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The Weekly Oil and Gas Update

The Weekly USA Oil & Gas Update: 29th July 2014

Contributor: Todd Erickson
Posted: 08/04/2014
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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

6

+1

9

12

Arkansas

11

0

11

13

California onshore

41

-4

38

40

Colorado

68

-1

64

68

Kansas

27

-3

31

23

Mississippi

15

0

13

12

N. Louisiana

27

-2

27

24

New Mexico

95

+1

90

76

North Dakota

177

-1

176

170

Ohio

43

0

35

35

Oklahoma

209

+5

195

168

Pennsylvania

54

+1

58

51

Texas

904

+18

892

851

Utah

25

-2

27

30

West Virginia

27

0

28

38

Wyoming

50

-2

49

52

Total US

1889

+6

1854

1782

Total Canada land

389

-3

162

337

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

97.57

100.89

106.61

Brent

104.58

108.37

109.81

Natural Gas-USD/mmbtu

NYMEX Henry Hub

3.82

4.52

3.33

General News

Wood Mackenzie says Eagle Ford tops in capex, Bakken second and Wolfcamp third and growing

The Eagle Ford will see $26.9 billion in capex this year, leading US oil & gas plays, the Bakken follows with $15.3 billion in capex, and the west Texas Wolfcamp play, with portions in the Permian and Delaware basins, will see more than $13.9 billion invested this year. Wood Mackenzie says that the Wolfcamp is just getting started, and will pass the Bakken's capex by 2017 to take second place in total tight oil spend. As a result of this investment, expect to see total production in the Wolfcamp play to rise from its current average of 200,000 bpd in 2014 to 700,000 bpd by the end of the decade. Stacked pay zone development is driving most of this increase, according to Wood Mackenzie's analysis. Article here

Unconventional Oil & Gas News

EIA recognizing Utica as a major gas play

According to a recent report by the Energy Information Administration (EIA), the Utica shale's early results producing natural gas mirror those of the Eagle Ford, and slightly exceed the Haynesville's. This level of success has prompted the EIA to add the Utica region to its monthly report which includes the country's six most prominent regions. A key takeaway from the report: although Utica overall production is still modest compared to the Marcellus, per-rig production is much higher. "Although Utica producers are currently very much in an experimental and exploration phase now, producers are entering the Utica with experience gained in producing from other major shale gas plays," the EIA says, which has translated to high capital efficiency. Article here

Environment and Safety News

Wyoming DEQ proposing new air emissions rules in Pinedale

In the western Wyoming town of Pinedale, oil and gas development has contributed to creating a non-attainment zone for EPA air quality standards. Although sparsely populated, unique meteorological conditions and oil & gas activity have combined to raise ozone to unacceptable levels. To combat this, years ago the state's DEQ enacted some of the country's strictest air emissions regulations in the industry. The problem has not been solved though, and the state is revisiting the rules, but getting pushback from all sides. Environmental groups want stricter standards, while industry groups are saying the proposed standards don't provide enough information about the cost of the compliance or the emissions reductions that they would achieve. Article here

Mergers and Acquisitions News

Apache to sell foreign LNG interests to focus on US onshore

The company announced its plans last week to sell its interests in the Wheatstone LNG project in Australia and the Kitimat LNG project in Canada. The sale will enable it to focus capital and energy on the booming US shale market. CEO Steve Farris told analysts on Friday that "[i]n our opinion, it makes sense that we reduce the size of our international assets," noting that the company's North American and international units "are two different businesses." Over the last year, Apache has sold over $10 billion in assets to focus on more profitable and predictable shale oil plays. Article here

Hess to spin out its North Dakota midstream assets to MLP

Following the growing trend among upstream companies in the US to separate their midstream assets, Hess will take its midstream assets in North Dakota, including a large gas processing plant, pipelines, and crude oil rail-loading terminal and spin them off as a Master Limited Partnership (MLP). This form of ownership offers tax advantages over traditional corporations, that along with lower perceived risk from recurring revenue streams typically produced by midstream assets, provides higher valuations from investors. Hess plans to launch the MLP in Q1 of 2015. Article here

SM Energy buys Baytex assets in Bakken for $330 million

The transaction included 61,000 net acres in Divide and Williams Counties producing 3,200 boe/d. Baytex will use the proceeds to pay down debt incurred from its Eagle Ford acreage acquisition from Aurora Oil & Gas earlier this year. Article here

Contributor: Todd Erickson