shale-oil industry has been badly hurt by the plunge in crude oil prices. Photo: Associated Press OPEC’s top official said Sunday that the cartel’s decision to continue pumping crude in the face of collapsing prices is hurting the U.S. shale-oil industry and that a global pullback on investment could lead to a shortage that will push the market upward again. “Projects are being canceled. Investments are being revised. Costs are being squeezed,” said Abdalla Salem el-Badri, the secretary general of the Organization of Petroleum Exporting Countries, at the Middle East Oil and Gas conference, which was held in Bahrain. “If we don’t have more supply, there will be a shortage and the price will rise again,” he said. Other top officials at the conference said they would maintain their response of continuing […]

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Has California’s Fracking Boom Already Gone Bust?

A hazy view of an oil field in Taft, California. (Credit: Faces of Fracking/Sarah Craig) We accelerate down the runway — a tiny asphalt strip next to Taft Skydiving. Our little Piper Cherokee lifts off and as we ascend, I peer out the window. Below us is California’s Kern County and more than a century of oil exploration — from the gushers of the 1800s to today’s less robust reality. It’s a spider web of dirt roads, drilling rigs, pump jacks, pipes and boilers. At least I’m pretty sure that’s what’s below us. The air quality is so bad that the San Joaquin Valley we’re flying over looks like the blurred work of an impressionist painter. Our view is smudged by stubborn smog that’s refused to budge for days. It’s a perfect metaphor for trying to understand the future of oil and gas production in California, which is why […]

Posted On : Published By : Tom Whipple
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Whiting reported to be seeking buyer, but source says not aware

WILLISTON, N.D. (Reuters) – Whiting Petroleum Corp ( WLL.N ), North Dakota’s largest oil producer, is seeking a possible buyer, according to the Wall Street Journal, but a person familiar with the board’s thinking told Reuters he was not aware of any such plan. The Denver-based company began seeking a buyer after tumbling crude oil prices CLc1 eroded its market value, the Journal reported earlier on Friday, citing people familiar with the matter. Three months ago, Whiting closed on its $1.55 billion buyout of Kodiak Oil & Gas to become the largest oil company in North Dakota, home to the Bakken shale formation, one of the world’s largest crude reserves. Clinching Kodiak helped Whiting eclipse rival Continental Resources Inc ( CLR.N ), guaranteeing years of growth potential and access to even more lucrative acreage across North Dakota, the No. 2 U.S. oil producing state. Although the deal increased the […]

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« Whiting Fall Reveals Weakness of Tight Oil Plays

Posted in The Petroleum Truth Report Whiting Petroleum is the latest victim of the flawed U.S. shale play business model. Whiting’s demise shows that location isn’t everything. The company is looking for a buyer despite having a premium position in the Bakken Shale play in North Dakota.   Whiting discovered the Sanish Field in 2006 that began the Bakken-Three Forks play and that has been the centerpiece of activity for the past several years.  The map below shows Bakken commercial areas at $45 WTI oil price based on an average well EUR (estimated ultimate recovery) of 650,000 barrels of oil equivalent. Bakken Shale map showing commercial area (in green) at $45 WTI oil price. Whiting wells are shown in red and Kodiak wells in yellow. Data from DrillingInfo, mapping by Labyrinth Consulting Services, Inc. (click image to enlarge) The table below summarizes Whiting’s financial performance.  The company ended 2014 with […]

Posted On : Published By : Tom Whipple