Oil & Gas Job Cuts Maybe Slowing

August 1, 2016 Elizabeth Alford

The Texas oil and gas industry continues to shrink and since last June, drillers have laid off to 1 in 5 employees. But one analyst says that trend may be slowing.

Related: Some Eagle Ford Towns Thriving

The job loss rate in the industry slowed in June, according to the index produced by petroleum economist Karr Ingham for the Texas Alliance of Energy Producers. He estimated about 900 jobs cut by oil and gas companies, compared to the thousands lost in January and February.

“Ingham said a slowdown in job cuts could be a sign that Texas energy employment levels will bottom out in August, six months after crude prices hit $26 a barrel and started climbing higher.”

— FuelFix

As second quarter earnings reports come in, we are hearing of massive losses for oil and gas operators across the country. For companies who haven’t resorted to bankruptcy, many must lay off workers to stay afloat. Schlumberger, Halliburton and Baker Hughes are the latest to report major layoffs saying they eliminated a combined 16,000 jobs in the three months between April and June.

Other producers who reported huge losses for the second quarter include ConocoPhillips ($1.1 billion), Baker Hughes ($900 million), Royal Dutch Shell, (2,200 jobs), BP, , Exxon Mobil, Chevron ($1.5 billion), National Oilwell ($217 million and PBF Energy.

Other highlights from the Texas Petro Index include:

The statewide working rig count averaged 222, a 55.9 percent decrease when compared with the first six months of 2015 when an average of 504 rigs were drilling. In the first half of 2014, the number of rigs working in Texas averaged 869.
The Texas Railroad Commission issued 3,539 drilling permits, 36.4 percent fewer than in 2015.
Oil producers pumped about 603.9 million barrels of crude oil, a 5 percent, year-over-year decline compared with the 635.4 billion in the first half of 2015.
About 213,050 Texans were employed in the oil patch in the first half of the year, a 22.6 percent drop from the same period last year. In the first half of 2014, the number of people employed in oil and gas production, drilling and service sectors was 291,365. At its peak in December 2014, the industry employed 306,000 in December 2014.

Crude oil prices dipped as low as the mid $20s in February and peaked at above $50 in early June. This week, they have settled in at around the $40 mark.

Read the latest Texas Petro Index

Baytex Energy Reduces Eagle Ford Spending

July 28, 2016 Elizabeth Alford

Baytex has reduced development and spending in the Eagle Ford for the second quarter of 2016

Baytex Energy executives announced their second quarter results today that highlighted significant cost reductions and a lowered net debt of $39 million.

In their Eagle Ford operations, Baytex reduced capital spending to$35.5 million, down from $81.7 million in Q1/2016 and $140.8 million in Q4/2015.

“Our emphasis on deploying capital efficiently wad evidenced during the second quarter as we continued to defer investments in our heavy oil operations in Canada and reduced the pace of development in the Eagle Ford. As a result we significantly curtailed our level of capital spending focusing all development activity in Eagle Ford.”

— Jim Bowzer, CEO

Other Eagle Ford highlights include:

Disposed operated assets in the Eagle Ford for approximately $55 million
Participated drilling 11 (net) wells
Began production on six of the new wells (40% drop from 2015)
Production rate of on new wells was approximately 1300 BOEs per day
Three drilling rigs (compared to six inQ1/2016)
Cost in the Eagle Ford has continued to decrease with wells now being drilled, completed and equipped for approximately US$5.4 million as compared to US$8.2 million in late 2014

Anadarko: No Drilling in the Eagle Ford for Q2

July 27, 2016 Elizabeth Alford

**Anadarko Petroleum Corp. 2nd Quarter Earnings**

Anadarko announces it will focus activity on other shale plays instead of the Eagle Ford into 2017.

In the wake of a $692 million second quarter loss, Anadarko Petroluem Corp. says they are sticking with their plan of patience outlined earlier this year, which includes holding the line on spending for 2016.

R. A. Walker – Chairman, President & Chief Executive Officer says that should change next year as he foresees a sustained $60 oil price environment for 2017. He says if that happens, the company will likely spend its money on the DJ and Delaware basins over the Eagle Ford Shale.

“The Eagle Ford Shale doesn’t compete for capital as well as the other two basins (DJ and Delaware). That doesn’t mean that it doesn’t create attractive rates of return. It just unfortunately is up against two exceptional assets that create better rates of return. And for a company that’s trying to stay close to or on top of discretionary cash flow with CapEx, it just unfortunately as a result of that doesn’t feed on capital and constantly is not being unallocated capital.”

— R. A. Walker

Anadarko reported there was no drilling activity for the quarter in the Eagle ford. Anadarko is one of the Eagleford’s largest producers, with roughly 388,000 gross acres in Dimmit, LaSalle, Maverick and Webb Counties.

Anadarko’s second quarter highlights:

Record production levels at three Gulf of Mexico facilities and in the U.S. onshoreDelaware and DJ basins
Encountered more than 1,040 net feet of oil pay at the Shenandoah-5 appraisal well and increased working interest in this operated deepwater discovery
Closed $2.5 billion of monetizations year to date
Retired $3 billion of near-term maturities with proceeds from debt issued during the first quarter

Encana Loses $601 Million but Remains Positive

July 25, 2016 Elizabeth Alford

**Encana Releases 2nd Quarter Earnings**

Encana Corporation released 2016 second quarter earnings, announcing they one of the lowest cost, highest performing operators in the Eagle Ford Shale Play.

Related: Encana’s Strong First Quarter

Encana is one of the first oil and gas producers out of gate with 2016 second quarter earnings and operations reports. In their recent conference call, executives focused on their success at reducing costs, increasing capital efficiency and increasing production instead of their loss of $601 million.

Encana is focused on activity in their four core assets at Eagle Ford, Permian, Duvernay and Montney and anticipate they will deliver approximately 13,000 BOE/d of production in the fourth quarter of this year and between 30,000 to 35,000 BOE/d in 2017.

“Our current Eagle Ford pacesetter is just $3 million and this compares to an average of over $8 million when we first entered the play. This pacesetter well cost took us over eight days to drill and was completed with a larger frac intensity. We signaled last quarter that we intended to ramp up our frac intensity and that would add approximately $400,000 per well.”

— Doug Suttles, Encana President & CEO

Highlights include:

Cash flow up over 75 percent from the previous quarter to $182 million
95 percent of capital invested in high return wells in the core four assets; the Permian, Eagle Ford, Duvernay and Montney
Maintained scale in the core four assets which delivered 268,300 barrels of oil equivalent per day (BOE/d), representing 73 percent of the company’s 368,300 BOE/d total production
Adding 50 percent more drilling and completions activity to our 2016 program

Learn more at encana.com

Some Eagle Ford Schools Fighting to Survive

July 21, 2016 Elizabeth Alford

The shale bust has slowed the river of money that Eagle Ford school districts had come to rely on, with some wondering how they will survive.

During the height of the shale boom, the drilling frenzy brought $1.5 billion in property tax revenue for local Eagle Ford schools and another $676 million for the Permanent School Fund. But as the oil and gas activity dried up, so did the tax revenues that fund local school districts.

The bust now threatens to be a serious financial blow to many districts. For the upcoming 2016-2017 school year, some are facing serious deficits and others will delay pay raises and hiring in order to juggle their budgets.

One worst-case scenario is the Cuero School District located in DeWitt County, where property values will likely drop 35 percent this year. This decrease will force the district to slash its budget by as much as 22 percent.

“the situation is ‘More or less a disaster. In two, three years, you are basically bankrupt,’ he said. ‘People don’t realize what a catastrophic thing this is going to be for schools.’”

— Cuero interim schools superintendent Ben Colwell

School districts located in the Eagle Ford are facing a double whammy because many have to actually pay back state funds, at a time when they can least afford to do so.

Texas public school financing policies state that districts that are designated as ‘property wealthy’ must give back some or all of the state funds they received in the prior fiscal year. This means that the districts that enjoyed additional funds due to the boom, must now give that money back at a time when their revenues are shrinking due to the downturn.