The Weekly Oil and Gas Update

The Weekly USA Oil & Gas Update: 3rd November 2015

Todd Erickson
Contributor: Todd Erickson
Posted: 11/02/2015

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

+1

9

8

Arkansas

4

0

4

12

California land

13

0

11

44

Colorado

30

0

38

75

Kansas

9

+2

7

26

Mississippi

6

0

3

14

N. Louisiana

30

0

26

32

New Mexico

42

+2

54

100

North Dakota

62

-1

70

180

Ohio

20

-1

21

42

Oklahoma

84

-6

107

208

Pennsylvania

28

+1

42

55

Texas

339

-7

375

901

Utah

5

0

4

23

West Virginia

16

-1

17

34

Wyoming

26

0

22

61

Total US

775

-12

874

1929

Total Canada land

190

+1

211

429

Oil & Gas Prices - Bloomberg/EIA

This Morning

12 weeks ago

1 year ago

Crude Oil - USD/bbl

WTI

46.25

44.94

81.26

Brent

48.98

48.30

85.64

Natural Gas-USD/mmbtu

NYMEX Henry Hub

2.25

2.85

3.56

General News

Shell abandons Canadian oil sands project, taking a $2 billion charge

Extracting heavy crude oil from Canada's oil sands is an expensive proposition, with consultants stating it takes a Brent price of $80 a barrel to make the economics of an oil sands investment work. Shell isn't the only company to pull out of the oil sands game; so far this year producers have made 18 announcements about delays or cancellations on other oil sands projects. The current crude oil price below $50 isn't the only challenge for oil sands. Getting the heavy crude to market can be difficult, especially without the Keystone XL pipeline or other major pipelines to key markets. Expect the majors to focus on more economic offshore opportunities instead of oil sands for their large capital projects, at least until prices recover. Article here

Chevron's earnings down, responds by cutting 7,000 jobs

The integrated energy giant had profit increases in its downstream segments but both US and international upstream segments had considerable degradation in profitability. As a result, the company will continue to lower its costs by cutting an additional 7,000 jobs, and lowering its 2016 capex roughly 25% from this year. Article here

Unconventional Oil & Gas News

Some good news: Antero posts gains in both production and profit

The company focuses on natural gas production from the Utica and the Marcellus, and posted an increase of 39% in natural gas production from a year ago, to 1.506 Bcfe/d. The company's profits rose from last year's $204 million in Q3 up to $206 million in 2015's Q3. According to the company's CFO Glen Warren, "[b]oth the overall production growth and liquids production growth were driven by outstanding results in our Utica operations, where we placed 25 wells online during the quarter." Antero also set expectations that Q4 would be flat from the current quarter. Article here

Environment and Safety News

New study shows that benefits of switching from coal to natural gas for power generation understated

Professor Richard Muller, from the University of California, states in his newest research that the environmental benefits of switching to natural gas from coal have been grossly understated. It is well established that burning natural gas to generate power creates about half the air emissions that creating the same amount of power from coal. Some studies have claimed however, that fugitive emissions from methane gas released to the atmosphere can create a greenhouse effect up to 86 times that of CO2, and with a methane leakage rate of 2% or more, the benefits of producing power from relatively clean natural gas are erased. Muller's research shows that leaked methane is not 86 times as potent as CO2, but rather only 11 times. According to Muller, "[l]egacy warming from fugitive methane is minuscule compared to that of carbon dioxide. Average leakage today is far below dangerous levels." Article here

Mergers and Acquisitions News

Anadarko finds itself competing with private equity for deals
According to Anadarko's CFO Bob Gwin, as much as $100 billion may have been raised by private equity group to back as many as 95 management teams hunting for oil and gas assets. The competition is likely driving up the price for distressed assets, as financial buyers look for deals in the market trough. "Where we see ourselves today trying to bid on properties in markets where we have interest, we are being pretty consistently outbid and most oftentimes we're being outbid by private equity-backed management teams," said Anadarko CEO Al Walker. Article here

Todd Erickson
Contributor: Todd Erickson
Posted: 11/02/2015

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