Oil and Gas Investor Magazine - February 2016

Cover Story

Outlook 2016

Crude oil inventories are a wall blocking visibility into when this current downturn will reverse. Investor asked industry analysts and financiers, E&P executives and consultants for their thoughts on when distress will diminish, and how they are positioned in the interim.

Feature

A Whale Of A Deal

Blue Whale Energy CEO Curtis Newstrom has positioned himself and his A&D team as a liaison between U.S. oil and gas assets and potentially billions in Chinese investment capital.

A&D Watch

While analysts say upstream companies are poised to restore power to their A&D engines, service and supply companies will instead be looking for cover. The year 2015 has shown that the days of magical thinking—wishing for something to make it happen—are over.

Bakken Production Remains Within Bounds

Although there are inevitable deviations from the play’s average, production has predominantly stayed within the upper and lower bounds. This trend is likely to change in 2016.

Going Under The Knife

Dividend cuts, asset sales, employee layoffs, project postponements: A reeling industry looks for ways to survive.

Oil And Water

Leading operators are developing best practices for water management on a technical, economic and operating license level to meet public concerns.

Pullback In The Powder

Three private operators in the Powder River Basin discuss the economic dynamics and their plans in the play.

Six For The Turnaround

We asked four energy analysts to share their top picks of stocks primed for upside when commodity prices recover. Here are six upstream players worth watching.

A&D Trends

Greene Light

LOLA is in talks with two kinds of sellers: companies saddled with capital costs that undercut profits, and firms in over their head because of debt that can’t be supported at prevailing commodity prices. In either case, they’ve had to stop drilling.

At Closing

Data Gathering

Finally, Barclays’ annual spending survey said North American E&P capex will fall 26.6% this year, following a 35% decline last year—a 61.6% reduction over two years.

Bright Spots

Meet Toby Deen

At the time of Devon’s purchase, the Eagle Ford assets were in full development mode, producing about 53,000 barrels of oil equivalent per day, with 82,000 net acres and some 1,200 undrilled locations.

Completions

Exits And Entrances

In late 2014, the firm was preparing two companies for sale. Falling crude prices spurred it to take one off the market, and the prospective buyer of the other withdrew after OPEC failed to curtail production.

E&P Momentum

At Long Last, LNG

LNG won’t be a silver bullet for an oversupplied domestic gas market. But it will be one of multiple solutions that encompass electric power generation and transportation, offering hope to domestic gas producers.

From the Editor-in-Chief

When Less Is More

“For the first time in decades (excepting a brief window in 2008-2009), distressed E&P companies may be able to obtain a higher rate of return through unsecured debt repurchases rather than drilling new wells.”

On the Money

Making Ends Meet?

Dividend payment by the majors and other energy producers has at least two effects: one is providing a yield to income-oriented investors; the second, other things being equal, is limiting cash flow that otherwise would be available for reinvestment via the drillbit, acquisitions, buybacks of stock or debt, etc. Simple, but meaningful.