Abraxas to Drill in Atascosa County

July 13, 2016 Elizabeth Alford

Abraxas is moving forward to drill in the Austin Chalk without joint venture partnership.

Abraxas Petroleum Corporation announced last week it has begun the process to drill their first well that targets the Austin Chalk at Jourdanton in Atascosa County. The company spudded Bulls Eye 101H on June 16 and estimates that the well will be producing by September 2016. Executives estimate that the drilling and completion costs for this first well will be around $5.8 million, which Abraxas will shoulder alone after terminating talks for a potential joint venture on this project.

“Although we are disappointed we could not come to an agreement with this potential partner in a timely manner, drilling this well on our own will give our shareholders more upside exposure compared to the reduced working interest in the joint venture.”

— Bob Watson, President and CEO of Abraxas

Abraxas also announced it is increasing its 2016 capital expenditure budget from $25 million to between $30 million and $40 million. All of this new activity is on the heels of a change in company leadership as Lee T. Billingsley, Abraxas’ Vice President of Exploration, resigned his position at the beginning of the month.

Texas Oil & Gas Bankruptcies Lead Pack

July 12, 2016 Elizabeth Alford

**Oil & Gad Bankruptcies 2015-16 | click to enlarge**

Texas leads the country in oil and gas bankruptcies for 2015 and 2016.

The law firm of Haynes and Boone has tracked energy industry bankruptcies in North America since 2015. The firm recently issued its latest report announcing that there have been 43 producers who have filed bankruptcy since January. The combined secured and unsecured debt represented in these filings is approximately $44 billion.

“More than three-dozen North American oilfield service companies commenced Chapter 7, Chapter 11 and Canadian bankruptcy cases in 2015 involving over $5.3 billion in cumulative secured and unsecured debt. As of June, 2016, 43 oilfield service companies have filed bankruptcy so far this year, totaling over $3.9 billion in cumulative debt.”

— HaynesBoon blog

Texas has been hit specifically hard, with more that half (25) of the 2016 filing being initiated in Texas courts. The combined total Texas bankruptcy filings for 2015-16 is 43, representing approximately $29 billion in cumulative debt.

Analysts believe that the carnage isn’t over and that the industry will see more filings throughout 2016.

Below is a list of the companies who filed since 2016.

January
- Aurora Operating LLC (Southern); $2.35 million
- MOG Producing LP (Southern); $4.29 million
- Antero Energy Partners LLC (Northern); $25.45 million

February
- Emkey Resources LLC (Northern); $22.35 million
- Ginger Oil Co. (Southern); $6.47 million
- Argent Energy U.S. Holdings Inc. (Southern); $51.9 million
- Primrose La Sara LLC (Southern); $4.3 million
- DRM Sales & Supply LLC (Western); $19.18 million

March
- GreenHunter Resources Inc. (Northern); $23.7 million
- Universal Well Service Holdings Inc. (Northern); $25.15 million
- Wellhead Distributors International (Southern); $31.7 million
- RMR Operating LLC (Northern); $3.5 million
- ESP Petrochemicals Inc. (Southern); $7.4 million
- Wellflex Energy Solutions LLC (Northern); $3.9 million
- DJ Oilfield Sevices LLC (Northern); $3.01 million
- East African Drilling Ltd. (Southern); $45.35 million
- Crossfire Manufacturing LLC (Northern); $653,600
- 7711 Operating Company LLC (Northern); $532,500

April
- ATK Oilfield Transportation Inc. (Western); $34.9 million
- Sanjel Inc. (Western); $1.1 billion
- Bluff Creek Production LLC (Western); $7.09 million
- Hydrocarb Energy Corp. (Southern); $12.5 million
- Aztec Oil & Gas Inc. (Southern); $1.5 million
- Energy XXI Ltd. (Southern); $2.75 billion
- DiamoNorthern District Tank Rental Inc. (Northern); $8.92 million
- Goodrich Petroleum Corp. (Southern); $444.2 million
- FPUSA LLC (Eastern); $2.3 million
- Paladin Energy Corp. (Northern); $23.48 million
- Trinity River Resources LP (Western); $133.8 million
- West Texas Poly Pump LLC (Western); $3.7 million
- Ultra Petroleum Corp. (Southern); $3.9 billion
- Midstates Petroleum Company Inc. (Southern); $2.045 billion

Has your oil & gas producer filed bankruptcy? Learn how to protect yourself

May
- CaNorthern Districtescent Well Service LLC (Western); $0
- *Linn Energy LLC (Southern); $5.962 billion
- *Berry Petroleum Company LLC (Southern); $1.733 billion
- J P S Completion Fluids Inc. (Western); $4.49 million
- SandRidge Energy Inc. (Southern); $4.19 billion
- Hawk Oilfield Service Inc. (Southern); $1.2 million
- Tall City Well Service LP (Western); $14.4 million
- Ricochet Energy Inc. (Western); $11.35 million
- Armada Water Assets Inc./Wes-Tex Vacuum Service Inc. (Southern); $24.9 million
- Mark A. Martinez LLC (Southern); $0
- Linc USA GP (Southern); $414.35 million

June
- Warren Resources Inc. (Southern); $486.3 million

David Porter: Obama a ‘Mouthpiece for Propaganda’

July 11, 2016 Elizabeth Alford

**RRC’s Porter Challenges Clean Air Act**

Railroad Commission Chairman David Porter joined officials from several energy states to voice their opposition to the EPA’s clean air act.

Porter testified before the U.S. House Committee on Energy and Commerce last week, strongly urging lawmakers to prevent the Obama administration from continuing to assume unconstitutional powers and adding obtrusive regulations on the states.

Porter made a case that the constrictions of the Clean Air Act are onerous, unnecessary and overreaching.

“The underlying themes in EPA rulemaking under the Obama Administration have been the consolidation of increased regulatory power in the Federal Government to the detriment of State authority, and the circumvention of the regulatory authority granted to EPA by Congress.” He went on to say that “The President disregards the Constitutional limits of his office and public opinion to forward his own liberal agenda that combats fossil fuels and favors unreliable and costly alternative energy sources. In promoting this agenda, he has allowed EPA to become the mouthpiece for ideological propaganda.”

— David Porter

Last summer, President Obama revealed a plan designed to cut greenhouse gas emissions 40 – 45 percent by 2025. After almost a year, the EPA finalized the new rule in May that sets standards for methane leaks along the natural gas production line.

The new standards are stronger than those proposed last summer and look to reduce 520,000 short tons of methane in 2025 instead of 400,000 in the original proposal. This is equivalent of 11 million metric tons of carbon dioxide.

In his testimony, David Porter shared his concerns about the how the Clean Air Act was conceived, claiming:

Minimal interaction and consultation with Texas and other State regulatory authorities
Underestimated or ignored compliance costs
Overestimated, unjustified and exaggerated regulatory and environmental benefits
Increased regulatory and economic burden on operating companies, particularly the smaller operators who make up an overwhelming majority of the industry in Texas
Creation of “one-size-fits-all” regulations that ignore the significant differences in regional operating conditions and State regulatory systems

Others who testified included Lynn Helms, director of the Oil and Gas Division of the North Dakota Department of Mineral Resources and Travis Kavulla, Vice-Chairman of the Montana Public Service Commission.

Read Porter’s full testimony here.

U.S. Rig Count Moves Upward; Eagle Ford Stays Flat

July 8, 2016 Elizabeth Alford

The Eagle Ford Shale rig count remained flat this week with34 rigs running across our coverage area by midday Friday.

In recent Eagle Ford news, Marathon Oil will pay $7320 after failing to conduct performance tests and for exceeding the natural gas production rates by 5.43 million standard cubic feet per day at the company’s Live Oak facility.

A total of 439 oil and gas rigs were running across the United States this week, an increase of 10 over last week. 88 were targeting natural gas (one less than the previous week) and 351 were targeting oil in the U.S. (10 more than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.) 201 of the rigs active in the U.S. were running in Texas.

Baker Hughes reports its own Eagle Ford Rig Count that covers the 14 core counties. The rig count published on EagleFordShale.com includes a 30 county area impacted by Eagle Ford development. A full list of the counties included can be found in the table below.

Eagle Ford Oil & Gas Rigs

There are six natural gas rigs running across the Eagle Ford, wth natural gas prices dipping this week to $2.80/mmbtu.

The Eagle Ford rigs targeting oil remained at 28 with WTI oil prices dropping to $45.24, a $3.94 decrease this week. A total of 32 rigs are drilling horizontal wells, one is drilling directional wells, and one is vertical.

Karnes County leads development in the region gaining two to 10 rigs running this week. See the full list below in the Eagle Ford Shale Drilling by County below.

Eagle Ford Shale Drilling by County

agle Ford Shale News

Eagle Ford Midstream Deal Worth $44 Million

Marathon Fined for Eagle Ford Infractions

Sitton: Frack Ruling Right Decision

What is the Rig Count?

The Eagle Ford Shale Rig Count is an index of the total number of oil & gas drilling rigs running across a 30 county area in South Texas. The South Texas rigs referred to in this article are for ALL drilling reported by Baker Hughes and not solely wells targeting the Eagle Ford formation. All land rigs and onshore rig data shown here are based upon industry estimates provided by the Baker Hughes Rig Count.

Eagle Ford Midstream Deal Worth $44 Million

July 7, 2016 Elizabeth Alford

Sanchez Production Partners has announced their intention to purchase Eagle Ford midstream assets.

Sanchez Production Partners (SPP) has initiated a transaction with Sanchez Energy to acquire 50% interest in Carnero Gathering, LLC. The company expects that the $44 million deal will increase their midstream revenue and adjusted EBITDA to approximately $7 million.

The Carnero Gathering System will ultimately connect45 miles of high pressure natural gas gathering pipelines from the Western Catarina Midstream system to a new plant in La Salle County.

“The Catarina asset is core to Sanchez Energy’s asset base and plans for future development. Since acquiring the asset in 2014, Sanchez Energy has reported strong results from its drilling program at Catarina, where the company has identified between 1,200 and 1,300 net drilling locations. We look forward to capitalizing on opportunities to grow alongside this leading Eagle Ford operator over time.”

— SPP Website

Other details include:

An initial payment of approximately $37 million in cash
Sanchez Energy will assume remaining capital commitments of approximately $7.4 million
SPP has amended its $500 million credit facility to stipulate conditions for investments in joint ventures
The processing plant is expected to be operational in early 2017