Lower Rig Count, But More Drilling in 2013 - Schlumberger - Halliburton

January 25, 2013 R.T. Dukes

In the company's fourth quarter conference call, Schlumberger (SLB) executives stated they expect the active rig count will fall from the 2012 average, but there will be more wells drilled. SLB reviews its outlook for North America in its conference call each quarter. The company does expect the liquids rig count to increase in the first half of the year, but does not expect much if any recovery in natural gas drilling.

Paal Kibsgaard, CEO, stated, "But if you look at our view on 2013 for North America, we expect the U.S. land rig count to be up between about 100-150 rigs in Q1, and this is based on the feedback from our customers. Now in terms of activity for the full year, we still see U.S. land rig count slightly down versus 2012, while the well count will be slightly up."

Halliburton is also expected to echo the same sentiment in its call today. The following statement was included in the company's press release:

“In 2013, we anticipate the North America rig count will improve from fourth quarter levels but will be down slightly compared to 2012."

Other notable items from the SLB call include:

Expects the liquids rig count to bounce up in the first quarter of 2013
Do NOT see a significant recovery in dry-gas drilling in 2013
Natural gas production remains strong
Hydraulic fracturing pricing is not expected to increase in 2013

As you hear locals begin to discuss rigs moving out of your area. Remember, a lower rig count does not mean there will be fewer wells drilled. Operators get more efficient over time and need fewer rigs to develop their acreage.

Eagle Ford Oil Production Surpasses 400,000 b/d - Up Almost 100%

January 24, 2013 R.T. Dukes

Production Growth — Growing Production Image

Eagle Ford oil production is up almost 100% from November 2011 to November 2012. The Texas Railroad Commission's initial reports for November have the play producing ~358,000 b/d of crude oil. Other recent estimates have been revised up by approximately 50,000 b/d in the three months following initial reports. If that trend continues, crude oil production will fall between 405,000-410,000 b/d when more wells are reported.

For reference, August production was revised from an initial report of ~320,000 b/d to ~380,000 b/d and October production has been revised from ~323,000 b/d to ~376,000 in one month since initial reports.

Remember, liquids reported by the TX RRC are measured at the wellhead. Additional condensate and natural gas liquids will be gathered further downstream in separators and processing plants. Industry analyst estimate the Eagle Ford is producing between 700,000 and 800,000 b/d of crude oil, condensate, and NGLs.

Where Are Oil & Natural Gas Prices Headed? Gary Evans of MHR

January 23, 2013 R.T. Dukes

Where are natural gas prices and oil prices headed in 2013? Gary Evans discusses his view US oil & gas prices.

Notes from the interview include:

Need cold weather for natural gas prices to recover
The industry needs $4 natural gas prices
Technology has allowed for recent shale boom
China and India are thirsty for oil
The US is producing more than 50% of what it consumes
WTI to Brent spread allowed for the recent run up in oil prices
Not bullish on oil prices, but expects more upside to natural gas
Difficulty in leasing is really a federal lands issue

Do you agree or disagree? Share your thoughts in the comments below.

Sanchez Energy Ends 2012 With 200% Plus Production Growth

January 22, 2013 R.T. Dukes

Sanchez Energy ended 2012 with production of approximately 4,500 boe/d. That's a 233% increase over year-end 2011 and over 150% growth from the third quarter of 2012. Proved reserves were estimated at 21.2 million boe.

The company also released well results from its most recent wells:

The Prost B #1H, in the Marquis Area, produced 1,114 boe in the first 24 hours and 936 boe/d over the first 30 days (14/64ths choke)
The Barnhardt #15, in the Palmetto area, produced 3,139 in the first 24 hours on a 32/64ths choke, but was later restricted to a 16/64ths choke

Tony Sanchez III, CEO said, "Tighter well-spacing tests in each of our project areas is expected to result in a material increase of our net identified Eagle Ford drilling locations, proved reserves, and net resource potential, which is currently based on 80 to 120 acre well spacing. In the Palmetto area, we are drilling the third well of a 5-well, 40 acre spacing pilot on the southern part of the Barnhart ranch. In Marquis we are also drilling a 60 acre spacing test in the western Prost area. Our assets also hold potential from the Buda Limestone, Austin Chalk, and Pearsall Shale formations that provide additional upside opportunities. We foresee drilling and testing additional formations in the second half of 2013 to further understand the potential of our existing acreage."

The company's 2013 capital budget will be announced in February after the company's board meeting.

UFOs In the Eagle Ford?

January 21, 2013 R.T. Dukes

The Mutual UFO Network is confirming a 60 ft diameter saucer was hovering near an oil well in South Texas. Maybe, just maybe, even aliens are impressed with the resource that is held in the vast shale play.

That photo, with a July 5 time stamp, already has passed two authenticity tests, says Charles Stansburge, a veteran MUFON investigator. “If it's a prank,” Stansburge said, “someone spent a lot of money to stage it. It's not a doctored photo. It's a 60-foot-diameter saucer that's hovering.”

Even more reports and eye witness sightings of strange flying objects have been reported.