And there was much rejoicing in the land.... Gas Prices

[Denny]

LMFAO. Wow.


US rig count -40 this week.

Total US rig count at 988

I knew it!

[Strychnine]

I posted this to FB yesterday, but you guys might enjoy...

The H&P yard got a magazine cover this month lol

[Denny]

What a way to make the cover. LOL

[Strychnine]

Time to add to the SPR's capacity.

Not adding to total capacity, but:

BP & Noble Energy Chosen To Replenish The US SPR

The US Department of Energy announced Thursday afternoon that it has awarded contracts for the delivery of crude oil to the Strategic Petroleum Reserve (SPR) to BP and Noble Energy so as to replenish oil it sold last year (see below).

With a capacity of 727 million barrels, the SPR is the largest stockpile of government-owned emergency crude oil in the world. Together, the SPR crude oil and facilities represent a $26 billion investment in energy security ($21 billion for crude oil and $5 billion for facilities).

BP Products North America will deliver 2,197,500 barrels and Noble Energy will deliver 2,000,000 barrels to the SPR's Bryan Mound site in Freeport, Texas. Deliveries are slated to be completed by July 31, 2015.

The DOE said in a press release that the awards are repurchasing crude oil sold during the 2014 test sale, using $239.2 million funds from the sale. The DOE is required by law to buy back petroleum products within one year of completion of a test sale to the extent funds are available from the sale. Funding from the test sale was also used to establish the Northeast Gasoline Supply Reserve last year.

Currently, the SPR holds 691 million barrels of crude oil in four storage locations in Louisiana and along the Texas Gulf Coast.

Also of note...

In 2013 Baker Hughes started publishing quarterly well count report as a supplement to the weekly rig count.

July 23, 2013:

BH Launches Well Count Report, Perfect Compliment to Rig Count

A huge congratulations is in order for Baker Hughes, the oilfield services company that also compiles the enormously useful rig count data that they’ve been sharing, like forever (for the past 70 years!). Big news: Baker Hughes has just launched a new “well count” data service as a compliment to their rig count data. The new well count service counts the number of new wells “spud” (when the drill bit hits the ground and starts chewing away) in a given quarter. The counts are tabulated by shale basin. This is an important new tool for landowners and businesses in the supply chain to use to monitor where drilling is heating up, and where it’s cooling down

As of today it's dead.

April 10, 2015:

Baker Hughes Incorporated announced today that effective immediately it has suspended the quarterly publication of the U.S. onshore well count. In response to the recent market downturn and internal initiatives to reduce costs, the company has prioritized its resources to support the ongoing publication of the weekly North America and monthly International rig counts, which continue to provide a timely and relevant snapshot of evolving market conditions.

[Strychnine]

Had some interesting conversation tonight. Had dinner with a friend who will soon take the CEO role of a new startup E&P. Beyond all of the financing, logistics, etc we talked about the market at large. He's guessing that by end of May we see a drop in production, but also that the storage issue is more hype than reality. His thought is that by the end of the year we could be settled in around $75/bbl and the biggest headache will be getting crews back after the industry has shed so many people.

I read through the 60 page presentation they are showing potential investors right now - detailing the execs' backgrounds, reservoir focus plans, geology, finance, etc - and it makes me want to change jobs lol.

He also said that with the market where it is now, investors are eager to play. It's a much better time to kickoff than 8 months ago like American Eagle Energy.

The equipment side would lag, obviously, but to get to that $75 magic number everyone has always referenced, even when prices were $100+, would be awesome.

[Ruffdaddy]

I agree on the storage issue. I've read a lot over the past few weeks detailing that it's not a major concern. but O&G is impossible to predict. Supply and demand is only a part of it...geopolitical conflicts, elections, economic growth and major accidents all come into play.

I don't believe we will have problems getting crews back in 2015. That's way too optomistic...way way waaaay too optomistic.

[Denny]

Had some interesting conversation tonight. Had dinner with a friend who will soon take the CEO role of a new startup E&P. Beyond all of the financing, logistics, etc we talked about the market at large. He's guessing that by end of May we see a drop in production, but also that the storage issue is more hype than reality. His thought is that by the end of the year we could be settled in around $75/bbl and the biggest headache will be getting crews back after the industry has shed so many people.

I read through the 60 page presentation they are showing potential investors right now - detailing the execs' backgrounds, reservoir focus plans, geology, finance, etc - and it makes me want to change jobs lol.

He also said that with the market where it is now, investors are eager to play. It's a much better time to kickoff than 8 months ago like American Eagle Energy.

The equipment side would lag, obviously, but to get to that $75 magic number everyone has always referenced, even when prices were $100+, would be awesome.

I wonder how that'll work. At what point do they start OK'ing more production? I'm guessing there are set triggers,with each producer. Then they'll have to round everyone up, mobilize equipment, etc. It's going to be nuts all over again. The industry obviously doesn't have very good throttle control.

[Cooter]

I agree on the storage issue. I've read a lot over the past few weeks detailing that it's not a major concern. but O&G is impossible to predict. Supply and demand is only a part of it...geopolitical conflicts, elections, economic growth and major accidents all come into play.

I don't believe we will have problems getting crews back in 2015. That's way too optomistic...way way waaaay too optomistic.

if it stays down for a couple years, you might have a little trouble ramping up good crews on the instant, but if you need crews in 2015, there are TONS of kids with big truck notes out there who will GLADLY go back to work yesterday!

[Ruffdaddy]

if it stays down for a couple years, you might have a little trouble ramping up good crews on the instant, but if you need crews in 2015, there are TONS of kids with big truck notes out there who will GLADLY go back to work yesterday!

I agree that it'll be tough in a few years. I was saying there's no way itll be tough to get rig hands this year. MAYBE frac crews...

[Cooter]

agreeing with you 100%

(I know that feels odd, LOL )

[Strychnine]

In just the past five years, Texas has increased its national share of petroleum output from 25% to 40%. Roughly 300,000 people are employed in the Texas oil and gas industry – over 150,000 more than were employed just four years ago. A representative in a Houston oil recruiting firm was quoted in The Dallas Morning News in mid-January that “It’s gone from frenzy to freeze.” In other words, the hiring boom has certainly gone bust, and the bust is already looking bad. It’s estimated Texas could lose 140,000 direct and indirect energy jobs by midyear. According the Federal Reserve Bank in Houston, “This would be mining jobs, finance, real estate, legal,… This would encompass the entire spectrum of employment impacts as a result of the price declines.”

Analysts believe that Texas’ oil production will plateau around the end of Spring. If prices don’t rebound, production declines could be significant considering the nature in which all shale oil plays behave

J.P. Morgan Chase warned as early as December 2014 that Texas may be heading for a recession. Though low oil prices translated into low gas prices has been a benefit to the overall U.S. economy in the short term, the indirect impact to the U.S., and most notably, Texas, is dim.

The Federal Reserve Bank of Texas released results of its manufacturing outlook survey in late January and the news was grim. The title alone paints the picture: “Texas Manufacturing Activity Stalls and Outlook Worsens.” Of the fifteen “Business Indicators Relating to Facilities and Products in Texas”, twelve indicators were on the decline in February.

Though the Retail and Service sectors remain strong in Texas, several index indicators are on the decline according the Dallas Fed. The percentage of retail companies reporting revenue increases was below 30% in the two consecutive months of January and February. The last time growth was below 30% two consecutive months was January and February of 2011.

Texas has also been a hotbed of real estate construction in recent years which has largely been driven by the expansion the oil industry. As layoffs mount, fears of another real estate crash loom. Multinational financial services provider Credit Suisse had in the recent past estimated a 14% growth rate for the Texas housing market but has now reversed that optimism in light of crashing oil prices, estimating a drop of 20%.

Certainly, the Texas economy is not solely based on the oil industry, but its recent economic surge is directly tied to it. Though oil and natural gas production tax revenues for the state only account for about 6.5% of its total revenue, nearly every facet of the state’s economic growth will be impacted by the surge in layoffs and capital expenditure cutbacks. The credit rating agency Fitch puts the potential impact in a nutshell: “This slowdown will affect employment, hotels and restaurants, retail, and construction and other related businesses. Cities will feel the impact in reduced sales tax receipts, building permits and other economically sensitive revenues.”

Clearly, Texas is not heading for a recession in 2015, but if oil prices continue to spur layoffs and spending cuts into 2016, the juggernaut economy of the state will undoubtedly have to put its nearly decade long historic growth rate in the rear view mirror.

[Strychnine]

He's guessing that by end of May we see a drop in production

EIA today.

Shale oil boom goes bust as expected production dips for first time in years

The federal government expects oil output from the most productive U.S. shale formations to see its first monthly decline in more than four years.

Oil output from the most productive U.S. shale fields is expected to drop off next month by 57 million barrels of crude daily from April to May, the U.S. Energy Information Administration said Monday. That would represent the first monthly decline in more than four years, according to Reuters.

The EIA forecasted that the seven shale formations — Bakken, Eagle Ford, Haynesville, Marcellus, Niobrara, Permian and Utica — will produce a total of 5.56 million barrels of crude oil daily next month, down from 5.62 million barrels per day in April. While the most productive formation, Permian, will see slightly higher output — by 11,000 barrels per day, to 1.99 million — output at the next-highest producer, Eagle Ford, will drop 33,000 barrels daily while Bakken’s output will decline by 23,000 barrels next month.

[GrayStangGT]

We are starting to see signs of life out of some of our customers, the last month has been pretty bad.

[Strychnine]

Gasser, Justin, Stanley, et al will be interested in this:

Top 5 Petroleum Engineering Schools in the United States
Mar 19, 2015

The following rankings are based on data from multiple sources that take into account graduation rates, number of degrees awarded annually, post-graduation employment rates, admission rates and more.

5. Pennsylvania State University

Pennsylvania State University, or Penn State as it’s most commonly known, is ranked in the top 1 percent of universities worldwide. The school boasts the largest alumni network of any school in the United States. Penn State was rated the 25th best overall engineering school in the country by U.S. News and World Report, with the nuclear and petroleum engineering programs ranked even higher on an individual basis.


4. University of Tulsa

In one of the United States’ oldest oil states, the University of Tulsa has one of the nation’s best petroleum engineering programs. The school encourages petroleum engineering majors to minor in one of their chemical engineering, geosciences or mechanical engineering programs. University of Tulsa’s McDougall School of Petroleum Engineering is “home to an extensive research program that is supported by industry and government agencies.”


3. Colorado School of Mines
The only school on this list devoted exclusively to engineering and applied science, the Colorado School of Mines carries a prestigious reputation. The university describes itself as a school dedicated to responsible environmental stewardship in resource production fields. Offering degrees in petroleum engineering at the undergraduate and graduate levels, the Colorado School of Mines has some impressive statistics to back up its program. As of May 2014, the department calculated a 94 percent job placement rate amongst its graduates.


2. Texas A&M University

Texas A&M offers degrees in petroleum engineering in undergraduate and graduate levels. Since Texas A&M is not only a highly reputable school for the major, but also based in the “energy capital of the world,” it has some of the highest rates of pre-graduation recruitment by major oil and gas companies. In 2002, U.S. News & World Report ranked Texas A&M’s petroleum engineering program as the best in the nation at the undergraduate level. In 2009, they ranked Texas A&M’s graduate program second in the nation.

1. University of Texas at Austin

Based in the capital of Texas, UT Austin is considered not only the best petroleum engineering school in the country, but one of the better schools overall. The Department of Petroleum and Geosystems Engineering admits roughly 100 students per year to the program, with average SAT scores of around 1407. Most students in the program came from the top 3 percent of their high school’s graduating class.

I made a bet with my boss last week taking WTI to hit $55 before $35. We'll see.

Think you'll collect this before the month is over?

[slow99]

Gasser, Justin, Stanley, et al will be interested in this:


1. University of Texas at Austin

Based in the capital of Texas, UT Austin is considered not only the best petroleum engineering school in the country, but one of the better schools overall. The Department of Petroleum and Geosystems Engineering admits roughly 100 students per year to the program, with average SAT scores of around 1407. Most students in the program came from the top 3 percent of their high school’s graduating class.

Hell yeah.