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The Weekly Oil and Gas Update

The Weekly USA Oil & Gas Update: 10th February 2015

Contributor: Todd Erickson
Posted: 02/08/2015
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The Oil & Gas Weekly is compiled by Todd Erickson. Todd is a veteran executive manager in the North American E&P market.

He has management experience in high-growth oil & gas service organizations performing a leadership role in operations, strategy, and corporate development with a track record of identifying opportunities and best-practices, creating execution plans, then developing effective teams and leaders to execute them.

Learn more about Todd here

Rig Counts - select states with key plays

Select states

This Week

Change from last week

3 months ago

One year ago

Alaska

10

0

7

11

Arkansas

12

0

12

12

California onshore

14

0

44

31

Colorado

55

-8

75

62

Kansas

18

-4

28

32

Mississippi

8

0

14

8

N. Louisiana

33

+2

31

25

New Mexico

78

-9

96

80

North Dakota

132

-11

181

168

Ohio

39

-2

41

39

Oklahoma

176

-7

208

185

Pennsylvania

54

0

56

54

Texas

654

-41

906

845

Utah

12

-2

22

26

West Virginia

19

-4

31

29

Wyoming

42

0

61

52

Total US

1456

-87

1925

1771

Total Canada land

377

-14

410

619

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

52.31

75.64

100.12

Brent

58.02

76.86

110.18

Natural Gas-USD/mmbtu

NYMEX Henry Hub

2.68

4.26

8.15

General News

Industrial natural gas use to grow by 2% in 2015

According to industry analyst Bentek, 166 gas-consuming industrial facilities were built over the last year, mostly in the eastern US. These will add just under 230 MMcf/d to aggregate demand, or about 2% more than last year. The build rate will be even higher this year; Bentek expects 162 new facilities to come online just in the first quarter of 2015. According to Bentek, demand is driven by plants that burn gas as fuel and facilities such as fertilizer plants that use natural gas as feedstock. Article here

Weatherford International to cut 5,000 jobs

The job cuts represent about 9% of the company's workforce, with most of the cuts in the Western Hemisphere. "Due to the quickly changing market conditions, we are aligning and reducing our cost as well as organization structures to match the new environment" the company said in a statement. With these cuts, and a reduction in its capex from $900 million to $550 million, the company expects to offset any reduction in earnings this year. Article here

Most North Dakota producers plan no layoffs of staff

It appears that most of the big players in North Dakota expect crude prices to rebound some time soon. The region's largest operator, Whiting Petroleum, said it has no plans to lay off any of its 507 North Dakota employees. Similar announcements have come from the other major producers, including Hess, Statoil, EOG and Oasis. Part of the motivation may be the difficulty in finding qualified employees in the state, so producers are willing to incur short-term costs in able to hold on to their good people. Article here

Unconventional Oil & Gas News

Permian takes the biggest hit as rig counts continue to drop

Of the 83 oil-directed rigs lost last week, 37 came from Texas' Permian Basin. Over the last 9 weeks, the US has lost 435 rigs, with the Permian has been hardest hit. "The drop this week was absolutely substantial," said consultant James Williams. "I'm actually surprised it's dropping this fast. A lot of companies are strapped for cash, their balance sheets and income statements do not look good and they're bailing out of new projects as fast as they can." The price drops have been largely driven by the success in US drilling over the last five years. OPEC is fighting back though, increasing its discount to targeted regions last week as it continues to maintain its production levels in an effort to increase market share. Article here

Environment and Safety News

Iowa environmental groups gear up to fight Bakken pipeline

Energy Transfer Partners has proposed building a 570,000 barrel per day pipeline to take crude oil from North Dakota's Bakken to Patoka, Illinois. National environmental groups opposed to hydrocarbon development are jumping on this as an opportunity hinder development, by organizing local groups. Angie Carter, representative for Women, Food and Agriculture Network said "An oil company is never a good neighbor," which characterizes much of the intransigence of the resistance. Both the Sierra Club and Food and Water Watch have representation behind the local environmental groups. "This project has no benefit to Iowa, and in fact damages our land, our water and our people," said Wallace Taylor, lawyer for the Sierra Club. Energy Transfer Partners says the project will have a $1.1 billion benefit to Iowa during the two years of its construction and employ 7,600 workers for a year, and ipelines are also widely acknowledged as the safest way to transport crude oil. Article here

Mergers and Acquisitions News

Low crude prices will drive merger and acquisition activity in 2015

In a recent report, the consulting firm AT Kearney said falling prices and OPEC's intent to continue production levels will drive M&A activity over the next 6 to 12 months as smaller firms with weaker balance sheets sell assets to stay afloat. "The window of opportunity may be shorter than expected and will be driven by Oil price expectations. Those companies with strong cash flow and healthy balance sheets will be able to leverage opportunities, while others will need to define strategies just to survive," said Richard Forrest with AT Kearney. Article here

Contributor: Todd Erickson