Alta Mesa Pulls out of Eagle Ford

September 24, 2015 Elizabeth Alford

U.S. oil producer, Alta Mesa Holdings, announced this week it will finalize its exit from the Eagle Ford by selling its subsidiary, Alta Mesa Eagle, LLC to EnerVest for $125 million.

The deal includes Alta Mesa properties primarily located in Karnes County and represents 7.8 million barrels of oil equivalent in reserve.

Analysts expect oil-company asset sales to increase in coming months as lenders reassess the loans they made to oil producers when crude prices were higher.

The recent downturn in the oil and gas industry has hit all of the big players hard causing small producers and business in the Eagle Ford to shut their doors due to the fierce competition that has added to the stress of the crisis.

In a recent study of 66 companies, the IHS found that in the first quarter of the year alone they had to write down nearly $29 billion in the value of their assets, which exceeded the total for the full year of 2014. These measures by big producers are squeezing out many local service companies who are being forced to drastically reduce their prices and fees, causing a ripple effect that negatively impacts all parts of small local economies.

In a separate deal, Alta Mesa signed a Letter of Intent with EnerVest tht will allow its subsidiary, Oklahoma Energy Acquisitions LLC (OEA) to purchase 1,700 acres Kingfisher County, Oklahoma by the end of 2015.

Other recent deals in the Eagle Ford:

Repsol completed its acquisition of Talisman Energy last month and became one of the largest companies in the energy sector worldwide. more
Noble Energy plans to get into the shale business by acquiring independent producer, Rosetta Resources. more

Will Methane Regulations Kill Texas Jobs?

September 23, 2015 Elizabeth Alford

NOAA Studies Eagle Ford Emissions — Eagle Ford Methane

The Obama administration's newly proposed regulations on methane emissions will likely cost the oil and gas industry as much as $420 million and add additional pressure to stressed Eagle Ford producers.

Related: Federal Fracking Rule on Hold

In an effort to address the problem of climate change, the Obama administration proposed measures that would cut emissions of carbon dioxide by 32 percent from 2005 levels by 2030. Oil and gas companies would be required to cut methane pollution from drilling sites, distribution systems and in other areas of operation.

Oil and gas producers are already fatigued from months of low crude prices and new regulations may be more than most can handle. Critics charged the administration with wanting to sabotage the industry and the jobs it has created.

Texas Railroad Commission Chairman David Porter likened the ruling to war and said it is:

“Another blatant attack on the oil and gas industry that will further impede America’s energy security, kill jobs and put even more stress on our national and state economies.”

Methane is the key component of natural gas and has a high impact on global warming — up to 25 times that of carbon dioxide.

In April, Scientists from the National Oceanic and Atmospheric Administration (NOAA) tested the air over Texas by flying over oil and gas fields to gather data to measure air pollution in the Eagle Ford. The research was part of a larger national project to measure air pollution from America’s biggest shale fields by tracking excessive production of ozone and methane. Another study showed that methane emissions across the United States had dropped significantly in the past two decades and are much lower than current EPA estimates.

Shale Industry Shake-Up

September 22, 2015 Elizabeth Alford

Mineral Owners May be Losing Money — Shale Idustry Loses Billions

Prolonged low crude prices are hitting the shale industry....hard.

A new report generated by data company, FactSet, says that capital spending in the shale industry exceeded cash from operations by about $32 billion in the first six months of the year and is quickly approaching the deficit of $37.7 billion reported for the whole of 2014.

U.S. shale oil producers have been reporting steep improvements in the productivity of their rigs but even this cannot save them from the financial constraints they face. According to the EIA, U.S. oil production fell in May and June, with some analyst predicting continued drops, as companies’ are unable to pay for more drilling and well completions.

Companies have made up for their shortfall by selling shares and borrowing cash to stay afloat, but there are signs this is drying up. During the first quarter of 2015, E&P companies sold $10.8 billion of shares compared to only $3.7 billion in the second quarter and the total for July and August is $1 billion.

Edward Morse, global head of commodities research at Citigroup, said that there would have to be a shake-up in the US shale oil industry to separate the good companies from the bad. “Just as it drove the industry to spectacular growth, the financial sector is going to drive the industry to consolidate and contract,” he said.

Next month, banks will do a regular review to determine how much they're willing to let oil companies borrow. Some predict that lenders might cut oil-company credit lines by as much as $15 billion. This would be a huge adjustment leaving companies strapped for the necessary cash pay for equipment and personnel.

Since April, oil production in the major shale plays has decreased sharply, with the Eagle Ford being the biggest loser. The Eagle Ford has lost 300,000 barrels a day and other major plays also experiencing a decrease include the Bakken Shale in North Dakota, the Utica Shale in Ohio and the Niobrara in Colorado, Kansas, Nebraska and Wyoming. Total production from shale plays fell by 350,000 barrels.

EOG: New Technology in the Eagle Ford

September 21, 2015 Elizabeth Alford

Talisman Cuts Jobs — New Drilling Technology

EOG uses new technology in its Eagle Ford operations.

In a recent presentation, EOG's Executive VP, Exploration and Production, Billy Helms, reflected on five qualities that he believes is keeping the company competitive and as a leader in the industry. Most notable is the company's focus on advancement and completion technology.

Recent examples include EOG's high density completions that help maximize recovery are increasing the recovery in every acre of land that the company has.

“So we’ve got completion engineers working with geologists to better understand what part of the rock we need to put the bit, the lateral and to complete. And those people are working with the drilling engineers to make sure we place the lateral in those places.”

— Billy Helms

EOG has used this new technology in the EagleFord, where it has increased completion improvements by 33% from 2014-2015. EOG is also focusing on finding the best rock by understanding the rocks and how they improve the recovery through 'targeting'. The company has identified a couple of targets that will increase recovery in the productive interval.

Another characteristic touted by EOG is its ability to cut costs. There has been a 10% cost reduction in the company's Eagle Ford well costs this year. oNe of the factors here is reduction in drilling time. In 2012 it took us 14 days to drill a well and now it takes a little over a week.

Fewer Drilling Permits for Eagle Ford

September 17, 2015 Elizabeth Alford

Texas drilling permits decreased in August by nearly two-thirds over this time last year as Eagle Ford production tanks.

The Texas Railroad Commission released August drilling statistics this week showing the agency issued 864 permits last month across the state compared to 2,440 in 2014. The breakdown of well types included 222 oil, 59 gas, 518 oil or gas, 54 injection, zero service and 11 other permits.

Well completion statistics are equally discouraging as the RRC reports processing 1,113 oil, 172 gas, 36 injection and 11 other completions inAugust 2015 compared to 2,157 oil, 303 gas, 92 injection and four other completions in August 2014. Total well completions for 2015 year to date are 14,665 down from 20,657 recorded during the same period in 2014.

This latest report comes on the heels of the EIA announcing that oil production in the Eagle Ford has decreased by 300,000 barrels a day since April. The decrease is being seen across several regions with a total production from the shale plays falling by 350,000 barrels.

The RRC reported that Eagle Ford received 125 permits to drill new wells and had 261 oil and gas completions. Since January 1st, 1685 drilling permits have been issued to producers in the Eagle Ford, which is roughly a third of all permits for the entire 2014.