The Weekly Oil and Gas Update

The Weekly USA Oil & Gas Update: 13th January 2015

Todd Erickson
Contributor: Todd Erickson
Posted: 01/12/2015

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

Note - Baker Hughes provided no updates from the previous week

Select states

This Week

Change from last week

3 months ago

One year ago

Alaska

11

+2

9

10

Arkansas

13

+2

11

11

California onshore

21

0

43

32

Colorado

65

-1

76

59

Kansas

26

-3

25

30

Mississippi

14

0

17

7

N. Louisiana

29

+1

31

25

New Mexico

95

-6

102

81

North Dakota

162

-7

182

168

Ohio

47

+1

42

35

Oklahoma

206

-3

211

183

Pennsylvania

51

-2

55

55

Texas

810

-30

896

825

Utah

18

-5

24

25

West Virginia

28

0

32

34

Wyoming

50

-5

62

54

Total US

1750

-61

1930

1754

Total Canada land

362

+158

420

476

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

46.84

82.76

91.45

Brent

48.55

84.42

108.02

Natural Gas-USD/mmbtu

NYMEX Henry Hub

2.86

3.69

4.19

General News

Rig count plummets by 61 last week

According to Baker Hughes, the US rig count last week fell to its lowest since November 2013. Most of the drop came from rigs directed at crude oil targets, with horizontal rigs falling by 35. Barclay's, in its Spending Outlook released on January 9th, said it expects the North American rig count to bottom out in the fourth quarter, dropping 500 rigs over the course of the year. Of course, no one knows where this is going for certain, but if crude prices remain depressed, rig counts dropping another 500 will not be unexpected. Article here

New North Dakota refinery start-up delayed until Q2

The brand-new refinery being built in a joint venture between MDU and Calumet was slated to start up on December 31st, but severe weather and delays in finishing the electrical and controls will push this off until the second quarter of 2015. "Although we are disappointed in the delay and cost increase at the refinery, we anticipate good returns from this facility," said David Goodin, president and chief executive of MDU Resources. The 20,000 bpd refinery takes locally-sourced crude from the Bakken and refines it into diesel for the local market. Article here

Bernstein analysts believe crude prices will recover by end of year

According to Bernstein's Hong Kong-based analysts, historically price crashes in crude oil typically take five to nine months to hit bottom, with recoveries between 5% and 135% seen a year later. We are six months into the current slump, which indicates it may be nearing bottom. "Oil prices are bottoming out, but we need to see more evidence of supply cuts and a demand response to lower prices before we can categorically call the bottom," the analysts said. Once rebalanced, Bernstein believes prices for crude oil will rise into the triple digits again, probably by 2017. The short term may be a rocky ride, however. "We believe that the next two years will be extremely challenging years for the service industry with offshore service providers the worst affected," they said. Article here

Unconventional Oil & Gas News

Halcon cuts capex budget again in response to falling crude prices

The company spent $950 million in 2014, but has only budgeted $375 million to $425 million this year. Halcon will run two rigs in the Bakken and one in the Eagle Ford this this budget, down from six it had budgeted before falling commodity prices prompted it to cuts spending. Article here

Environment and Safety News

Colorado regulator approves increase in fines for violations

The Colorado Oil and Gas Conservation Commission can now fine offending violators up to $15,000 per day, a 15-fold increase over the previous daily amount. The new rules also eliminate the previous $10,000 cap on fines. "This marks a considerable change in the way we do business," said Matt Lepore, director of the commission . "Toughening major penalties for violators is an important component of our ongoing efforts to strengthen our oversight, enforcement and compliance program." The Colorado Oil and Gas Association, an industry group, supports the new rules. "Overall, we're on the same page with the COGCC and have the same goal, which is to ensure consistency, clarity and certainty as to how the new rules will be enforced, how penalties will be calculated, and how both will applied to all stakeholders," said spokesman Doug Flanders. Article here

Mergers and Acquisitions News

SM Energy to sell assets to focus on Bakken and Eagle Ford

According to a report by The Bakken Magazine, SM Energy will sells its natural gas focused assets in East Texas, Northern Louisiana and Oklahoma and invest the proceeds into its crude oil acreage in North Dakota and Texas. According to Chief Executive Officer Tony Best, "[w]e had a strong 2014 driven by outstanding well results across the company. This was particularly true in our core Eagle Ford and Bakken/Three Forks development areas where, as previously disclosed, we have economic drilling inventory equating to over 20 years of current company production and 10 years of gross locations at our current pace." Article here

Todd Erickson
Contributor: Todd Erickson
Posted: 01/12/2015

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