Sanchez Reduces 2015 Capex by 60%

January 13, 2015 Elizabeth Alford

As oil prices hit new lows, Eagle Ford producers are scrambling to revise budget projections for 2015.

On January 7th, Sanchez Energy joined other companies who are forced to update 2015 capex projections from just two months ago. The company reports that the initial 2015 estimate of $1.15 billion will be slashed almost 60% to $400 - $450 million.

“Due to ‘the deteriorating commodity price environment, Sanchez Energy has elected to further reduce its 2015 capital plan. Our 2015 drilling plan calls for us to move from 8 gross (7 net) rigs across our Eagle Ford position and 1 gross and net rig in the TMS in the fourth quarter of 2014 to 4 gross (3.5 net) rigs focusing on Catarina and Palmetto in the Eagle Ford and .25 gross and net rigs in the TMS. This represents an approximately 60% reduction in average rig count from fourth quarter 2014 to 2015.’”

— Tony Sanchez, III, President and Chief Executive Officer of Sanchez Energy

Despite the drastic cuts, the report predicts that the company will maintain 2014 Q4 production numbers. It is also expected that oil production will continue to rise in 2015 and should average 40,000 to 44,000 barrels a day.

Read complete report at sanchezenergycorp.com

Texas Quakes Alarm Residents

January 9, 2015 Elizabeth Alford

Residents in the north Texas community of Irving were rattled on Tuesday by a series of earthquakes that have many anxious for answers. Within a 36 hour period, the U.S Geological Society registered close to a dozen quakes in the region ranging in intensity from a 2.6-3.7 on the richter scale. Though there were no reports of injury, the tremors drew huge concern in an area where quakes are, historically, rare.

Though the amount of earthquakes in Texas hardly compares to our west coast neighbors, they have been on the rise in recent years, causing many to make a connection between increased seismic activity and the fracking throughout the state.

Several studies including from SMU and UT in Texas and a USGS study in Ohio have linked earthquakes to wastewater injection wells. But this seems unlikely here since there are no such wells in the county and experts warn against jumping to conclusions.

“It’s premature to speculate on the cause of this current series of seismic events,” said Brian Stump, Albritton Chair of Geological Sciences at SMU, in a statement reported in the Dallas Morning News yesterday. “We’re just getting started. We want to support the local community in understanding these earthquakes.”

“It could just be a natural event that just happened to occur. We’re going to be exploring all possibilities, including any contributions that the oil and gas industry might have in terms of injection of fluids or extraction of fluids in the subsurface.”

— Robert Williams, a Geophysicist with the USGS

Whatever the cause, North Texas residents were clearly shaken and taxed emergency response systems with an overwhelming amount of 911 calls. Additionally local school districts went into quick action and initiated mandatory emergency earthquake drills for school children.

Matador Reduces Eagle Ford Rigs in 2015

January 7, 2015 Elizabeth Alford

Matador Pulling Two Rigs in the Eagle Ford in 2015

Matador Resources Company, a Dallas-based energy company heavily invested in the Texas shale oil industry, announced yesterday that it plans to reduce its operation by cutting production from two rigs in Eagle Ford in 2015.

This is a big move for the company considering that their oil, natural gas and total oil production were at record levels at the end of 2014. Management says that their strategy to narrow drilling efforts to three rigs in its Permian Basin operations is necessary in light of lower oil prices, which have dropped from $100 per barrel in June to below $50. But the company insists that it isn’t abandoning the region entirely.

“As a result of the Company’s strong execution in the Eagle Ford over the past three years, this asset has become an “oil bank” that Matador can return to and develop further at a future time when commodity prices are more favorable.”

Matador was originally scheduled to release its full operational report by mid January, but have moved it to February 15th in order to have more time to better assess their current situation.Everyone is invited to listen in to this presentation and the details can be accessed through the Company’s website on the Presentations & Webcasts page under the Investors tab.

Find out more at matadorresources.com

Low Crude Prices Not Good for All

January 5, 2015 Elizabeth Alford

Texas gasoline prices are averaging under $2.00, the lowest we have seen in years. While this was a nice perk for consumers over the holiday season, it is still unclear how cheaper crude will impact the overall health of the Texas economy.

One Washington think tank has estimated that, though many parts of the country will experience a slight economic stimulus in 2015, the lower oil prices will bring a significant downturn in the economic health of energy dependent states.

Unprecedented production in the United States shale plays have contributed to an increase in worldwide oil supplies, resulting in gasoline prices plummeting to their lowest level in almost five years. This has proven to be an economic boom of sorts to American families who are pocketing an additional $25-$75 per month. An additional perk will come as reduced fuel costs will eventually affect the pricing of consumer goods and services.

“The reduction in oil prices provides US consumers with what amounts to an annual increase in disposable income of $350 billion (about 2.0 percent of US GDP) through reduced prices for gasoline, diesel fuel, other petroleum products, and goods and services whose production uses petroleum products. The average US household will see a raw gain that amounts to $2,790 per year.”

— Stephen Brown with Resources for the Future

The economic picture is not so rosy for everyone. Energy producers and states that are heavily invested in oil production will take a hit in 2015. Some companies have announced they will slash their budgets, with many predicting cuts in their exploration efforts. This will have a ripple effect that will impact local economies and support industries as tax revenues are reduced and layoffs are inevitable.

And Texas is not immune. The New york Times reports that Hercules Offshore has plans to lay off some 300 employees. This is in addition to the already 2,300 oil and gas jobs lost in Texas from October - November.

Download the entire report from rff.com.

2014: Record Breaking Year for Texas Oil

January 3, 2015 Elizabeth Alford

Happy New Year! — 2014 Great Year for Texas Oil

With plummeting oil prices garnering much of the recent energy news, it may be easy to forget that 2014 was a record-breaking year for the shale oil industry and Eagle Ford Play specifically.

Here are a some of the record-breaking news stories we covered during 2014:

January began with predictions that 2014 would be a banner year for Eagle Ford Shale as analysts suggested that Texas could become the eighth largest oil producing country in the world passing Iraq, Kuwait, and Mexico within the year. This bold announcement was due in part because the EIA noted that U.S. oil production grew faster in 2013 than any other country in over two decades.

By June, prediction became reality as Texas experienced production numbers reminiscent of the 1970’s and actually surpassed Iraq’s crude production.

Another milestone quickly followed as Bloomberg announced in July that the U.S. passed Russia and Saudi Arabia as the world’s largest oil producer, with over ¼ of total crude production coming from Texas.

Even as oil prices declined through the fall months, it was only good news for producers in Eagle Ford. Wood Mackenzie announced in November that Eagle Ford finally hit a long-anticipated milestone as crude production topped one billion barrels.

In early December, the EIA reported that Texas had become the largest producer of shale natural gas.

While the low oil prices make the 2015 uncertain, most analysts predict that U.S. shale will remain strong.