As operators continue to grapple with a $40/bbl oil price environment, many are looking for ways to balance declining production with capital expenditures. In the Permian, a familiar, but perhaps currently under-emphasized story of DUCs and excess backlog has the potential to play a significant role. As oil prices began to rapidly deteriorate in March, operators responded quickly and both completions and drilling activity fell precipitously. However, completions fell faster and further than drilling activity. As a result, the excess backlog of wells in the Permian Basin sky-rocketed from ~350 wells in February to over 2,300 wells by May. Depending on the location of these wells and timing of completions, there is ~1.8 MMb/d of production potential.
https://btuanalytics.com/crude-oil-pricing/1-8-mmb-d-permian-production-potential-from-ducs/
Wednesday, August 5, 2020
Seeking Alpha - Oil: The Market Is In For A Bit Of A Surprise If It Didn't Price In The Incoming Draws
Summary
- WTI finally broke above $42 resistance level after 3 failed attempts.
- Technical analysts suggest this move could push prices to $49/bbl.
- On the fundamental side, while we argued that prices could have already priced in the draws, today's move suggest otherwise. If so, then, the market is in for a surprise.
- We currently have US crude storage falling below ~500 million bbls by the end of August.
- In addition, US oil production has disappointed to the downside. July average is around ~11.3 mb/d, but our leading indicator indicates that August may actually move lower despite more shut-in production return.
World Oil - Range Resources sells Louisiana shale assets at dime-on-the-dollar valuation
HOUSTON (Bloomberg) --Range Resources Corp. is selling its Louisiana shale fields for about one-10th of what it paid for them just four years ago as depressed natural gas prices hammered the heavily indebted driller.
Range agreed to sell the assets acquired in its 2016 takeover of Memorial Resource Development Corp. to Castleton Resources LLC for $245 million, according to statements by both companies Monday. Range stands to reap an additional $90 million in the future, contingent on higher commodity prices.
The $335 million potential total value compares to the approximately $3.3 billion Range originally paid in an all-stock deal for the fields. The biggest-ever deal for Range turned into a bust when the company’s geologists and engineers soured on the quality of the rocks in early 2018.
https://www.worldoil.com//news/2020/8/4/range-resources-sells-louisiana-shale-assets-at-dime-on-the-dollar-valuation?id=31307113
Range agreed to sell the assets acquired in its 2016 takeover of Memorial Resource Development Corp. to Castleton Resources LLC for $245 million, according to statements by both companies Monday. Range stands to reap an additional $90 million in the future, contingent on higher commodity prices.
The $335 million potential total value compares to the approximately $3.3 billion Range originally paid in an all-stock deal for the fields. The biggest-ever deal for Range turned into a bust when the company’s geologists and engineers soured on the quality of the rocks in early 2018.
https://www.worldoil.com//news/2020/8/4/range-resources-sells-louisiana-shale-assets-at-dime-on-the-dollar-valuation?id=31307113
Monday, August 3, 2020
World Oil - Quarterly losses are a reality check for shale producers
HOUSTON (Bloomberg) --Three shale explorers signaled a grim rest of 2020 for the U.S. oil patch just hours after President Donald Trump arrived in the Permian Basin championing “American energy dominance.”
In second-quarter earnings reports published after the close of trading in New York, QEP Resources Inc. cut its production outlook, WPX Energy Inc. further reduced its capital spending budget, while Concho Resources Inc. stuck with plans to keep crude volumes flat from 2019 levels, ending years of growth. QEP shares dipped as much as 20%.
It’s a downbeat reality check for the industry, which is emerging from the worst oil price crash in a generation and another sign that the decade-long, debt-fueled surge of production growth is over.
https://www.worldoil.com//news/2020/7/30/quarterly-losses-are-a-reality-check-for-shale-producers
In second-quarter earnings reports published after the close of trading in New York, QEP Resources Inc. cut its production outlook, WPX Energy Inc. further reduced its capital spending budget, while Concho Resources Inc. stuck with plans to keep crude volumes flat from 2019 levels, ending years of growth. QEP shares dipped as much as 20%.
It’s a downbeat reality check for the industry, which is emerging from the worst oil price crash in a generation and another sign that the decade-long, debt-fueled surge of production growth is over.
https://www.worldoil.com//news/2020/7/30/quarterly-losses-are-a-reality-check-for-shale-producers
Friday, July 31, 2020
Baker Hughes Weekly US Land Rig Count - July 31 2020
For the first week since March 20, the weekly US Land rig count did not decline week over week. The Baker Hughes Weekly Rig Count showed that the US Land Rig Count stayed at 239 rigs. The Permian was down 2 rigs but the Midcon and Bakken each added a rig.
While this is a positive sign that the industry has reached a low point in activity, we will probably be bouncing along this trough for a while. There is a lot of uncertainty about the impact of a second wave of COVID-19 and the weakness in future prices due to OPEC+ supply increases. The market will remain volatile for the remainder of 2020
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| Figure 1: Baker Hughes Weekly US Land Rig Count - July 31 2020 (Source: Baker Hughes) |
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| Table 1: Baker Hughes Weekly US Land Rig Count - July 31 2020 (Source: Baker Hughes) |
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| Table 2: Baker Hughes Weekly US Land Rig Count - July 31 2020 (Source: Baker Hughes) |
Thursday, July 30, 2020
RigZone.Com -Natural Gas Could Blaze Trail for Hydrogen
(Bloomberg) -- For a glimpse into the future of a hydrogen-fueled world, look no further than natural gas and the technology that rapidly transformed it into a global commodity.
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