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The Weekly Oil and Gas Update

The Weekly USA Oil & Gas Update: 31st March 2015

Contributor: Todd Erickson
Posted: 03/30/2015

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

12

-3

10

14

Arkansas

9

0

12

12

California land

12

-1

26

38

Colorado

37

-2

69

63

Kansas

13

+1

29

31

Mississippi

3

-2

14

13

N. Louisiana

25

-3

28

26

New Mexico

51

-2

102

88

North Dakota

96

-2

169

178

Ohio

28

0

47

38

Oklahoma

133

-3

209

188

Pennsylvania

51

+1

54

51

Texas

462

-3

852

866

Utah

8

0

23

27

West Virginia

21

0

28

26

Wyoming

28

-1

57

50

Total US

1048

-21

1840

1809

Total Canada land

118

-22

253

296

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

48.27

50.05

101.57

Brent

55.86

51.08

105.95

Natural Gas-USD/mmbtu

NYMEX Henry Hub

2.62

3.22

4.48

General News

Analyst expects 2016 activity to equal 2014, based on cost cuts

According to the recent report by Wood Mackenzie, "Upstream cost deflation: how much could cots of exploration fall?", drilling activity should rebound in 2016 after exploration budget cuts averaging 30% in 2015. WoodMac believes like-for-like costs will fall 19% as operators renegotiate costs with service providers. The cost-cutting will then fuel a return to 2014-level budgets, regardless of lower prices. Article here

Shell hoping to drill in offshore arctic this summer

Although still lacking the necessary approvals, Shell is preparing for drilling this summer in the arctic by moving drilling rigs to the area. "Any final decision to go forward with a 2015 season will depend on successful permitting, clearing any legal obstacles and our own assessment that we are prepared to explore safely and successfully," a Shell spokesman told Reuters. Shell CEO Ben van Beurden said in January that Shell had already spent $1 billion in preparation for the effort. Article here

Unconventional Oil & Gas News

WoodMac - Some shale still profitable at $50 per barrel

According to energy analyst Wood Mackenzie, the US has several tight oil plays that remain profitable even in the current pricing environment. The Springer sub-play in the Midcontinent, the Karnes Trough in the Eagle Ford, and the Nesson Anti-cline in the Bakken generate a 10% IRR at $50 per barrel. The remaining 35 top oil-weighted sub-plays could become economic at $50/bbl with a reduction in drilling and completion costs of 30%, and the prolific Parshall Sanish in the Bakken and the SCOOP Woodford become profitable with just a 5% cost reduction. "Wood Mackenzie believes reductions of this magnitude are achievable as some companies have already announced them," the firm said in a recent press statement. Article here

Environment and Safety News

Senate bill pushes White House to increase crude-by-rail safety

The Obama administration is expected to demand the DOT to increase rail safety by raising standards on tank-car construction and advanced braking systems, but a group of senators don't think this is enough. Lawmakers have introduced a bill that addresses crude volatility; it has been suggested that the higher volatility of Bakken crude is the cause of the recent spate of fires after derailment. "This bill is showing our impatience with the fact that (the White House plan) doesn't include volatility and we think it should," said Senator Maria Cantwell. Article here

Mergers and Acquisitions News

LINN Energy has $2.5 billion to shop for acquisitions

Quantum Energy Partners has pledged $1 billion in equity, and lenders can provide an additional $1.5 billion to enable LINN to acquire additional producing properties. LINN is a $3.7 billion MLP which typically targets mature, producing assets to maximize cash flow. Article here

Contributor: Todd Erickson