The Weekly USA Oil & Gas Update: 25th November 2014

Rig Counts - select states with key plays

Oil & Gas Prices - Bloomberg/EIA

General News

US oil imports lowest rate since 1995

According to the American Petroleum Institute (API), crude production in the US hit its highest level in 4 decades, leading to a 5.3% drop in imports from a year ago. "The supply picture has improved thanks to horizontal drilling and hydraulic fracturing," said John Felmy, chief economist at the API in a recent phone interview. While domestic crude production keeps increasing, consumption has remained flat or even dropped, with the total deliveries of petroleum products slipping 0.2% from a year ago. Article here

Unconventional Oil & Gas News

Dueling reports on the profitability of tight oil in a falling market
Bloomberg New Energy Finance (article here) and IHS (article here) each recently released reports concerning the profitability of tight oil production as prices fall below $80 a barrel. According to IHS's fairly rosy view, 80% of US tight oil plays have a breakeven of between $50 - $69 a barrel. Bloomberg took a less optimistic view, estimating that 19 shale regions don't make money with oil at $75 a barrel, including parts of the Eagle Ford and Eaglebine. "Everybody is trying to put a very happy spin on their ability to weather $80 oil, but a lot of that is just smoke," said Daniel Dicker, president of MercBloc Wealth Management Solutions with 25 years' experience trading crude on the New York Mercantile Exchange. "The shale revolution doesn't work at $80, period." Although some E&P companies have recently announced cutbacks in capex plans for the coming year, the industry has not yet seen any widespread slowdown.

Pace slows down in the Bakken due to rules on flaring reduction

According to North Dakota Department of Mineral Resources Director Lynn Helms, well completions fell from 272 in August to only 176 last month, as producers delayed completion to lower flare rates. According to the Forum News Service, the North Dakota Industrial Commission's mandate to reduce flaring is working, with flare volume dropping down to 24% from 30% earlier this year. Article here

Environment and Safety News

Settlement reached on Colorado's Roan Plateau cancels leases, refunds lease bid payments

Bill Barrett Corporation was refunded $47.6 million in bonus bids and annual lease payments in the settlement that cancels 17 of 19 leases on Colorado's disputed Roan Plateau. The acreage has been considered an area of high importance for wildlife conservation and environmental groups. The deal still enables development on the remaining leases in the area. According to US Senator Michael Bennet, "[o]ur local communities and the leaseholders have worked out this compromise. They've agreed to it because it balances a variety of needs and interests by allowing for some development while also establishing crucial environmental and wildlife safeguards." Article here

Mergers and Acquisitions News

Apache sells natural gas assets for $1.4 billion

The transaction includes 90,000 acres in southern Louisiana and 115,000 acres in the Anadarko Basin in Wheeler County, Texas. Article here

WPX looking to sell Marcellus assets

Under new CEO Richard Muncrief, the company has been high-grading their assets and focusing on the most profitable. "That's one of the fundamental reasons that we're deciding to exit the Marcellus. Our Marcellus acreage simply can't compete with the Williston and with the Gallup (assets)," he said. Likely affecting Muncrief's decision is the $1.50 to $2.00 discount to Henry Hub pricing that Marcellus producers take due to limited takeaway options. Article here