The Weekly Oil and Gas Update

The Weekly USA Oil & Gas Update: 28 May 2014

Todd Erickson
Contributor: Todd Erickson
Posted: 05/27/2014

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

+2

17

6

Arkansas

11

-1

12

15

California onshore

47

0

34

39

Colorado

66

+1

62

57

Kansas

32

-2

30

26

Mississippi

10

-2

12

11

N. Louisiana

29

+1

26

21

New Mexico

87

-2

82

75

North Dakota

174

0

168

174

Ohio

39

0

40

32

Oklahoma

191

-4

181

186

Pennsylvania

60

0

52

58

Texas

889

-2

844

840

Utah

27

0

26

34

West Virginia

25

0

27

23

Wyoming

45

0

53

44

Total US

1857

-4

1769

1762

Total Canada land

152

+2

626

130

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

104.31

105.34

94.65

Brent

110.45

111.26

103.77

Natural Gas-USD/mmbtu

NYMEX Henry Hub

4.39

7.09

4.19

General News

Ballot measure on Colorado that could lead to industry ban clears its first hurdle

The ballot measure would allow local government's rules to supersede state regulations, enabling them to ban any specified commercial activity, primarily oil and gas development. Just recently, the Colorado Supreme Court cleared the ballot measure from a challenge that it was over-vague. The next step will be for the measure's sponsor to gather 86,000 signatures, which will put it on this fall's ballot. The spokesman for the group sponsoring the measure, identified as "Lotus", no last name, said "At this point we don't have enough money to pay people but we have volunteers from around 40 cities across Colorado at this point and we've only just begun." In addition to this ballot measure, there are 10 others seeking to give control to local governments to control or limit a variety of oil and gas activities. Article here

Unconventional Oil & Gas News

EIA cuts Monterey Shale estimate for recoverable oil by 96%

Those in the industry who have been watching development efforts struggle in the Monterey Shale were not surprised, but others were floored when the US Energy Information Administration backed off its previous estimate of 13.7 billion barrels of recoverable oil and revised the number down to an insignificant 600 million barrels. Environmentalists have been fighting vociferously with state officials who had seen future development in the play capable of bringing in up to $24 billion in additional tax revenues annually. Now, it appears that there isn't anything to fight over. Industry experts have identified that the Monterey Shale's geology is much more complex than other successful oil plays, making current horizontal drilling and hydraulic fracturing techniques used in other shale plays ineffective in the Monterey. In 2011 when the EIA made its 13.7 billion recoverable estimate, it didn't take this into account, assuming the play could be developed like the Bakken or Eagle Ford. John Staub, an analyst with the EIA said "Our oil production estimates combined with a dearth of knowledge about geological differences among the oil fields led to erroneous predictions and estimates." One might call that an undersstatement. Article here

Noble Energy moving forward in Nevada oil field

The US BLM released the environmental assessment for comment covering Nobles proposed development near Elko, Nevada. Over the next two years, Noble plans to drill 20 assessment wells to see if the play holds economic tight oil deposits. Noble has a substantial acreage position in Nevada of several hundred thousand acres it holds in anticipation of positive results. Perhaps Nevada has the newest shale play. Article here

Environment and Safety News

Continental's CEO warns that the Bakken has no room for any more safety mistakes

Last week at North Dakota's Williston Basin Petroleum Conference, Continental CEO Harold Hamm told attendee's "We can't have any more issues. . . it has to be done in an absolute safe manner. It's going to take all of us." Hamm was referring to the eight accidents involving Bakken crude oil being transported via rail that have occurred over the last year, prompting federal safety officials to look closely at the practice. Hamm believes it would take just one more serious incident for officials to restrict the rail shipments. "If we have anything, they're going to shut us down," he said. "We're in the Crosshairs." Article here

Mergers and Acquisitions News

Sanchez Energy to buy Shell's Eagle Ford acreage

The transaction is part of a broader plan by Shell to sell 700,000 acres in North American onshore operations, as it continues to pull back and lay off workers in this region. Sanchez is paying a$639 million in cash for the acreage. Article here

LINN Energy swaps Permian Basin oil assets with XTO for Hugoton Basin natural gas assets

In the swap, XTO receives 25,000 net acres in the northern Midland core area most prospective for horizontal drilling into the Wolfcamp and Spraberrry development. Linn gets a portion of XTO's interest in the low-decline Hugoton gas field in Kansas, which fits LINN's MLP profile better than crude-oil development acreage. The acquisition puts XTO's total assets in the Permian up to 1.5 million acres. Article here

Todd Erickson
Contributor: Todd Erickson
Posted: 05/27/2014

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