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Cheap Oil Crashes Energy’s Debt Party

Oil and gas companies in the Americas have been feasting at the debt markets trough this year. But falling prices have put them on a diet. As of Dec. 12, borrowings by oil and gas companies from North, Central and South America—including the U.S., Canada, Brazil and Mexico—accounted for 60% of all money raised from debt issued by energy companies globally in 2014. The $145.9 billion in bonds issued by companies from the Americas hit a year-to-date record, even as global borrowing for the industry fell to its lowest level since 2011, according to Dealogic. Brazilian oil company Petróleo Brasileiro SA’s $8.5 billion bond, issued in March, was the year’s largest. Oil prices have plunged in recent weeks amid growing supply and falling demand. Last week, the benchmark U.S. oil price fell below $60 a barrel for the first time in five years, which has put pressure on the […]

Posted On : Published By : Tom Whipple
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Report: Shale Vulnerable to Short-Term Investment Cuts Versus Deepwater

Companies with flexible financing may choose US deepwater project investment opportunities over US shale in the near-term, according to a recent report. U.S. shale projects may be vulnerable to short-term investment cuts in relation to deepwater projects, according to a Dec. 9 report by petroleum investment advisor Gaffney, Cline & Associates (GCA). Oil and gas companies are facing reduced cash flow in 2015 due to the recent decline in oil prices to a five-year low. That dip has been blamed on reduced demand and global oversupply, with much of the oil production oversupply coming from U.S. unconventional production. As a result, companies will be scaling back or reprioritizing their spending. However, recent analysis by GCA indicates shale activity will most likely suffer investment cuts first due to low oil prices, leaving the deepwater Gulf of Mexico and other deepwater plays relatively more protected. Strong offshore Gulf of Mexico projects […]

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Bakken Shale Rig Count Decreases by One to 187

Univ. of Texas Releases Study Focusing on Correlation Between Well Technology and Methane Emissions During Natural Gas Production Oil torch against the cloudy sky The  Bakken-Three Forks rig count  decreased by one t0 187 rigs running across our coverage area by the end of last week. The NDIC notes 181 rigs are active in North Dakota, but around 12 of those are in the process of moving in and rigging up. In recent Bakken news, a new study led by researchers from The University of Texas hopes to provide clues to better understand the correlation between well technology and methane emissions during the natural gas production process. The findings, published December 9th in  Environmental Science & Technology , indicate that the overwhelming majority of methane emissions are from two types of wells; those that use pneumatic devices and those that use liquid unloading. Read more : Methane Emission From Two Main […]

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Oil Storm Has Texas Wildcat Veterans Warning Bakken Rookies to Take Cover

Autry Stephens knows the look and feel of an oil boom going bust, and he’s starting to get ready. The West Texas wildcatter, 76, has weathered four such cycles in his 52 years draining crude from the Permian basin, still the most prolific U.S. oilfield. Though the collapse in prices since June doesn’t yet have him in a panic, Stephens recognizes the signs of another downturn on the horizon. And like many bust-hardened veterans in this region — which has made and broken the fortunes of thousands — he’s talking about it like a gathering storm. The ups and downs of oil are a way of life in Midland and Odessa, Texas, dating all the way back to the Great Depression. It’s as much a part of the culture as Gulf Coast hurricanes, and residents often prepare accordingly. Related: “We’re going to hunker down and go into survival mode,” […]

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The Shocking Data Proving Shale Oil Is Massively Over-hyped

Hooray, Crude Oil is suddenly much cheaper than it used to be. That’s great news, right? Not so fast. For certain it’s not good news for those counting on a continued rise in US oil production from the “shale miracle”. Many drillers were challenged to operate profitably when oil was above $70 per barrel. Very few will remain solvent with oil in the $50s (as it is as of this writing). So, expect US oil production to suffer from these lower prices if they persist. But even if oil prices rise and rise soon, there’s new data that indicates the total amount of extractable oil from America’s shale plays is less — much less — than what we’re being told (or better put, “sold”). On today’s podcast, Chris talks with oil analyst David Hughes, who has complied several recent studies based on a massive database of production results on […]

Posted On : Published By : Tom Whipple
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Goldman Sees U.S. Oil Output Maintained as Costs Sink With Price

U.S. producers, pumping crude at the highest rate in more than three decades, may increase output further as costs decline almost as fast as oil prices, according to Goldman Sachs Group Inc. The slump in benchmark U.S. futures, down more than 40 percent this year, is driving producers to move drill rigs to lower-cost fields, Goldman said in a note e-mailed today. While there is evidence of some rebalancing starting to occur in the market, it’s far from sufficient, according to Goldman. “Costs are falling nearly as fast as the price, which means oil producers can spend less to get the same or potentially even more in terms of production,” Goldman said. “While reductions in capex are coming faster than expected, it is unlikely to translate into less supply” it said, adding drill-rig rates have dropped as much as 20 percent. ConocoPhillips, the third-largest U.S. energy producer, cut its […]

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Despite lower crude oil prices, U.S. crude oil production expected to grow in 2015

Source: North Dakota Department of Mineral Resources, Bloomberg The recent decline in crude oil prices has created the potential for weaker crude oil production. EIA’s Drilling Productivity Report (DPR) includes indicators that provide details on the effect low prices may have on tight oil production, which accounts for 56% of total U.S. oil production. Analyzing these indicators and the changes in oil production following the drop in crude oil prices during the 2008-09 recession may offer some insight into possible near-term oil production trends. The price of West Texas Intermediate (WTI) crude oil delivered to Cushing, Oklahoma declined more than 31% from June to November 26 and another 7% after the late November announcement of the Organization of the Petroleum Exporting Countries (OPEC) decision to maintain the current production level. At $60 per barrel, the current price of oil is likely approaching or already below the expected per-barrel costs […]

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U.S. Oil Rigs Drop Most in Two Years, Baker Hughes Says

U.S. oil drillers, facing prices that have fallen below $60 a barrel and escalating competition from suppliers abroad, idled the most rigs in almost two years. Rigs targeting oil dropped by 29 this week to 1,546, the lowest level since June and the biggest decline since December 2012, Houston-based field services company Baker Hughes Inc. (BHI) said on its website today. As OPEC resists calls to cut output, U.S. producers including ConocoPhillips and Oasis Petroleum Inc. (OAS) have curbed spending. Chevron Corp. (CVX) put its annual capital spending plan on hold until next year. The number of rigs targeting U.S. oil is sliding from a record 1,609 following a $50-a-barrel drop in global prices, threatening to slow the shale-drilling boom that has propelled domestic production to the highest level in three decades. “It’s starting,” Robert Mackenzie, oil-field services analyst at Iberia Capital Partners LLC, said by telephone from New […]

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North Dakota monthly crude production falls for first time since Nov 2013

Houston (Platts)–12Dec2014/414 pm EST/2114 GMT Low oil prices and regulations for flaring and oil conditioning helped suppress North Dakota’s crude oil production in October, the first time the monthly total has fallen since November 2013, data released Friday by the state’s Department of Mineral Resources showed. Crude output in October was 1.182 million b/d, a 4,054 b/d decline from September, the agency said. "We’ve really got three majors forces at play here and all of them are working to restrict production … or hold it flat," said Lynn Helms, director of North Dakota’s Department of Mineral Resources. Helms said this marked the first time in eight months the state did not set a production record and said it was "very unusual" to not see an increase in production from September to October. Helms pointed to flaring reductions, conditioning and falling oil prices as the likely explanation. On Tuesday, the […]

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Bakken and North Dakota Production Report

The North Dakota Industrial Commission just published their Bakken Monthly Oil Production Statistics and also their ND Monthly Oil Production Statistics . Bakken Barrels Per Day 2 Bakken production was down 1,598 barrels per day to 1,118,010 bpd. All North Dakota production was down 4,054 bpd to 1,182,174 bpd. From the Director’s Cut , bold mine: The drilling rig count dropped 2 from September to October, an additional 3 from October to November, and has since fallen 5 more from November to today. The number of well completions decreased from 193(final) in September to 134(preliminary) in October. Three significant forces are driving the slow-down: oil price, flaring reduction, and oil conditioning. Several operators have reported postponing completion work to achieve the NDIC gas capture goals. There were no major precipitation events, but there were 9 days with wind speeds in excess of 35 mph (too high for completion work). The […]

Posted On : Published By : Tom Whipple