Category: Shale Oil

Hess’ Bakken Acreage Map Hess Corporation recently announced revisions to its 2015 capital and exploratory budget that includes a big cut in the Bakken. The company plans to reduce spending in the region by 18% from 2014 numbers, hoping to allow the company to remain flexible in the face of an extreme pricing environment. The company has revised its budget several times in response to the sharp decline in crude prices throughout 2014. The company reduced 2014 capital expenditures below its planned capital budget of $5.8 billion and the capex budget for 2015 is is $4.7 billion. Related:  Hess Increases Bakken Production Guidance Through 2020 Greg Hill, President and COO, stated that “We are reducing our 2015 spending in the Bakken to $1.8 billion, compared with $2.2 billion in 2014. In 2015, we plan to operate an average of 9.5 rigs and bring approximately 210 new operated wells online, compared […]

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Drilling activity in the Bakken is feeling the effects of a bearish crude oil market. The drop in crude oil prices in recent months has likely gone uncelebrated in the North Dakota town of Williston, or in the state as a whole, as exploration and production companies reduce or halt their drilling activity in the Bakken, that vast shale formation underlying North Dakota and neighboring Montana. But how much has the state’s drilling activity been affected, and how long is the slowdown likely to last? The abrupt arrival of sub-$50 oil prices has been a shock to the oil industry, and the subsequent decline in drilling activity in the Bakken could, if continued, prove painful for a state that had until recently been riding high as an oil producing state and an economic powerhouse. Between 2006 and 2013, North Dakota went from being the ninth-largest oil producing state to […]

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UK’s Douglas-Westwood, an energy business strategy, research and commercial due-diligence services provider, discusses "Oil Price Downturn to have Significant Impact on North American Land Rig Market in 2015 with International Market More Resilient" in its latest edition of DW Monday. The recent oil price downturn is expected to have a significant impact on the global land rig market in 2015, as operators announce planned cuts to expenditure. Following a 24 percent rise over the 2010-2014 period, the number of active drilling rigs is expected to fall 12 percent in 2015.  The North American market, which is particularly susceptible to fluctuations in commodity prices, is expected to see the largest impact, with the active drilling rig fleet forecast to decline by 29 percent. Notably, Apache Corporation has announced plans to cut spending on its North American assets by 26 percent in 2015.  In comparison, the impact of the oil price […]

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(Bloomberg) — The Federal Reserve said some banks tightened standards or terms to energy-industry borrowers in the fourth quarter, after the price of oil plunged. U.S. banks “reported little change in their standards” for commercial and industrial loans overall, the Fed said today in its Senior Loan Officer Opinion Survey, conducted Dec. 30 to Jan. 13 with 73 domestic banks and 23 U.S. branches of foreign banks. “Banks which reported having tightened either their standards or terms on C&I loans predominantly pointed to industry-specific problems as the main reason for having tightened their lending policies to non-financial businesses,” the Fed said. “Some survey respondents specifically noted their concerns about the oil and gas sector resulting from the sharp decline in the price of oil as a reason that they had tightened their lending policies.” West Texas Intermediate crude futures for March delivery declined below $45 a barrel last week […]

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(Bloomberg) — Oil and natural gas producers confronting a cash drain are auctioning off the family silver: pipelines and processing plants. Bakken shale billionaire Harold Hamm and Canadian gas giant Encana Corp. are among the latest to peddle some of their most valuable assets and steadiest earners. They don’t have much choice — as the oil price collapse deflates the value of drilling operations, pipes and plants are about the only things attracting big payments for producers vying to stay afloat. The deals for quick cash are another facet of the energy industry meltdown leading to more than $40 billion in spending cuts and thousands of job losses. The capital infusion comes with a trade-off because producers pay more to process and transport fuel over the lines and in the facilities they used to own. “At some point they all get desperate enough,” said Michael Formuziewich, a fund manager […]

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(Bloomberg) — North America’s small and mid-sized energy companies are searching for creative ways to stay afloat as investors smell blood in the water from the almost 60 percent fall in the price of oil since June. Oil and natural gas companies are straining for solutions before cuts in credit lines and increases in lending rates hit home in April, when banks re-price the collateral used to secure revolving credit lines. Some are turning to more creative forms of financing as familiar sources of money dry up. That financing is coming from hedge funds, private equity shops and mega-wealthy investors like billionaire Carl Icahn who have the cash to weather a prolonged downturn and are on the hunt for deals among the wounded, bankers and analysts say. Oil operators, meanwhile, are laying off staff, freezing salaries and deferring investments to conserve cash. “Companies have lived in a state of […]

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The crude oil price drop has yet to chase all producers out of North Dakota, and it likely won’t – as long as prices remain at or above a critical threshold, according to recently released analysis by the North Dakota Department of Mineral Resources House Appropriations Committee . In doing their analysis, the department looked at several areas affected by wilting crude oil values, including well permits, rig counts, production projections and even breakeven pricing. What the department concluded is that new drilling would not cease until prices fell to $30/barrel or less, far lower than prices in the mid- to upper $40s a barrel seen in recent days. The drop in prices has slowed production in the state dramatically, however, and drillers that have remained are focusing on “the most bang for the buck,” Alison Ritter, spokesperson for the House Appropriations Committee, told Rigzone. “They are focusing their […]

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 If the Saudis wanted to crush America’s shale oil industry they are certainly doing a good job of it.  West Texas Intermediate reached a 2014 peak of $107.73 in June before dropping as low as $49.77 today on the New York Mercantile Exchange. The grade settled at $50.04 a barrel. That’s below the break-even price for 37 of 38 U.S. shale oilfields , according to Bloomberg New Energy Finance. Shale oil fracking and Canadian tar sand is some of the most expensive (and dirty) oil production on the planet, while conventional Persian Gulf oil is the cheapest to produce. Warren Henry, the spokesman for Continental, one of the frackers who have been spending money faster than they can make it, says that current oil prices are “not a sustainable long-term trend.” However, Bob Tippee, Editor of Oil & Gas Journal, has a different take .  “The Saudis have no […]

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The cratering in global oil prices is hitting small-time U.S. producers as they struggle to keep their operations afloat. Dan Molinski reports. DALLAS—Rumor became reality here last week when dozens of workers lost their jobs at Laredo Petroleum Inc. The Oklahoma-based energy outfit said it closed its regional office to cope with plunging oil prices. The layoffs were “kind of like a death in the family,” says Robert Silver, age 62, a geophysicist who had helped Laredo decide where to drill in the Permian Basin in West Texas. Trouble has been looming over the oil patch since crude prices began falling last summer, from over $100 a barrel to under $50 today. But only now are the long-feared effects of a bust starting to ripple through the complex energy ecosystem, affecting Houston executives, California landowners and oil old-timers in Oklahoma. Many big energy companies have said they plan to […]

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Overview The state of North Dakota—home of the Bakken shale oil boom—reported recently that oil production there had held steady, despite that the number of new producing wells had dropped drastically. But as I found from digging into the data, the drop-off in well completions was not nearly as steep as North Dakota had said—and that the apparent “silver lining” in the data is not there. It’s free to read because it was shared by the author. Back Mason Inman, and your funding directly supports his future work — You can impact the stories that get told. In mid-January, when the North Dakota Department of Mineral Resources released its latest update on the Bakken oil boom—the “Director’s Cut,” a summary compiled by the Department’s Director, petroleum engineer Lynn Helms—I was surprised by the data. But I wasn’t the only one surprised. In presenting the latest data, through November 2014, […]

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