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

Rig Counts - select states with key plays

Oil & Gas Prices - Bloomberg/EIA

General News

Saudi's expect crude prices to stabilize, but believes production cuts should come from non-OPEC producers

In a recent speech in Germany, Saudi Arabia's oil minister Ali al-Naimi said he expected oil prices to stabilize at their current levels, about $60 a barrel right now. He also said that the Saudi's were committed to their current production numbers, and that production cuts to balance supply and demand should come from non-OPEC members. "It makes absolutely no sense for the most efficient producers to be the ones to cut production when we are only 30 percent of the producers," said Naimi. Not all OPEC members agree with Naimi, and non-OPEC producer Russia is especially critical of the Saudi's stance, accusing them of destabilizing the crude oil market. Article here

Unconventional Oil & Gas News

Anadarko to cut capex by 33% this year

The Houston-based company will only spend $5.4 to $5.8 billion this year in capital expenditures, 60% of that focused on shale wells. The cuts will be felt primarily onshore, with land rig activity reduced by 40%, and 125 completions deferred in the Wattenberg field. Anadarko has also agreed to sell $700 million in oil and gas assets. "We don't see value in chasing growth in this environment," said Al Walker, Anadarko's chief executive officer. Article here

Utica Shale profitable at $3/Mcf, according to RBC

Analyst firm RBC Capital Markets released a report on March 5th that said results were improving in the play, especially for smaller producers Antero, Gulfport and American Energy Partners. "Antero's liquids-rich wells were again quite impressive, with 16 new wells averaging 2,284 [barrels of oil equivalent per day] (6% oil)," RBC analysts led by Leo Mariani wrote. Gulfport also had Q4 wells producing 1,367 boe/d with 15% oil and American Energy drilled 8 wells averaging 886 boe/d with 44% oil. Although rig count has recently dropped with lower commodity prices, RBC thinks the rig count is poised to go back up. "We believe it [rig count] will likely start to climb again by late 2015 and continue higher for the foreseeable future given the recent success in the play, our outlook for commodities to rebound, and the need to hold acreage in the play by production. Overall, we think the rig count could increase by at least 25% by [year-end 2016]," said the report. Article here

Environment and Safety News

Another derailment and fire in unit train carrying Bakken crude oil

The BNSF 105-car train derailed near Galena, Illinois on March 5th in a rural area. At least two of the cars burned, with flames reaching several hundred feet high. No injuries or evacuations were reported. Article here

Mergers and Acquisitions News

Wall Street still believes in oil, invests $7.8 billion in last two months

According to Tudor Pickering Holt & Co., the money was invested into 16 separate stock-market equity fund raises for companies including Noble, Newfield, Encana and Oasis. This amount represents the biggest quarterly surge in at least seven years, and more than all 2009. "There was a two to three month window when capital markets were closed because everyone was nervous," said Tudor analyst Michael Rowe. "The message we're receiving is there's more money starting to flow back into energy." Rowe also said that the healthier firms planned to use the capital to gear up for potential mergers and acquisitions in the coming months. Article here