Tag Archives: oil & gas

Behavioral finance in oil and gas – Oil & Gas Financial Journal

WHY DO EXPLORATION and production companies make more acquisitions, buy back more stock, and invest more in growing and developing their reserves when the commodity price is high and these uses of capital are at their most expensive levels? Why do they lever up at the top of the cycle when there seems to be more downside than upside? These actions seem at odds with the rational concept of “buy low and sell high.” Can behavioral finance explain these seemingly irrational behaviors?For over half a century, business school students have been trained in the efficient market hypothesis which asserts that investors cannot “beat the market” because the stock market is so efficient that share prices reflect essentially all available information at all times. In their economics classes, these students have been taught how investors always make rational decisions that are in their best self-interest. Given the volatility in the oil and gas industry, many undoubtedly wonder how efficient the market is and how rational investors are. How do we explain the apparent market inefficiency and irrational behaviors?

Source: Behavioral finance in oil and gas – Oil & Gas Financial Journal

Permian and Eagle Ford lead US crude output higher

Houston, 15 May (Argus) — US shale crude output is expected to rise by 122,000 b/d to 5.4mn b/d next month, according to new data from the US Energy Information Administration (EIA).The largest increases will be in the Permian basin in Texas and New Mexico, and the Eagle Ford in south Texas, the EIA said in its latest Drilling Productivity Report.Permian basin production should increase by 71,000 b/d from May to June to about 2.49mn b/d.Output in the top-producing Permian has been more resilient than in other regions during the downturn in commodity prices because of lower extraction costs. Midstream companies are investing heavily to add takeaway capacity out of the region because of the expected rise in output.Eagle Ford oil production is expected to rise by 36,000 b/d to about 1.28mn b/d in June.

Source: News – Argus Media

EOG’s Eagle Ford Golden Era May Be Close To Ending – Seeking Alpha

EOG posted a profit for the first quarter of the year, accomplishing a relatively rare feat in the shale patch. Given its reputation as a top operator it was expected.

Its Eagle ford acreage, which helped earn its reputation, is now showing signs of deterioration in terms of quality as the Eastern part is saturated, while Western part is inferior.

EOG is working to move away from over-dependence on Eagle Ford, increasing presence in currently popular areas like the Delaware basin. It remains to be seen whether it will help.

This was not unexpected, given that other companies involved in shale announced an operating profit for the first quarter of the year. One such company that I just covered was Chesapeake (NYSE:CHK), which is generally not thought of as one of the best in the shale patch. The fact that EOG (NYSE:EOG), which developed a reputation in the shale patch as one of the best, announced a profit did not surprise me. If there is anything to be surprised of here is the fact that the operating profit was only $108 million on revenue of $2.6 billion. Chesapeake by comparison had an operating profit that was double, on similar revenue, as I pointed out in a recent article.

Source: EOG’s Eagle Ford Golden Era May Be Close To Ending – EOG Resources, Inc. (NYSE:EOG) | Seeking Alpha

WildHorse buys Eagle Ford assets for US$625 million

WildHorse Resource Development is acquiring Eagle Ford properties for US$625 million. The assets, comprising 111,000 net acres (449 square km), are being purchased from Anadarko Petroleum and affiliates of private equity firm Kohlberg Kravis Roberts & Co.In 2016, fourth-quarter net production on the acquired properties totalled 7,583 boepd, comprising 72% oil from 386 operated wells. The assets are located in Texas’ Burleson, Brazos, Lee, Milam, Robertson and Washington counties, adjacent to WildHorse’s existing acreage position. The transaction is expected to close on or around June 30, 2017 with an effective date of January 1, 2017.The Houston-based firm said that production on the purchased acreage came from 68 Eagle Ford, 299 Austin Chalk, and 19 Buda-Georgetown operated wells. The acreage is estimated to contain 949 net Eagle Ford locations and 22.9 million boe of proven developed producing reserves, consisting of 73% oil and 88% liquids.“This transformative acquisition presented us with a strategic opportunity to consolidate our acreage position. With a total of 385,000 net acres [1,558 square km], we have built a premier contiguous acreage base, making us the second largest operator in the entire Eagle Ford trend,” said WildHorse’s chairman and CEO, Jay Graham.

Source: Your Oil & Gas News | WildHorse buys Eagle Ford assets for US$625 million