Explorers in U.S. oil fields stung by the quick rise and fall in the market last year are expected to move cautiously when crude prices begin to climb again. Bill Thomas, chief executive at EOG Resources Inc., the largest landholder in Texas’s Eagle Ford shale formation, told attendees at an industry conference in Houston on Wednesday that his company won’t start boosting output the first time oil hits $60 a barrel. “We’re going to make sure the market is in good shape, it’s balanced, and we’ve got a future,” Thomas said. “We don’t want to ramp it up and drive the price of oil down again.”
Source: It’ll Take More Than an Oil Rally to Restart Shale Boom – Bloomberg Business
Billionaire Harold Hamm, whose early adoption of shale drilling in North Dakota helped usher in a U.S. energy renaissance, plans to cut spending by 41 percent at his company after the plunge in oil prices.Continental Resources Inc. and other U.S. producers can adjust quickly to the crude collapse and will be able to withstand the downturn better than many producing countries, which face economic “ruin,” Hamm said in an interview.“The oil and gas industry has lowered the cost of gasoline to consumers in this country,” Hamm, chairman and chief executive officer of Continental, said yesterday. “It’s been good for America, this increase in supplies that we have here. We don’t want to see it all go for naught.”Continental (CLR) and rivals including ConocoPhillips and Apache Corp. plan to trim spending and move rigs to more profitable areas while prices remain under pressure. Crude has fallen by almost 50 percent since June to a five-year low as demand forecasts fell amid a glut in supply fed in part by the shale revolution.Saudi Arabia and OPEC allies have declined to cut output to stave off price declines. U.S. prices are expected to average $63 a barrel in 2015, according to the U.S. Energy Information Administration. Photographer: Andrew Harrer/BloombergHarold Hamm, Chairman and Chief Executive Officer of Continental Resources Inc.U.S. producers have trimmed billions from 2015 spending plans as the price decline eroded potential profits from drilling in shale rock, a technological breakthrough that helped boost production to the highest level in almost 30 years.
via Billionaire Shale Pioneer Cuts Spending 41% on Oil Crash – Bloomberg.
The danger of stimulus-induced bubbles is starting to play out in the market for energy-company debt.Since early 2010, energy producers have raised $550 billion of new bonds and loans as the Federal Reserve held borrowing costs near zero, according to Deutsche Bank AG. With oil prices plunging, investors are questioning the ability of some issuers to meet their debt obligations. Research firm CreditSights Inc. predicts the default rate for energy junk bonds will double to eight percent next year. Anything that becomes a mania — it ends badly,” said Tim Gramatovich, who helps manage more than $800 million as chief investment officer of Santa Barbara, California-based Peritus Asset Management. “And this is a mania.”The Fed’s decision to keep benchmark interest rates at record lows for six years has encouraged investors to funnel cash into speculative-grade securities to generate returns, raising concern that risks were being overlooked. A report from Moody’s Investors Service this week found that investor protections in corporate debt are at an all-time low, while average yields on junk bonds were recently lower than what investment-grade companies were paying before the credit crisis.
via The Fed Helped Cause $550 Billion Energy Debt Boom, And Now It Could End In Tears – Yahoo Finance.
Posted in Bakken, Eagle Ford, energy debt, Shale, shale breakeven, Shale Natural Gas, Shale oil, shale oil breakeven
Tagged Bakken, Eagle Ford, energy breakeven, Shale breakeven, Shale Natural Gas, Shale oil, Shale oil breakeven
Oil market analysts are debating if oil will fall to $50. In North Dakota, prices are already there.Crude sold at the wellhead in the Bakken shale region in North Dakota fell to $49.69 a barrel on Nov. 28, according to the marketing arm of Plains All American PAA Pipeline LP. That’s down 47 percent from this year’s peak in June, and 29 percent less than the $70.15 paid for Brent, the global benchmark.The cheaper price for North Dakota crude underscores how geographic and logistical hurdles can amplify the stress that plunging futures prices have put on drillers in new shale plays that have helped push U.S. oil production to the highest level in 31 years. Other booming areas such as the Niobrara in Colorado and the Permian in Texas have also seen large discounts to Brent and U.S. benchmark West Texas Intermediate.
via Sub-$50 Oil Surfaces in North Dakota Amid Regional Discounts – Bloomberg.
Posted in Shale oil, shale oil breakeven, shale service providers, U.S. Shale
Tagged Bakken, Eagle Ford, Permian, shale, Shale breakeven, Shale oil, Shale oil breakeven, U.S. shale
Saudi Arabia has no target for crude prices and will let the market decide at what level oil should trade for now, according to a person familiar with the nation’s oil policy, who asked not to be identified.The comment echoes those made by Oil Minister Ali Al-Naimi, who said Nov. 26 that the oil market will “stabilize itself.” OPEC decided the next day not to cut its oil-output limits, triggering the biggest one-day drop in futures in more than three years.
via Saudi Arabia Said to Have No Price Target for Crude Oil for Now – Bloomberg.
Although OPEC’s decision to maintain current crude production quotas was not entirely unexpected see post, the market reaction was violent. WTI crude fell by 10% over the last two days of the week.At $66 per barrel North American producers have real problems on their hands. While Eagle Ford is still profitable, both Bakken and Permian Basin are in now the red.
via Bakken And Permian Shale Basin In Red – Business Insider.
Houston, Tx has seen significant growth in recent years from the shale boom. A material amount of the companies which have the highest revenues and/or employ the most people in the Houston metropolitan area are in the energy industry or provide services to the energy industry. Many of these companies saw big declines in their stocks on November 28, 2014 after OPEC announced they would not be curtailing production.
Houston Tx Companies Equity Returns Dec 1 2014
Shale producer equities experienced their largest one day decline as a group on November 28, 2014 in reaction to the OPEC announcement from the previous day stating they would not be curtailing production. The OPEC announcement resulted in an over 10% decrease in WTI taking oil down to prices not seen since May 2010 and in 2009.
Shale Play Producer Equity Returns Dec 1 2014
OPEC’s contentious decision to keep its production target, leaving the market with a supply glut, could trigger a wave of debt defaults by U.S. shale oil producers, warn analysts.The 12-member oil cartel on Thursday said it would stick to its output target of 30 million barrels a day, triggering a sharp decline in oil prices, with U.S. crude futures tumbling nearly $6 to $67.75 on Friday – the lowest since May 2010.Neil Beveridge, senior oil analyst at Sanford C. Bernstein, told CNBC the plunge in oil prices raises the risk of bankruptcy for U.S. shale players.
via Will OPEC bankrupt US shale producers?.