OGI This Week
The New Normal: The industry is adapting to the low oil prices—acquisitions and mergers will continue, non-acquisition spending will fall and capital spending for the largest plays has been reduced. Ask Your Questions: MLPs are proving trickier to govern and define. Lawyers gave a webinar covering MLP classification and qualifications under guidance by the IRS. Old Is New: Older oil fields in North America could be infused with activity through new fracturing techniques.
Game On: Maersk Group created an online game, “Quest For Oil: A Subsurface Gaming Experience.” Lessons that online gaming can give the offshore oil and gas industry were discussed at the close of this year’s Offshore Technology Conference. Finish Line: E&Ps pulled through first-quarter 2015. Pioneer Natural Resources plans to sell its Eagle Ford midstream business, Apache lost $4.7 billion and Rex increased its production guidance. World View: Lifting sanctions against Iran would bring 1 million more barrels per day of oil onto the market by year-end 2016, but geopolitics are unpredictable.
Debate: Opinions differ on whether refracturing is a cost-effective way to revive old or incomplete wells, or if it potentially weakens offset wells’ value. Economics: E&Ps recently closed a record number of debt and equity offerings, a show of confidence in the industry even as E&P values have eroded. Important: The state of Tamaulipas is Mexico’s most violent—with cartels, kidnappings and theft—but it will also play a pivotal role in development and transit of hydrocarbons.
Prudence: Guarding the balance sheet by cutting costs and shortening drilling times is one strategy some E&Ps are using to combat the downturn. Stable: The oil market remained steady after a brief price spike on news April 28 that Iranians boarded the MV Maersk Tigris cargo ship headed to the Marshall Islands. Discussion: Recapitalization as a strategy for companies was assessed at Hart Energy’s recent Energy Capital Conference.
Beneficial: Recent equity financings have helped E&Ps hold onto their midstream assets, Tudor Pickering, Holt said. Detrimental: Alaska Sen. Lisa Murkowski said the ban on domestic oil exports hurts American producers and consumers. Ideal: Exporting LNG is “in the national interest,” the Department of Energy said according to a white paper from America’s Natural Gas Alliance.
Lead Role: The U.S. could play a greater role in the global oil trade as prices stay low and geopolitics play out, said Tom Petrie of Petrie Partners. Go Green: The “circular economy” of renewables and consumer products minimizing waste and pollution has heft in the environmental movement, said researcher Amy Myers-Jaffe. More Gas: The country’s technically recoverable resource base of natural gas increased 5.5% since 2012, according to the Potential Gas Committee.
Money: More people in industry are concerned about prices than they are about regulations, according to a survey. Impact: A world of oil scarcity has become one of relative oil abundance thanks, in part, to the U.S. shale and natural gas boom, said the CEO of NGP Energy Capital Management. Lull: The Bakken core, with the highest recoveries and lowest breakeven costs, is resting, said a Sterne Agee research analyst.
Bills: Residential energy bills are lower by about $13 billion annually than they were in 2007, a recent paper examining the shale gas boom’s effects on consumers said. Blueprints: Mexico draws up plans for US$10.5 billion in pipeline buildout as the country shifts into privatized oil and gas. Wallets: American consumers have about $165 billion in disposable income—if the savings are annualized—because of lower gasoline prices, said the managing director and chief U.S. economist for Morgan Stanley.
Optimism: Operators at Scotia Howard Weil’s recent conference discussed plans to spur production growth through various methods. Regulation: More than 100,000 oil and natural gas wells—more than 90% using hydraulic fracturing—on public and Native American lands have new rules governing their use and production. Worldview: Jed DiPaolo, senior adviser to Duff & Phelps, views energy commodity prices through the lens of geopolitics, and urges patience and conservative spending.
Support: Lifting the export ban would be “pro-consumer, pro-economy, pro-national security,” said Doug Suttles, CEO and president of Encana Corp., at the recent Vail Global Energy Forum. Uncertain: The EPA’s revised air quality standards for ozone were challenged by industry groups as unsupported by science, redundant and costly. Outlook: A recent oil market report analyzed global demand for crude oil, domestic crude storage capacity and global refinery throughput rates. These combined factors could push U.S. production down toward zero growth by May, the report said.
Incentive: Texas, particularly, could have influence in setting global oil prices if the crude oil export ban is lifted, according to a Texas railroad commissioner. Impact: The smallest projected increase since February 2011, of less than 300 barrels per day of oil, will happen in April, according to the Energy Information Administration. Erasure: Various disruptions from weather to political unrest recently impacted oil supply, as outages wiped out 2.7 million barrels per day.
Money Matters: Few companies were prepared with financial measures, such as explicit return-on-capital targets, before the oil price downturn, a survey finds. Drilling Down: Coiled-tubing fracks are a popular completions method for some geologies, such as sandstone. Pause Button: Clayton Williams could face a drop in production of as much as 10% as it idles some domestic rigs.