Shale Oil

Texas Oil Fields Rebound From Price Lull, but Jobs Are Left Behind

20 Feb 2017   Shale Oil, USA

In the land where oil jobs were once a guaranteed road to security for blue-collar workers, Eustasio Velazquez’s career has been upended by technology. For 10 years, he laid cables for service companies doing seismic testing in the search for the next big gusher. Then, powerful computer hardware and software replaced cables with wireless data collection, and he lost his job. He found new work connecting pipes on rigs, but lost that job, too, when plunging oil prices in 2015 forced the driller he worked for to replace rig hands with cheaper, more reliable automated tools. “I don’t see a future,” Mr. Velazquez, 44, said on a recent afternoon as he stooped over his shopping cart at a local grocery store. “Pretty soon every rig will have one worker and a robot.” Oil and gas workers have traditionally had some of the highest-paying blue-collar jobs — […]

U.S. shale oil braces for the unfamiliar in 2017: inflation

18 Feb 2017   Shale Oil

U.S. shale producers are facing their first production cost increase in five years in 2017 as industry activity picks up and energy service providers hike fees to take a bigger share of the profits generated by higher oil prices. Drilling innovations over the past decade have generated a dizzying reduction in the cost of pumping oil from shale formations across the United States – the world’s largest energy consumer – triggering an energy revolution and a production boom. When that boom ended with the onset of a two-year global price war in 2014, shale producers responded with even deeper cost cuts. Technological breakthroughs allowed producers to wring more oil from the rock and halved the per-barrel price needed to turn a profit. But […]

Is The Bakken A Bust?

17 Feb 2017   Shale Oil

North Dakota has released December production data for the Bakken and for all North Dakota . They were a little shocking. (Click to enlarge) Bakken production down 86,150 barrels per day 895,330 bpd. North Dakota production down 92,029 bpd to 942,455 bpd. It was noted that this the largest decline ever in North Dakota production. But it should not be overlooked that the October increase in production was also the largest ever increase in North Dakota production. From the Director’s Cut Oil Production November 31,034,520 barrels = 1,034,484 barrels/day December 29,216,093 barrels = 942,455 barrels/day (preliminary) (all-time high was Dec 2014 at 1,227,483 barrels/day Gas Production November 52,785,707 MCF = 1,759,524 MCF/day December 47,679,872 MCF = 1,538,060 MCF/day (preliminary) (all-time high was Nov 2016 at 1,759,524 MCF/day) Producing Wells November 13,520 December 13,337 (preliminary) (all-time high was Nov 2016 at 13,520) 11,449 wells or 86% are now unconventional Bakken […]

How Long Can The Permian Craze Continue?

17 Feb 2017   Shale Oil

The two great dueling forces in the world oil market, OPEC and American production, have created an atmosphere of uncertainty, as prices hover above $50. Last week the EIA reported another record inventory and an increasing rig count , while analysts point to a possible crisis as a market held aloft by buoyant predictions of OPEC cuts slowly faces up to insufficient demand. Crucial to this situation is the state of the U.S. patch, particularly the Permian Basin, which since late last year has been the focus of recovering production. The EIA data for the field is good, with new well production rising sharply and overall production of oil and gas rising sharply in 2017. While some speculate the bubble may burst , prospects for companies already invested in the Permian look positive, even if production costs are rising. The Permian has seen the highest increase in rig count […]

U.S. shale oil output to rise in March by 80,000 bpd: EIA

14 Feb 2017   Shale Oil

U.S. shale oil production for March is expected to rise by the most in five months, government data showed on Monday, as energy companies boost drilling on the back of oil prices that are hovering over $50 a barrel. March oil production is forecast to rise by 79,000 barrels per day to 4.87 million bpd, according to the U.S. Energy Information Administration’s drilling productivity report. That would be the biggest monthly rise since October. In the Permian shale play of West Texas and New Mexico, output is forecast to rise by more than 70,000 bpd to 2.25 million bpd, in what would be the biggest monthly rise since January 2016. Meanwhile, Eagle Ford production in Texas is expected to rise by 14,000 bpd to 1.08 million bpd, the first monthly increase since December 2015, EIA data showed. In North Dakota’s Bakken field, production is forecast to fall by nearly […]

More drilling permits issued in Texas

14 Feb 2017   Shale Oil, USA

The number of new drilling permits issued in Texas last month was more than 80 percent higher than the previous year, state data show. Texas is the No. 1 oil producer in the state and accounts for about half of all the drilling activity in the country. Preliminary data from the Railroad Commission of Texas, the state oil and gas overseer, show 81.5 million barrels of oil produced in November, about 1 million barrels less than the previous month. The Texas energy sector, as well as the state economy , was under pressure for most of last year because of a downturn in crude oil prices. Since late last year, crude oil prices recovered in response to a decision from the […]

Passing On The Permian: Has The Bubble Grown Too Big?

14 Feb 2017   Shale Oil

Has the Permian Basin become too hot? More companies and enormous sums of capital continue to flood into West Texas to take advantage of the most prolific shale basin in North America. Rig counts are showing no sign of slowing down and new deals in the Permian are announced on what seems like a weekly basis. However, will the Permian bubble deflate? ExxonMobil dumped more than $6 billion in January to double its holdings in the Permian, as the oil supermajor decided to ramp up shale drilling instead of taking on more complex megaprojects offshore. But in the past, ExxonMobil has made a play for shale assets at the top of the market. In 2009, Exxon paid more than $30 billion for XTO Energy, a Texas shale gas driller, in what was widely seen in retrospect as an expensive play on a market that had already peaked. With that […]

At $60,000 an Acre, the Permian Basin May Be Too Ritzy

11 Feb 2017   Shale Oil

Record prices for drilling rights in the Permian Basin, the most fertile U.S. shale field, are prompting oil companies and private equity investors to look elsewhere for the next big gushers. Explorers eager to tap the basin’s mile-thick stack of oil-soaked rock layers have paid as much as $60,000 an acre. That marks a 50-fold explosion in deal prices over four years, according to Wood Mackenzie Ltd. It also pushes the cost 10 times higher than in the Bakken of North Dakota. The backlash is just beginning. BP Plc, the U.K.-based supermajor, has focused its shale-drilling efforts on the other end of the hemisphere, in Argentina’s Vaca Muerta region, while Sanchez Energy Corp. has targeted the Eagle Ford of South Texas and Newfield Exploration Co. has acquired rights in the Stack field in northern Oklahoma. As far as the Permian is concerned, “companies that don’t already have a foothold […]

US, Canada Producers Continue to Dominate Shale Production

11 Feb 2017   Shale Oil

Despite having just one-fifth of the world’s shale resources, advantages in the US and Canada mean the countries will continue to monopolize the market, according to a new Raymond James report. Shale producers in the United States and Canada worried their market share will be absorbed by foreigners can rest easy. Your corner on the market is safe – at least for the next few years. While there is little doubt that shale resources exist in abundant quantities around the world, a variety of hurdles preclude their development, analysts at Raymond James & Associates (RayJa) said in a recent report. “The tricky aspect of the emerging plays will be how to achieve cost-effective scale-up, bearing in mind the hurdles in technical know-how, regulatory barriers and other issues,” they wrote. “Shale outside North American may become relevant vis-à-vis global oil and gas supply (and thus prices) beyond 2020, but over […]

Wall Street Pouring Money Back Into Oil And Gas

10 Feb 2017   Shale Oil

Despite the near record increase in U.S. oil inventories last week – an increase of 13.8 million barrels – oil prices traded up on February 8 and 9 as traders pinned their hopes on a surprise drawdown in gasoline stocks, which provided some evidence of stronger-than-expected demand. The abnormal crude stock increase took inventories close to 80-year record levels at 508 million barrels, and is another bit of damming evidence that should worry oil bulls. But the oil markets were not deterred. In fact, that has been a defining characteristic of the market in recent weeks – optimism even in the face of some pretty worrying signals about the trajectory of the market “adjustment” process. More signs of optimism abound. Wall Street is pouring the most money into oil and gas companies in the U.S. since at least 2000, according to Bloomberg. In January alone, drillers and oilfield service […]

Wall Street’s Love Affair With Energy Heats Up as Rigs Soar

9 Feb 2017   Shale Oil

Wall Street is throwing the most money at U.S. energy companies since at least 2000 amid growing confidence that the industry is emerging from the worst downturn in a generation. Energy firms raised $6.64 billion in 13 equity offerings in January, drawn in by a rich combination of oil prices consistently above $50 a barrel and a rush to drill that’s doubled the rigs in use in the U.S. and Canada since May. The biggest change from last year: oilfield servicers that provide the rigs, fracking equipment and sand used by drillers. The most beaten-down sector during a two-year price rout, servicers made up 22 percent of the equity totals in January, compared with 5 percent all last year. “The mood is absolutely different,” Trey Stolz, an analyst in New Orleans at the investment banking firm Coker & Palmer Inc., said by phone. “Go back to a year ago […]

Permian Drilling Costs Surge: Are The Days Of Cheap Oilfield Services Over?

9 Feb 2017   Shale Oil

It was only a matter of time before drilling, fracking, and oilfield service providers for the oil and gas industry started raising their prices to reflect the improving prospects for their clients. Now the time has come, and drillers and frackers are asking much higher prices for their services; according to a CNBC report , the cost of fracking per well in some cases shot up by 50 percent between bidding and executing. We wrote about this last month, when a Wood Mac report warned that 2017 would be tough for oilfield service providers, and things would only start looking up in 2018. Yet, it seems that the rush to the Permian will help relieve many drillers and frackers of their earlier hardships. The Permian is currently the top spot for shale oil and gas. Everyone is buying acreage there and everyone is optimistic, not least because of the […]

Expensive Middle East Crude Could Lose Market Share To U.S. Shale

OPEC’s production cuts have put a floor under oil prices, at least for now. The resulting reduced supplies have also boosted the price of Middle East crude grades, and increased the spread between WTI and Brent. WTI is now trading at a discount of more than $2.20 compared to Brent. The current price differentials have made flows of U.S. crude oil to Asia commercially profitable after the Saudi-led production cuts resulted in higher Dubai and Oman benchmark prices against the U.S. benchmark WTI and the Brent benchmark. Therefore, commodity traders and oil supermajors are taking advantage of this arbitrage window to send more crude oil to the region with the world’s highest demand – Asia – which is the traditional stronghold of Middle East crude oil exports. But Middle Eastern exporters have been very carefully selecting which buyers to cut off as part of the OPEC output reduction, and […]

Offshore Drillers Still Seeking Recovery Enjoyed by Shale

8 Feb 2017   Offshore, Shale Oil

While oil drillers in US shale basins are starting to see business come back, their offshore brethren will have to wait for prices to surge well above $60 a barrel. (Bloomberg) – While oil drillers in U.S. shale basins are starting to see business come back, their offshore brethren will have to wait for prices to surge well above $60 a barrel. U.S. offshore operators like Diamond Offshore Drilling Inc. and Atwood Oceanics Inc. are down more than 15 percent in the last month, as companies focus on onshore oil that reaps better returns. With oil trading near $53 a barrel, firms are looking toward booming plays like the Permian Basin in West Texas and the Scoop and Stack formations in Oklahoma, according to Marc Edwards, Diamond Offshore’s chief executive officer. “From an operator perspective, they still have choices as to how they deploy their capital. And, of course, […]

A Primed Pump: Midstream Prepared for the Permian’s Pinch Point

7 Feb 2017   Shale Oil

With hundreds of thousands of barrels’ worth of crude oil pipeline announced during recent weeks, the midstream sector proves it’s planned ahead for the Permian Basin’s production recovery. This is the third story in a series of Rigzone’s “A Primed Pump,” an analysis of the Permian Basin in 2017. To view the second story, click here . As rig rage drove up the U.S. count to a level not seen in years, production in the prolific Permian Basin entered 2017 under the shadow of a bottleneck that threatened to choke the flow of all that black gold. But as luck would have it, the midstream sector saw that coming. During January alone, midstream companies shared their expansion plans to increase capacity by more than 300,000 barrels per day (bpd), hauling hydrocarbons from the Permian Basin. Analysts had forecast production increases would fill incremental capacity, and create problems for producers […]

BP may ‘incrementally’ increase U.S. shale portfolio: CEO

BP is looking at ways to incrementally increase its footprint in U.S. shale oil and gas production, its Chief Executive Officer Bob Dudley said on Tuesday. Dudley said the company will use “a lot of discipline” in investments in the sector as asset prices are high. Talking to analysts after reporting its 2016 results, Dudley also said the British oil and gas company was considering giving the green light to several projects around the world, including in Oman, Trinidad and Tobago and India. (Reporting by Ron Bousso; editing by Jason Neely)

U.S. oil rig count rises to highest since October 2015: Baker Hughes

4 Feb 2017   Shale Oil, USA

U.S. energy companies added oil rigs for a 13th week in the last 14, extending a nine-month recovery as drillers take advantage of crude prices that have held mostly over $50 a barrel since OPEC agreed to cut supplies in late November. Drillers added 17 oil rigs in the week to Feb. 3, bringing the total count up to 583, the most since October 2015, energy services firm Baker Hughes Inc said on Friday. During the same week a year ago, there were 467 active oil rigs. Since crude prices first topped $50 a barrel in May after recovering from 13-year lows last February, drillers have added a total of 267 oil rigs in 32 of the past 36 weeks, the biggest recovery in rigs since a global oil […]

A Primed Pump: Depleted Labor Force Squeezes Permian Production

4 Feb 2017   Shale Oil

Producers angling to produce more crude oil at higher, stable prices must replenish their workforces to take advantage of the low-key rally, analysts say. This is the second half of Rigzone’s “A Primed Pump,” an analysis of the Permian Basin in 2017. To view the first story, click here . Now that oil prices are stable and above $50 per barrel, the energy industry’s depleted workforce is being called back into the field – but there are far fewer candidates with an ear to the ground. As many as 350,000 oilfield workers lost their jobs during the downturn, which stretched beyond two years in a much lower for much longer down cycle. But the U.S. rig count is on the upswing, led by a frenzy in the Permian Basin, and companies need bodies at the wells. Those companies that recognize its time to staff up will likely find the […]

A Primed Pump: Can the Mighty Permian Basin Live Up To The Hype?

3 Feb 2017   Shale Oil

Supermajors and independents alike scramble for acreage in the prolific Permian Basin as rigs counts increase and crude oil prices stabilize. During the oil and gas industry’s last two dismal years, the Permian Basin stood apart in an apparent “one basin recovery” in which money could be made at $30 per barrel oil. With price stability now in the low- to mid-$50s, the basin has become that much more attractive – luring capital spending, rigs and jobs. And perhaps, even a more widespread recovery. Indeed, analysts at Barclays say operators can breakeven on average in the play at $43 per barrel. In the upper and middle portions in Midland, Martin and Howard counties, the breakeven price may be as low as $35 per barrel. Double-digit growth is achievable at prices between $45 and $50 per barrel, Barclays said. During a sustained period of low prices, most M&A activity migrates […]

Top 10 Bankruptcies Of 2016 Feature 9 Energy Firms

2 Feb 2017   Shale Oil, USA

Low oil prices and the distress of the solar, coal, and oil and gas producers resulted in nine energy firms making the top 10 of public company bankruptcies for 2016 with assets valued at more than US$3 billion each, according to a recent publication by law firm Jones Day. The top 10 bankruptcies of public companies – defined as a company with publicly traded stock or debt – included just one non-energy entry and came from the airline industry. Jones Day’s top 10 bankruptcies list for 2016 paints a rather gloomy picture of the energy industry’s struggles amid the downturn in oil prices, slashed investments in drilling, and heavy borrowing before the slump. Saint Louis-based solar energy company SunEdison Inc held the unfortunate no.1 spot on Jones Day’s list with US$11.5 billion worth of assets and more than US$8 billion in debt. SunEdison filed for Chapter 11 protection in […]

U.S. Shale Sees Rebound In 2017…But Mostly From The Permian

2 Feb 2017   Shale Oil

The oil industry invested more than $28 billion in buying up land in the Permian Basin in 2016, three times the amount spent in 2015, according to Reuters . That accounted for about 39 percent of all money spent on land acquisitions in the U.S. oil industry last year. Other shale basins do not even come close to that level of investment. By way of comparison, the Marcellus Shale attracted 10 percent of total land investment in 2016, while the once-hot Bakken only captured 3 percent. Money has flooded into West Texas because the Permian has both below-ground and aboveground advantages over other shale basins. To start with, the Permian has a vast volume of oil waiting to be tapped. But more importantly, it is geologically favorable for drillers – multiple shale formations are stacked on top of each other, which means that a driller can sink a vertical […]

A tale of two shales in Texas

2 Feb 2017   Shale Oil

The Permian shale oil basin in the southern United States is among the few to show gains even during the market downturn, a federal report finds. Overall, the shale oil basins in the United States have been more resilient than expected during the market downturn that began in mid-2015. In a recent forecast, the U.S. Energy Information Administration predicted a slight increase in total U.S. oil production for 2017, a reversal of estimates last year that forecast a decline. Texas remains the No. 1 oil producer in the United States and the EIA said in a daily briefing that the Permian shale basin is the most durable in the country. “Although overall U.S. oil production has […]

Exclusive: Endeavor, giant of West Texas oil industry, mulls public offering

2 Feb 2017   Shale Oil

Endeavor Energy Resources LP, a privately-held Texas oil producer, is considering an initial public offering of stock to expand operations on more than 330,000 acres of land it controls in the booming Permian Basin. Endeavor is among the largest leaseholders in the biggest U.S. oil field, where acreage is coveted by the world’s top energy firms. Exxon Mobil ( XOM.N ) last month spent as much as $6.6 billion to double its holdings in the Permian. Firms last year spent more than $28 billion acquiring land here, and are now pumping about a quarter of all daily U.S. oil output. The IPO “is one of our options” for financing, Chief Executive Chuck Meloy told Reuters in an interview at Endeavor’s Midland, Texas, headquarters. The company has also been courting the bond market, he added. Meloy declined to give further details on the pricing target for an IPO, the timing, […]

As oil recovers, U.S. firms descend on the Permian Basin in West Texas

2 Feb 2017   Shale Oil

In most U.S. shale oil regions, energy firms are making strategic but cautious bets as the price of oil holds above $50 a barrel. Here in the Permian Basin of West Texas, the largest U.S. oil patch, the industry poured more than $28 billion into land acquisitions last year – more than triple what they spent in 2015. Those deals set the stage for much larger investments needed to extract the oil from the ground – and they illustrate how the Permian Basin has become the epicenter for the U.S. shale resurgence after a historic oil price crash. “We could easily see an extra 100 rigs out here in the Permian by June,” said Josh Clawson of Gesco, a Midland, Texas, electrical contractor for oil drilling rigs. That doesn’t necessarily mean the investment blitz will extend to other U.S. oil regions. The industry’s focus on the Permian reflects the […]

Is The Kremlin Funding A Campaign That Undermines U.S. Fracking?

2 Feb 2017   Russia, Shale Oil

The recent National Intelligence Council report assessing the involvement of Russia in last year’s U.S. presidential elections spurred a flurry of media reports suggesting that Russia is heavily involved in anti-fracking campaigning. Some authors interpreted this involvement as a “ propaganda effort ”, while others claimed the Kremlin was financially backing anti-fracking groups in the U.S., without, however, providing any evidence for this claim. The basis for all these reports is part of the report, in which the authors discuss the agenda of RT, a state-funded TV channel and website that is widely seen as the Kremlin’s chief megaphone abroad. They quote shows and reports that led them to conclude that RT aimed at fueling discontent in the U.S. and influence interior politics. Anti-fracking rhetoric was identified in the report as a major element of RT’s agenda and interpreted by the report’s authors as reflecting Russia’s concern about the […]

Trump’s Drilling Frenzy Could Upend OPEC Deal

31 Jan 2017   Shale Oil

In just thirteen words, a U.S. judge has summed up the problem with almost everything that’s happened since Donald Trump became US President: “I think the government hasn’t had a full chance to think about this.” That was how Judge Ann Donnelly of the federal district court in Brooklyn summed up the situation that erupted over the weekend when airports began to implement the now infamous Muslim Ban. Which by the way President Trump says isn’t a Muslim Ban, and is working “very well.” But let’s look closer to home at decisions which impact on the industry. Using the powers of the Executive Order, he brought back the Dakota Access and Keystone XL projects. With the Dakota Access decision, his intention is to allow the development of a 1,100-mile pipeline to transport 450,000 barrels a day from the Bakken fields of North Dakota to Illinois. For months now there […]

U.S. Oil-Rig Count Climbs by 15, Baker Hughes Says

28 Jan 2017   Shale Oil

The number of rigs drilling for oil in the U.S. rose by 15 in the past week to 566, according to oil-field services company Baker Hughes Inc. The U.S. oil-rig count is typically viewed as a proxy for activity in the sector. After peaking at 1,609 in October…

U.S. Shale Won’t Pilfer OPEC, Russian Markets, Former Energy Minister Says

28 Jan 2017   Russia, Shale Oil

A former Russian energy minister on Friday dismissed concerns U.S. shale oil companies may try to use production cuts by Russia and nations in the Middle East to swoop in and steal market share, saying the Americans know there are some no-go zones. Igor Yusufov, Russia’s energy minister from 2001 to 2004, said U.S. shale producers wouldn’t attempt to enter core OPEC and Russia markets where prices are too low for them to compete….

Proppacalypse Now: Frac Sand Demand On Fire in 2017

27 Jan 2017   Shale Oil

With E&Ps finding that more sand downhole makes increases production, demand for frac sand is expected to double previous US peak to 240 billion pounds. Editor’s Note: This is the final story in a series analyzing the 2017 outlook for oilfield services. For yesterday’s story, click here . While 2017 may not be a stellar year for oilfield services in general, the sand proppant those companies use in hydraulic fracturing may enjoy its best time yet. With crude oil prices appearing stable at more than $50 per barrel, exploration and production (E&P) companies are gaining confidence and spending more money on capital expenditures (CAPEX). Increasingly, analysts and investors are bullish on the grain’s prospects as rig counts climb and E&P companies pour ever more sand downhole to accelerate production. This phenomenon has been the single biggest driver of improved well production in the U.S., analysts at Raymond James (RayJa) […]

Red tape chokes off drilling on Native American reservations

27 Jan 2017   Shale Oil

When the U.S. oil boom hit North Dakota a decade ago, wells sprang up quickly on the edges of the Fort Berthold Indian Reservation, an expanse of prairie and rolling hills three times larger than Los Angeles. Tribe members here, facing a 40 percent unemployment rate and sending their children to 1950s-era school buildings, were eager to tap some of state’s most promising reserves. But layers of federal regulation – applying only to tribal lands – slowed them down for years, frightened away investors and cost them millions of dollars. “The reservation looked like the hole of a donut,” said Marcus Levings, who was chairman of Mandan, Hidatsa and Arikara (MHA) Nation’s reservation at the time. […]

A pivotal shift in Texas shale

26 Jan 2017   Shale Oil

Emerging U.S. shale player Halcon Resources said it spent more than $700 million to shift its priorities in its Texas operations. The company said it spent $705 million to acquire acreage in the Delaware shale basin, in Texas, from a private operator while unloading acreage in the Eagle Ford shale for $500 million. “These transactions represent a strategic pivot for us into the Delaware basin,” President and CEO Floyd Wilson said in a statement . A recent survey of shifting dynamics in the Lower 48 from consultant group Wood Mackenzie finds the Delaware basin may be one to watch. “In our view, the Delaware Basin looks to be setting itself up nicely for overall productivity gains at the end of 2017 and into 2018,” the consultant […]

Permian To Be Only Shale Play That Sees Output Increase This Year

26 Jan 2017   Shale Oil

The Permian shale formation has been drawing a lot of attention recently, and it’s more likely than not to continue drawing even more in the immediate future, now that it has essentially become the new center of the shale revolution. According to a recent report from commodity analysts with Barclays, the Permian will be the only shale play that will see a production increase this year, while all the rest will see declines. It’s worth noting here, though, that the Barclays analysis came out before Donald Trump took office on January 20: this week, the new president revived the Keystone XL oil pipeline that was vetoed by the Obama administration. Trump also signed an executive order for the restart of the Dakota Access pipeline, which could provide a major boost to Bakken operators. According to Barclays, output in the Bakken will rise by a modest 10,000 bpd, and this […]

Hess to triple Bakken rig count, forecasts late 2017 supply surge

26 Jan 2017   Shale Oil

Hess plans to triple its rig count in the Bakken Shale by the end of 2017 from two rigs to six and forecasts the company’s production in the play will grow as high as 110,000 b/d of oil equivalent by Q4, up 10% from the start of this year. “We are increasing activity in the Bakken,” John Hess, the company’s CEO, said during a Q4 earnings call Wednesday. Related episode of Capitol Crude : John Hess on the ‘new chapter’ for oil prices, US shale production Hess reported that its Bakken production averaged 95,000 boe/d in Q4, down about 13% from the same quarter a year ago, due largely to severe winter weather and the company’s reduced drilling activity. Hess’ production in the Gulf of Mexico fell from 73,000 boe/d in Q4 of 2015 to 61,000 boe/d in Q4 2016. Overall, oil and gas production averaged 311,000 boe/d in […]

Shale Frackers’ Weak Sales Leave Investors Asking What Growth?

25 Jan 2017   Shale Oil

Reporting a profit might not be enough Thursday for Baker Hughes Inc., after its two larger rivals failed to impress investors with anemic sales growth. Schlumberger Ltd.’s adjusted earnings surpassed estimates by a penny, Halliburton Co. earnings were 2 cents a share better than expected. Even Patterson-UTI Energy Inc., the rig contractor and fracking-service provider that’s buying rival Seventy Seven Energy Inc. for $1.4 billion, announced preliminary results that also are better than forecasts. Still, sales for the two largest oil-service companies didn’t grow as fast as the increase in North American drilling implied, and shares slid. Schlumberger sank 3.4 percent in the two days after its Jan. 20 earnings release. Halliburton fell 2.9 percent Monday and Patterson-UTI tumbled 4.2 percent. Investors are dissatisfied with the pace of growth, focusing on sales in North America, the driver of the global oil industry recovery, according to Credit Suisse. Shale explorers […]

Expect A New Shale Boom This Spring

25 Jan 2017   Shale Oil

U.S. shale has now rebounded to a solid financial equilibrium that it makes sense for companies to begin investing in drilling again. The International Energy Agency (IEA) expects U.S. shale drillers to add over 500,000 bpd throughout 2017. Current announcements show the oil price floor, installed by OPEC’s production cuts, have allowed companies such as Hess Corporation and Noble Energy Incorporated to ramp up their budgetary spending by 60% . Hess in particular is bullish on the Bakken in North Dakota with a $2.25 billion budget for 2017. Noble Energy will spend $2.5 billion – a 67 percent jump from last year’s $1.5 billion budget. On top of this, Noble plans to purchase Clayton Williams Energy based in the West Texas Permian for $2.7 billion, giving Noble another 4,200 prospective wells on 120,000 acres. In other words the spigot has been opened, and more rigs and workers are being […]

No Stopping Texas Shale Boom as Permian Fever Spreads to Pipes

25 Jan 2017   Shale Oil

The Permian Basin land rush is spreading to oil and gas pipelines. Plains All American Pipeline LP said it will expand its crude oil gathering system in America’s hottest shale play through a $1.2 billion purchase from Concho Resources Inc. and Frontier Midstream Solutions LLC. The Alpha Crude Connector System is located in the oil-rich northern portion of the Permian’s Delaware Basin and will serve to expand the volume that the company is able to move from West Texas to Corpus Christi and other delivery points, Plains said Tuesday. The deal is the latest of many in the Permian, the largest and most prolific oil field in the U.S., as its crude-soaked layers of rock have delivered good returns for producers even during the market crash. On Monday, Targa Resources Corp. agreed to buy a set of pipelines in the region from Outrigger […]

BHP Lifts Shale Spending as Oil Gains Lure Drillers to Add Rigs

25 Jan 2017   Shale Oil

BHP Billiton Ltd. , the largest overseas investor in U.S. shale, boosted spending on its onshore oil and gas division as rising prices lure drillers to add rigs and spur a deals spree. The company boosted spending on the unit to $165 million in the three months to Dec. 31, from $108 million the previous quarter, according to a BHP statement Wednesday. It also boosted overall planned petroleum exploration spending by 17 percent to $820 million for fiscal 2017 after its successful bid for Mexico’s Trion field and positive drilling results in the Gulf of Mexico. The oil industry is expected to raise spending for the first time in three years after slashing almost half a million jobs globally during the downturn, industry consultant Graves & Co. said this month. Projects in BHP’s petroleum division will account for about half of its capital expenditure over the next five years, […]

Shale revival looms over oil prices and spreads

25 Jan 2017   Shale Oil

Saudi Arabia’s energy minister has predicted production cuts by OPEC and non-OPEC countries will reduce global oil inventories by 300 million barrels by the middle of 2017. Six months of full compliance with the agreement would cut inventories to their five-year average and make any extension of the accord unnecessary, according to Khalid Al-Falih. Crude exporters have been talking up compliance with the pact over the last two weeks to validate market expectations and steady prices. But traders have become more wary as the initial surprise from the ambitious OPEC and non-OPEC deals fades and the market becomes more watchful. The focus has shifted to questions of compliance and the resurgence of shale production in the United States (“U.S. shale oil and gas sector surges back to life”, Reuters, Jan. 23). SOFTER SPREADS Spot crude prices have stalled since the middle of December and calendar spreads have been weakening […]

Halliburton Leaves Investors Wanting More in U.S. Shale Recovery

24 Jan 2017   Shale Oil

Halliburton Co.’s return to profitability in North America wasn’t enough to satisfy investors hungry for faster growth in its biggest market. The world’s top provider of fracking services failed to keep up with the rapid growth in the shale patch last quarter. North America’s drilling revival is leading the oil industry’s recovery, with shale explorers seen increasing spending four times faster than the global average this year. While the number of rigs drilling for oil and gas in the U.S. and Canada has more than doubled since May, and grew 19 percent in the last three months of the year, Halliburton’s revenue in the region rose just 9 percent from the previous quarter, according to an earnings report Monday. The shares fell the most in more than four months. “We expected them to grow a little bit more with the rig count,” Rob Desai, an analyst at Edward Jones […]

Saudi Oil Minister Shrugs At U.S. Shale Recovery

When OPEC decided not to cap output in 2014, flooding the market with oil, it was trying to drive higher-cost producers – most notably U.S. shale – out of profitability range. It succeeded in contributing to the oil glut, collapsing the oil prices, and hurting many U.S. shale plays and producers who were waiting for better times before returning to activity. However, this strategy spectacularly backfired on OPEC’s biggest producer and de facto leader Saudi Arabia, which started to book budget deficits amid the low oil prices, with deficit an unthinkable concept five years ago. The recent U-turn in OPEC and Saudi strategy – cutting back output to try to draw down oversupply and prop up oil prices – comes with a caveat: at higher oil prices, higher-cost producers – U.S. shale in particular – have more economic reasons and profit-making motivation to increase drilling and M&A activity. And […]

Has OPEC Seriously Underestimated U.S. Shale Dynamics?

21 Jan 2017   OPEC, Prices, Shale Oil

Oil was flat this week as rising U.S. shale production and a bearish inventory report continued to put pressure on WTI and Brent. Crude oil inventories rose by another 2.4 million barrels, gasoline stocks jumped by nearly 6 million barrels, and upstream production figures provided further evidence that U.S. shale output is coming back is already here in the form of a huge rig count increase . Oil price to fall below $50 if OPEC fails to deliver. A new CNBC survey of energy forecasters finds that experts believe that oil prices will fall from today’s levels if the […]

‘Permania’ grips the US shale oil industry

20 Jan 2017   Shale Oil

They call it “Permania”. The Permian Basin of western Texas and eastern New Mexico has become the hottest region in the US shale oil industry, for drilling, for production and for dealmaking. The region was already in high demand for acquisitions last year, and a couple of deals this week with a combined value of almost $10bn have confirmed that Permian assets are still the most sought-after for companies seeking to increase their US oil production. Asset prices have been bid up to the point that some observers are starting to ask if they are unsustainable. As one respondent to a recent survey for the Federal Reserve Bank of Dallas put it: “Permian transactions are approaching price multiples associated with a bubble or a Ponzi scheme”, reminiscent of the property boom of the early 1980s or the technology bubble of the 1990s. As in the dotcom bubble, there is a technological revolution underlying the inflation of asset prices. Spurred by the slump in crude prices that began in 2014, shale oil producers across the US have been cutting costs and boosting productivity. The Permian region has weathered the downturn the best. Since April 2015, oil production has dropped 19 per cent and 37 per cent respectively in the shale areas of Bakken in North Dakota and Eagle Ford in south Texas, according to the US Energy Information Administration. However, in the Permian it has risen 14 per cent.

U.S. Shale To Put A Firm Cap On Oil Prices

19 Jan 2017   Shale Oil

The latest Drilling Productivity Report released by the Energy Information Administration has shown that crude oil output in the shale patch will continue rising next month, with the Permian accounting for most of the increase. In February, oil wells in the Permian will yield 53,000 barrels more than thins month, far ahead of the second contributor to the rise, Niobrara, where crude oil output should go up by 13,000 bpd. Just one more play will likely register an increase in oil production, albeit small: the Marcellus shale, where output should rise by 1,000 bpd. The rest of the shale oil patch will experience declines in production, including Bakken, which will see the greatest decline, at 20,000 bpd; Eagle Ford, where the decline is expected at 3,000 bpd; and Utica, where production is seen to fall by 3,000 bpd. Oil output in Haynesville will see no change in February. The […]

Shale Rebound Will Cramp OPEC’s Style

19 Jan 2017   OPEC, Shale Oil

The Energy Department gave oil bulls a sobering reminder Tuesday: Shale oil production is rising strongly, particularly from the Permian Basin in western Texas and New Mexico. Putting an exclamation point on that resurgence, energy giant Exxon Mobil hours earlier announced a multibillion-dollar acquisition that doubled its exposure to that prolific oil patch. Is this making petrostates nervous less than a month into a coordinated push to revive oil prices by restricting supply? Speaking the same day at the World Economic…

IEA Sees Significant Gains in U.S. Shale Oil as Prices Rise

18 Jan 2017   Shale Oil

Oil-price gains will trigger a “significant” increase in U.S. shale output as OPEC and other producers rein in supply, according to the head of the International Energy Agency. “U.S. shale-oil production will definitely react strongly,” Executive Director Fatih Birol said Wednesday in a Bloomberg Television interview in Davos, Switzerland. At $56 to $57 a barrel, “a lot of shale plays in the United States would make perfect sense to produce.” Birol’s comments suggest that the IEA has become more optimistic about the outlook for U.S. production. Last month, the Paris-based agency said it expected U.S. tight oil — as shale is also known — to rise only “marginally” in 2017. The policy adviser to 29 nations will release its next short-term oil outlook on Thursday. Oil prices have risen about 20 percent since the Organization of Petroleum Exporting Countries reached a deal to curtail supply last year. The Nov. […]

U.S. shale oil output set to grow in February as prices rise

18 Jan 2017   Shale Oil

U.S. shale production is set to snap a three-month decline in February, the U.S. government said on Tuesday, as energy firms boost drilling activity with crude prices hovering near 18-month highs. The month-on-month increase in production would be the first since October and the third rise in a year, according to the U.S. Energy Information Administration’s drilling productivity report. February production will edge up 40,750 barrels per day (bpd) to 4.748 million bpd, the EIA said. In January, it was expected to drop by 5,900 bpd. In the Permian Basin in West Texas and eastern New Mexico, output is set to rise by 53,000 bpd to 2.180 million bpd, the data showed. North Dakota’s Bakken oil production was set to drop by 20,000 bpd to 978,000 bpd. Eagle Ford oil output from Texas […]

U.S. oil and gas industry has turned the corner: Kemp

18 Jan 2017   Shale Oil, USA

U.S. petroleum producers are looking forward to better times in 2017 as the industry has passed the low-point in the cycle and embarked on the road to renewed expansion. Domestic oil and gas production hit a trough in the first half of 2016 and showed signs of rising in the second half as drilling picked up in response to higher prices. U.S. oil output was essentially flat between July and October 2016, after sliding between April 2015 and June 2016. Gas output also held steady between July and October, after declining earlier in the year, according to the U.S. Energy Information Administration. The downward trend in oil and gas output has been arrested by a significant upturn in the number of rigs drilling onshore, especially in West Texas. The number of rigs drilling oil-rich formations across the United States has risen by more than 200, or 65 percent, from […]

Exxon Mobil to Buy Permian Basin Land From Bass Family for More Than $5.6 Billion

18 Jan 2017   Shale Oil

Exxon Mobil Corp. said Tuesday that it was buying land in the much sought after Permian Basin region from the Bass family for $5.6 billion in stock and up to $1 billion in contingent cash payments. Exxon Mobil is buying companies owned by the oil family closely associated with Fort Worth, Texas, that have an estimated potential for 3.4 billion barrels of oil equivalent production, including in New Mexico’s Delaware Basin, an area…

ExxonMobil buys drilling rights in big bet on US shale

18 Jan 2017   Shale Oil

ExxonMobil has placed a big bet on US shale oil, agreeing a deal worth up to $6.6bn to buy companies with drilling rights on about 250,000 acres in the Permian Basin region of Texas and New Mexico. The deal, which is worth $5.6bn in Exxon shares plus up to $1bn more in cash, is the company’s largest since the $41bn acquisition of XTO Energy, agreed in 2009. It is also the first big decision for Darren Woods, the new chief executive who took over from Rex Tillerson at the end of last year. Exxon is buying a package of companies from the Bass family of Fort Worth, Texas, which was identified by Forbes magazine as one of the 30 richest families in the US in 2015, controlling an “intensely private fortune”. The deal is the clearest indication yet of how Exxon and other large US oil groups have shifted their attention from large multibillion-dollar projects to more flexible developments where individual wells are much less expensive. The acquisition will double Exxon’s resource base in the Permian region to about 6bn barrels of oil equivalent. The deal is also the latest example of the intense interest from oil producers in the Permian region, which holds a number of different shale layers including the Wolfcamp, Bone Spring and Spraberry formations.

Noble Buys Clayton for $2.7 Billion to Expand in Permian

17 Jan 2017   Shale Oil

Noble Energy Inc. agreed to buy Clayton Williams Energy for $2.7 billion in stock and cash to expand in America’s hottest shale play. The combination will create the second-largest acreage position in the Southern Delaware Basin of the Permian shale formation, Houston-based Noble said in a statement Monday. The deal provides more than 4,200 drilling locations on about 120,000 net acres, with resources of more than 2 billion barrels of oil equivalent, Noble said. The Permian has been a hot spot for deals because it’s one of the few areas in the world where producers managed to make a profit during the downturn. While crude prices rallied last year thanks to an OPEC-led agreement to ease a global supply glut, they’re at half their peak level in mid-2014. Shareholders of Clayton Williams, based in Midland, Texas, will receive 2.7874 shares of Noble’s common stock and $34.75 for each share […]