Oil companies continue buying acreage in West Texas’s prolific Permian Basin.This time, it was Denver’s SM Energy, announcing Tuesday it was picking up 35,700 acres in Howard and Martin counties, north and east of Midland, from private-equity backed and Houston-based QStar for $1.6 billion in cash and stock. The deal included 2,400 barrels per day of existing oil and gas production and works out to at least $42,000 per undeveloped acre, analysts said, stacking the purchase up among top prices this year.It’s the second big announcement in a week. Last Thursday, Dallas-based RSP Permian bought Silver Hill Energy Partners, also headquartered in Dallas, and its 41,000 acres for $2.4 billion, or as much as $47,000 per undeveloped acre, according to some analysts.The investment banking firm Piper Jaffray called the purchase another among “transformational acquisitions” this year.The two announcements again show how U.S. oil companies, regardless of the slump in oil prices, are fighting to get into the oil-rich Permian Basin, even as they pull rigs from other fields. They also show how much companies are willing to pay.“The Permian is so hot right now,” said Ben Shattuck, an analyst with the energy research firm Wood Mackenzie. “These are high-water numbers.”The Permian Basin’s two sections, the Midland and the Delaware, are the most competitive markets in the country in tight oil right now, he said.
Source: Oil companies keep paying for Permian land; ‘High-water numbers,’ analyst says | Fuel Fix
Posted in Permian
The biggest player in the Permian Basin, America’s most coveted oil field, thinks rig counts in region are poised for explosive growth.In an interview with Bloomberg, Pioneer Natural Resources Co. Chief Executive Scott Sheffield predicted that 100 oil rigs will be added in the area considered to be U.S. shale drillers’ version of prime real estate over the next year. Bloomberg Intelligence Analysts Vincent Piazza and Daniel Krauser note that Pioneer has the highest gross production of any driller in the Spraberry and Wolfcamp formations in the Texan oil field.The shale revolution sparked a frenzied rise in U.S. crude production that eventually drove oil prices to their lowest level in more than a decade earlier this year. While prices have since recovered, they’ve failed to sustainably hold above $50 per barrel — and any advances may continue to be capped if drillers boost activity in the productive Permian Basin.
Source: The Top Permian Oil Producer Says Rig Counts in the Region Are Going to Soar
Could add 300,000 b/d annual production at $47-$57/b
With crude near $60/b, US may see incremental 500,000 b/d-plus
Eagle Ford, Bakken need $55-$60/b to start production boost
Production in the Permian Basin, the US’ most active oil play, could grow significantly at current or slightly higher prices, but boosting Eagle Ford and Bakken output requires a step change in crude prices, Scott Sheffield, CEO of major Permian player Pioneer Natural Resources, said Thursday.Located in West Texas and New Mexico, the Permian could add 300,000 b/d a year at a $47/b to $57/b WTI price to domestic supply, Sheffield said in webcast remarks at the Barclays 2016 CEO Energy-Power Conference in New York
Source: Permian oil output could grow 300,000 b/d/year at current price range: Pioneer CEO – Oil | Platts News Article & Story
Apache Corp. says it has discovered the equivalent of at least two billion barrels of oil in a new west Texas field that has the promise to become one of the biggest energy finds of the past decade.The discovery, which Apache is calling “Alpine High,” is in an area near the Davis Mountains that had been overlooked by geologists and engineers, who believed it would be a poor fit for hydraulic fracturing. It could be worth $8 billion by conservative estimates, or even 10 times more, according to the company.Apache started acquiring mineral rights in the area two years ago and subsequently discovered its potential. The company then quietly went about locking up more land in the field, believed to be up to 450,000 acres overall. Its position now exceeds 300,000 acres, or roughly two-thirds of the field, and is about 20 times the size of Manhattan.The company has begun drilling in the area and says the early wells, which produce more natural gas than oil, are capable of providing at least a 30% profit margin at today’s prices, including all costs associated with drilling. Some are so prolific that they can break even at a price of 10 cents per million British thermal units, according to the company. Natural gas futures closed Tuesday at $2.72.“This is a giant onion that is going to take us years to unveil and peel back,” Apache Chief Executive John Christmann IV said in an interview. “The industry dogma about this area, all the fundamental premises that most people had about it, were just wrong.”
Source: Apache Has High Hopes for New Oil-Field Discovery in Texas – WSJ
Rystad Energy believes the Permian basin will be the primary catalyst to restore US onshore oil production growth by November.The oil and gas consulting service bases the projection in part on its own data showing US Lower 48 oil production was 120,000 b/d higher in August compared with the US Energy Information Administration’s estimates in its Short-Term Energy Outlook for the month.The upward revisions coincide with increased drilling activity in the Permian, where 62 more rigs have started operations since May 27, according to data published Aug. 26 by Baker Hughes Inc. (OGJ Online, Aug. 26, 2016). The West Texas and southeastern New Mexico basin has accounted for more than two thirds of all US rig count increases during the country’s recent rebound.Rystad notes the Permian’s current horizontal drilling activity is comparable to levels observed during the final three quarters of 2015. Additional completion work on drilled but uncompleted (DUC) wells also has been initiated.
Source: Rystad: Permian to help restore US onshore oil output growth – Oil & Gas Journal
Posted in Permian
A year ago, U.S. oil production topped out at 9.6 million barrels per day. By last month, output had fallen to 8.5 million bpd. More than 10% of supply, lopped off in one year.But Scott Sheffield doesn’t think America’s frackers will be down for long. The CEO of Pioneer Natural Resources said on his quarterly earnings call last week that Pioneer’s 800,000 acres in the Permian basin of west Texas were so economic that “definitely we can compete with anything that Saudi Arabia has.”Sheffield said that Permian production costs had fallen to $2.25 per barrel, a price so low that the region will keep growing no matter how low the price of West Texas Intermediate crude goes. “My firm belief is the Permian is going to be the only driver of long-term oil growth in this country, and it’s going to grow on up to about 5 million barrels a day from 2 million barrels.” That’s enough to replace all our declines, and then some.
Source: America’s Saudi Arabia? Why Investors Are Still Hot On The Permian Basin – Forbes
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
Oil and gas producer WPX Energy Inc. said Tuesday it has agreed to buy the Permian Basin assets of RKI Exploration & Production LLC for $2.35 billion in a deal led by Weil Gotshal & Manges LLP, as the company continues to shift its portfolio to focus on oil.
RKI unit holders will receive 40 million shares of WPX stock in the transaction, with the balance of the purchase price being paid in cash. WPX will also assume $400 million in debt.
Posted in Permian
Posted in Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Uncategorized, Utica
Tagged Bakken, Eagle Ford, Haynesville, Marcellus, Niobara, Permian, Utica
The shale oil boom that turned the U.S. into the world’s largest fuel exporter and brought $3 gasoline back to America’s pumps is grinding to a halt.
Crude output from the prolific tight-rock formations such as North Dakota’s Bakken and Texas’s Eagle Ford shale will shrink 1.3 percent to 5.58 million barrels a day this month, based on Energy Information Administration estimates. It’ll drop further in July to 5.49 million, the lowest level since January, the agency said Monday.
With the Organization of Petroleum Exporting Countries maintaining its own oil production, U.S. shale is coming under pressure to rebalance a global supply glut. EOG Resources Inc., the country’s biggest shale-oil producer, hedge fund manager Andrew J. Hall and banks including Standard Chartered Plc have forecast declines in U.S. output following last year’s plunge in crude prices. The nation was still pumping the most in four decades in March.
“Production has to come down because rigs drilling for oil are down 57 percent this year,” James Williams, president of energy consultancy WTRG Economics, said by phone Monday from London, Arkansas. “Countering that is the fact that the rigs we’re still using are more efficient and drilling in areas where you get higher production. So that has delayed the decline.”
via U.S. Shale Oil Boom Grinds to a Halt as OPEC Keeps Pumping – Bloomberg Business.