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Oil Drillers Pull Most U.S. Rigs in More Than Two Decades

In what is the strongest sign yet of the damage that plunging crude prices are doing to the U.S. oil industry, drillers idled more rigs last week than they have at any point since 1991. Oil rigs fell by 61 to 1,421, Baker Hughes Inc. (BHI) said on its website today, extending the five-week decline to 154. The 2014 peak was 1,609. It was the largest drop since February 1991, which also followed a tumble in prices before the start of the Persian Gulf War . The price of U.S. benchmark West Texas Intermediate oil has plunged by more than half since June, imperiling a shale boom that has brought the nation closer to energy independence than it has been in almost three decades. U.S. drillers laid down the most rigs last quarter since 2009 as the Organization of Petroleum Exporting Countries and the rest of the world’s suppliers […]

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New drilling affected by oil price fall

Floor hands Jose Garza, left, Jose Salinas, center, and Omar Cano make a pipe connection on Orion Drilling Co.’s Perseus drilling rig near Encinal in Webb County, Texas, U.S., on Monday, March 26, 2012. The Perseus is drilling for oil and gas in the Eagle Ford Shale, a sedimentary rock formation underlying an area of South and East Texas. Photographer: Eddie Seal/Bloomberg *** Local Caption *** Jose garza; Jose Salinas; Omar Cano Crude lost another 11 per cent this week amid continuing worries about a supply surplus as demand slows, with the Brent benchmark falling below $50 a barrel. ICE February Brent, the global benchmark, was trading at $50 a barrel at the end of the week while US crude fell 8 per cent to $48.37. More On this topic IN Commodities Analysts said the fall in oil prices was filtering through to US shale ventures, with new drilling […]

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Are Mountrail’s Sweet Spots Past Their Prime?

This post is an update on total Light Tight Oil (LTO) extraction from Bakken in North Dakota based upon actual data as of October 2014 from North Dakota Industrial Commission (NDIC). It further presents a statistical analysis on developments of well productivity with a detailed look at developments in Parshall, Reunion Bay and Sanish. There were general improvements in LTO well productivity in Bakken during 2013. Present trends in LTO well productivity for Mountrail’s sweet spots (Alger, Parshall, Reunion Bay, Sanish and Van Hook) suggests these are past their prime. Figure 29 in this post show development in well productivity for Alger and Van Hook and figures 06, 08 and 10 for Parshall, Reunion Bay and Sanish. A common feature for Parshall, Reunion Bay, Sanish, and Van Hook is that these reached new highs in well productivity for wells started in 2013. Alger has been in general decline since […]

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Mounting debt for energy firms as oil prices plummet

Mounting debt for energy firms as oil prices plummet thumbnail Energy firms have been financing new oil production by taking on large amounts of debt. When oil prices averaged over $100, that strategy made sense. But with oil at $50, most indebted firms are suddenly in crisis. In recent years oil exploration companies have taken on more debt in order to finance their operations. The level of debt in the upstream sector – excluding integrated oil companies like ExxonMobil – hit $199 billion at the end of 2014, a 55 percent increase since 2010, according to the  Wall Street Journal . Loading up on debt made sense when oil prices were high. Fracking new shale wells can be an expensive process, but when oil was averaging over $100 per barrel, the debt load for many firms didn’t seem so burdensome. Now with oil prices falling by more than half […]

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Shale Producers in U.S. Cutting Rigs Loose Early Amid Oil Slump

U.S. oil producers are bailing out of long-term contracts for drilling rigs as crude prices sink below $50, another signal that the nation’s shale boom is slowing. Yesterday, Helmerich & Payne Inc. (HP) , the biggest rig operator in the U.S., said it had received early termination notices for four contracts. Today, a second contract driller, Pioneer Energy Services Corp. (PES) , said four rigs had been canceled early. Producers may cut short another 50 to 60 agreements, according to Bloomberg Intelligence analyst Andrew Cosgrove. Companies are paying to cancel rigs rather than keep drilling in the face of a 55 percent plunge in prices. Mounting rig cutbacks imperil the unprecedented boom in U.S. output that’s contributed to a global glut of oil and helped sustain a price war among the world’s largest suppliers. “This is just the beginning,” R.T. Dukes, an upstream analyst at Wood Mackenzie Ltd., said […]

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Shale explorer Sanchez Energy cuts spending

Sanchez Energy keeps tight focus on Eagle Ford shale in Texas, but trims capital plans in response to low oil prices. Photo by Calin Tatu/Shutterstock HOUSTON, Jan. 8 (UPI) — U.S. shale explorer Sanchez Energy said it’s the latest to cut its capital plans for 2015 because of slumping oil prices. "In response to the deteriorating commodity price environment, Sanchez Energy has elected to further reduce its 2015 capital plan to a range of $600 million to $650 million," President and Chief Executive Officer Tony Sanchez said in a statement. The range is nearly 30 percent less than the capital plan announced in November, which the CEO said itself was less than the $1.15 billion envisioned before oil prices started their decline in June. Several international energy companies have reduced their spending plans for the year in response to the bear market for crude oil. Oil prices have lost […]

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Shale Producers in U.S. Cutting Rigs Loose Early Amid Oil Slump

U.S. oil producers are bailing out of long-term contracts for drilling rigs as crude prices sink below $50, another signal that the nation’s shale boom is slowing. Yesterday, Helmerich & Payne Inc. (HP) , the biggest rig operator in the U.S., said it had received early termination notices for four contracts. Today, a second contract driller, Pioneer Energy Services Corp. (PES) , said four rigs had been canceled early. Producers may cut short another 50 to 60 agreements, according to Bloomberg Intelligence analyst Andrew Cosgrove. Companies are paying to cancel rigs rather than keep drilling in the face of a 55 percent plunge in prices. Mounting rig cutbacks imperil the unprecedented boom in U.S. output that’s contributed to a global glut of oil and helped sustain a price war among the world’s largest suppliers. “This is just the beginning,” R.T. Dukes, an upstream analyst at Wood Mackenzie Ltd., said […]

Posted On : Published By : Tom Whipple
Category:

Mounting debt for energy firms as oil prices plummet

Mounting debt for energy firms as oil prices plummet thumbnail Energy firms have been financing new oil production by taking on large amounts of debt. When oil prices averaged over $100, that strategy made sense. But with oil at $50, most indebted firms are suddenly in crisis. In recent years oil exploration companies have taken on more debt in order to finance their operations. The level of debt in the upstream sector – excluding integrated oil companies like ExxonMobil – hit $199 billion at the end of 2014, a 55 percent increase since 2010, according to the  Wall Street Journal . Loading up on debt made sense when oil prices were high. Fracking new shale wells can be an expensive process, but when oil was averaging over $100 per barrel, the debt load for many firms didn’t seem so burdensome. Now with oil prices falling by more than half […]

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North Dakota defiant despite low oil prices

North Dakota Gov. Jack Dalrymple gives nod to potential budgetary impacts of low prices for crude oil during his annual State of the State address. UPI/Ron Sachs/Pool BISMARCK, N.D., Jan. 7 (UPI) — If low oil prices threaten North Dakota spending plans, the state’s governor said he had confidence lawmakers would take measured steps to cope. North Dakota Gov. Jack Dalrymple delivered his State of the State address late Tuesday, announcing plans to invest roughly $2.7 billion in state counties behind the oil boom in the state. "I have recommended increasing the state’s support during the upcoming biennium by another $1 billion," he said. North Dakota’s economy grew in 2013 faster than any other U.S. state in terms of real growth in gross domestic product. The U.S. Commerce Department said in a state-by-state review North Dakota can credit the extractive industries for a sizable portion of its 9.7 percent […]

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Freezing rain impacts Texas oil operations

Extreme winter weather in western Texas idles some drilling operations. UPI/Kevin Dietsch DALLAS, Jan. 7 (UPI) — It’s not oil prices, but extreme winter weather that’s impacting production and drilling operations in the Permian shale oil basin in Texas, an operator said. Pioneer Natural Resources said severe winter weather in West Texas has left the Spraberry/Wolfcamp area in the Permian basin in the dark and out of reach. The company said an "extensive recovery period is expected," and it could take several weeks before it determines the full extent of the damage . The National Weather Service said Wednesday conditions are ripe in West Texas for a possible winter storm and accumulations of freezing rain. The high for Wednesday is predicted at 31 degrees Fahrenheit, about 30 degrees below average. Since the start of the year, Pioneer said much of the associated infrastructure in the Spraberry/Wolfcamp area is frozen […]

Posted On : Published By : Tom Whipple