Anadarko Loses Big in Third Quarter

November 3, 2015 Elizabeth Alford

Chesapeake Released 2015 Q1 — Anadarko Q3 2015

Anadarko Petroleum Corporation released its third quarter financials this week, revealing it won't be chasing growth any time soon.

During a conference call last week, Anadarko's leadership reported a net loss of $2.235 billion. CEO Al Walker emphasized that the company is has stepped out of a growth mode and is instead focusing on reducing costs and improving operating efficiencies to deal with the downturn.

“Even though we’re not choosing to chase growth at this time on our 650,000 gross acre position, the work we’re doing is laying the foundation for the future,” said CEO Al Walker. “When we see value in pursuing growth, we’ll be prepared to accelerate activity.”

Third Quarter Highlights

Exceeded the midpoint of guidance by 6,000 barrels per day of higher-margin U.S. oil sales volumes
Achieved capital expenditures and lease operating expense (LOE) per barrel of oil equivalent (BOE) below the low end of guidance
Completed a successful appraisal test at the Shenandoah field in the Gulf of Mexico
Accomplished a project milestone at the Heidelberg spar with the setting of the topsides
Continued to actively manage the portfolio by monetizing nearly $2 billion of assets year to date
Reduced costs by nearly $70 per foot drilled on each well. a savings of almost of $1 million per well
Lowering the high end of our 2015 capital guidance by an additional $100 million

Texas Economy Declines for Last 10 Months

November 2, 2015 Elizabeth Alford

Mineral Owners May be Losing Money — Texas Economic Index Eases

The Texas Economic Activity Index declined for a 10th straight month in August.

The Texas Economic Activity Index is produced monthly by Comerica Bank and measures such variables as non-farm payrolls, exports, hotel occupancy rates, unemployment insurance claims, housing starts, sales tax revenues, home prices, and the state rig count.

Lower oil prices and the drop in oil field activity have continued to impact the Texas economy, though it is showing signs of easing. August figures show a 0.4 percentage decrease from July's index reading of 95.5. Throughout 2014, the index averaged 105.2 points for all of 2014, four and four-fifths points above the average for full-year 2013.

“The rate of decline in our Texas Economic Activity Index has clearly eased. We look for more stable conditions for the state economy as we progress through 2016.”

— Robert Dye, Chief Economist at Comerica Bank

Comerica predicts that the oil business will remain stressed through the remainder of this year, though there are some positive economic markers. Housing starts and house prices are holding up statewide and the increased economic diversity means we will likely see net positive job creation.

According to Texas Comptroller's Office, the Texas region's consumer confidence index dropped in October to 115.9, down 2.5 percent from September 2015, and 9.7 percent lower than one year ago. But the Texas unemployment rate for September was down from 4.8 percent from 2014 and has been at or below the national rate for 105 consecutive months.

Cabot Oil & Gas Reducing Rigs in the Eagle Ford

October 29, 2015 Elizabeth Alford

Cabot Oil & Gas' third quarter results failed to meet expectations, including a slowdown in its Eagle Ford operations.

Cabot Oil & Gas released its 2015 third quarter earnings last week, reporting revenue of $305.30M, way below the anticipated $354.36M. The company also reported production increases of 7% with a total of 27 new net wells.

For its Eagle Ford operations, Cabot experienced an 8% decline in liquid volumes, resulting from the reduced amount of activity in the play due to lower oil prices. Other Eagle Ford highlights include:

Experienced another 15% to 20% reduction in drilling costs over Q2
Completed seven wells in the Eagle Ford and placed six wells on production
Drilling Eagle Ford wells was 30% to 40% faster than our 2014 average
Currently operating one rig in the Eagle Ford

“We are currently operating one rig in the Eagle Ford, and we plan to drop that rig by the end of the second quarter of 2016 when the contract expires unless we see a significant uplift in oil prices during the first half of this next year. ”

— Dan O. Dinges, Chairman, President and CEO

Cabot’s activity in the Eagle Ford is focused on 89,000 net acres in Atascosa and Frio Counties, Texas.

EXCO Suspends Eagle Ford Operations

October 28, 2015 Elizabeth Alford

U.S. natural gas producer, EXCO Resources Inc, announced on Tuesday it has suspended oil exploration in the Eagle Ford shale of South Texas.

Related: Shale Industry Shake-Up

EXCO released its third quarter financial and operational results that showed several areas of growth for its Eagle Ford operations:

Production increased by 26% over Q3 2014
Average drill time of 11.2 days with average total measured depth of 15,900 feet
Improved cost structure with average drilling cost of approximately $5.5 million per well
Drilled 4 gross (2.8 net) operated horizontal wells

But theses gains are not enough to counter the low prices that have been too much for the struggling company.

“As a result of continued depressed oil prices, EXCO has suspended its development program in the South Texas region for the remainder of 2015. The Company’s acreage in the South Texas region is approximately 81% held-by-production, which allows EXCO flexibility in the timing of development of this region.”

— EXCO

EXCO is in the middle of a strategic restructuring led by turnaround expert and former TXU Corp Chief Executive John Wilder. Going forward, the company plans to implement a new strategy focusing on 1) liability management, 2) operational performance, 3) capital deployment, 4) risk management, 5) portfolio repositioning, and 6) performance management.

Company-wide Q3 Highlights

Drilled 9 gross (5.2 net) and turned-to-sales 9 gross (4.6 net) operated horizontal wells
Produced 340 Mmcfe per day
Production decreased 6%, from the Q2
Adjusted EBITDA was $62 million, 10% below adjusted EBITDA for the Q2
Progress with cost savings for gathering, transportation, lease operating and administrative costs

China Grabs Texas Shale Fields

October 27, 2015 Elizabeth Alford

Rosetta-Noble Merger — Chinese Buy Texas Shale Fields

Yantai Xinchao, a Chinese investment firm, has announced plans to buy Texas shale oil fields.

The $1.3 billion deal includes purchasing oil assets from Tall City Exploration and Plymouth Petroleum from oil fields located in Howard and Borden counties.

This is the second deal this year where Yantai Xinchao invested in Texas. In May, the company announced plans to pay about 2.2 billion yuan for another oilfield inCrosby, Texas, with proven reserves of about 25 million barrels

China's huge demand has Chinese oil and gas companies eyeing U.S. assets and analysts predict that we will see more of this activity as tough competition and tight government regulations back home put more pressure on Chinese energy industry. So far this year, the Chinese government has issued five import licenses to independent refineries to break the dominance of State-owned companies and create a more competitive and efficient energy sector.

“The Chinese are logical buyers for assets here (...) Some of the independents will be cash-strapped and so they’re potentially sellers. I think the Chinese NOCs are logical buyers.”

— John England, chief of Deloitte LLP’s U.S. Oil and Gas Practice

In 2010, state-owned Chinese energy giant CNOOC bought 600,000 acres of oil and gas fields the Eagle Ford. Tom Pauken, former chairman of the Texas Workforce Commission, expressed concern about long-term effects of such deals on the U.S. economy and possible threats to Texas and warned against allowing the Chinese access to new, hard-earned U.S. technology.