The Weekly Oil and Gas Update

The Weekly USA Oil & Gas Update: 17th November 2015

Todd Erickson
Contributor: Todd Erickson
Posted: 11/16/2015

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

Select states

This Week

Change from last week

3 months ago

One year ago

Alaska

13

0

12

8

Arkansas

4

0

4

12

California land

10

-2

12

45

Colorado

32

-1

38

75

Kansas

10

0

12

27

Mississippi

7

0

4

12

N. Louisiana

29

+1

28

32

New Mexico

38

+1

52

99

North Dakota

62

-1

69

181

Ohio

20

0

19

46

Oklahoma

85

+2

103

207

Pennsylvania

28

0

38

53

Texas

338

-2

389

902

Utah

5

0

4

23

West Virginia

16

0

18

32

Wyoming

24

0

24

62

Total US

767

-4

884

1928

Total Canada land

176

-8

204

401

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

40.53

38.22

77.43

Brent

43.50

41.59

82.90

Natural Gas-USD/mmbtu

NYMEX Henry Hub

2.39

2.65

4.18

General News

IEA says crude oil price to remain below $80 until end of 2020

Despite the continued decline in production investments, oil will stay lower for longer than most expected, largely because of declining rate of demand says the International Energy Agency. Even as prices recover, the IEA expects declines in production to be most pronounced with higher-cost producers in Canada, Brazil, and the US, with declines offset by supply growth in Iraq and Iran. This puts the majority of exports back into the politically-unstable Middle East. "We have to think carefully about the oil security implications of a very few number of countries exporting a big chunk to the global markets along," said Fatih Birol, executive director of the IEA. Article here

Iraq offering discounts to US refiners on its crude

US crude oil production has dropped by almost 500,000 bpd since June, and the gap appears to be getting filled by tankers arriving from Iraq, one of the world's lowest-cost producers. This may be more than a one-time event. "In the longer term, we expect the US to have to increase imports next year by some 500,000 barrels to 800,000 barrels a day year on year," said refining consultant Steve Sawyer. "Given our projections for Iraqi output, it could well come from here." The Iraqis are capturing this business by discounting $5.85 off benchmark prices in November. "It's being discounted so US Gulf Coast refiners are more incentivized to take it," said oil analyst Dominic Haywood. Article here

Unconventional Oil & Gas News

Permian Basin edges out Bakken and Eagle Ford as premier US shale oil producer

Although output across the US has been declining since the crash in crude oil prices, and the corresponding fall in E&P investment, the Permian is faring better than the other leading shale plays. The US Energy Information Administration believes oil production will be down 12% in the Bakken by December from its peak in the previous year, and the Eagle Ford to decline by 25% from its peak in March, while the Permian is expected to be down just 1% from its level in September. "The Permian is, in my humble opinion, the basin that keeps on giving," said Anadarko's SVP for international exploration Ernest Leyendecker. The rig count in the Permian has fallen less than the other leading plays, primarily because producers believe it still has productivity gains to be wrung out. "The Permian basin is in the second or third inning, where the Eagle Ford and the Bakken are in the sixth or seventh inning said Pioneer's CEO Scott Sheffield. Article here

Environment and Safety News

California's Kern County streamlines permitting process

The county hosts a vast majority of the state's drilling and production activity, yet had no previous permitting process, relying on a hodgepodge of uncoordinated state agencies. The new process puts Kern County in charge as the lead agency, streamlining the process while adding a comprehensive environmental review, including 88 mitigation measures. Although the higher level of review makes the permit process more expensive, it also reduces the risk of permit rejection. Suzanne Noble of the Western States Petroleum Association believes the extra cost will be worth it. "The 30-some companies that we represent for this project have accepted a tremendous [amount] of new costs as well as new requirements in order to obtain economic certainty. And you obtain that through a streamlined permitting process, which we achieved here today." Article here

Mergers and Acquisitions News

Major producers have half-trillion dollars available for takeovers
According to data compiled by Bloomberg, the top six major producers have a combined total of half a trillion dollars in cash and stock they could use for potential acquisitions. Leading the list is ExxonMobil, with a total of $320 billion, followed by Chevron $65 billion and PB with $53 billion. Speculation of possible mergers or acquisitions was high after Anadarko's bid for Apache was withdrawn last week, and now both companies are takeover targets. Article here

Todd Erickson
Contributor: Todd Erickson
Posted: 11/16/2015

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