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Permit Activity last week. 

  • PA – 39; Chesapeake in Bradford; Chevron in Fayette; Talisman and Cabot in Susquehanna
  • OH –6; American Energy Utica in Belmont

Expo/Industry events for the next few months

Utica Upstream 2015 – April 8, 2015, Canton, OH

Two dynamic speakers have been added to the list of presenters for Utica Upstream – Congressman Bill Johnson, representing Ohio’s 6th congressional district, including most of the state’s Utica shale counties, and Shawn Bennett, Executive Director of OOGA.   

If you are a business that serves the oil and gas economy in the Utica Shale, you will need the best information going forward in 2015.  Get the whole story from industry experts. 

https://www.cantonchamber.org/utica-upstream

Upstream PA 2015 – April 16, 2015 Penn State

George Stark to Speak at Upstream PA 2015

George Stark, Director of External Affairs, at Cabot Oil & Gas Corporation, will be a presenter at Upstream PA 2015 where he will provide an overview for Cabot Oil & Gas Corporation’s drilling activity in 2015.  More importantly, he will review Cabot Oil & Gas Corporation’s accomplishments over the last seven years and what it has meant to communities and businesses in Susquehanna County, Pennsylvania where Cabot Oil & Gas Corporation has been drilling.  The benefits of Cabot Oil and Gas Corporation in the community may be jeopardized by oil and gas severance tax being proposed by the governor.   Stark will update attendees on how best to make sure their voice is heard during this tax policy debate.

If you’re doing business in the upstream market in PA, this is a must attend seminar.

http://upstreampa2015.com/

Ohio Valley Oil & Gas Expo
April 28 & 29
James Carnes Center
St. Clairsville, OH

Last year’s event showcased over 150 booths and brought in 2,000+ visitors.  An even larger turn out is expected this year, as this area continues to evolve into the busiest shale play—making our business to business event the place to be!

Register now to exhibit!  www.ohiovalleyoilgasexpo.com

Latest facts and a rumor from the Marcellus and Utica Shale

  • EnLink expands in the Eagle Ford.  EnLink Midstream Partners announced that it has entered into an agreement to acquire the Victoria Express Pipeline (VEX) and related truck terminal and storage asset from Devon Energy Corporation. Total consideration for the transaction is approximately $210-$220 million, including approximately $171 million in cash, approximately 338,000 of the Partnership’s common units and EnLink’s assumption of approximately $30-$40 million in certain construction costs to expand the system to full capacity, subject to adjustments. The transaction, which is expected to close on or about April 1, 2015, subject to the satisfaction of certain conditions, is expected to be immediately accretive to the Partnership.

    “VEX will continue to provide opportunities to move condensate to attractive markets on the Gulf Coast. We strongly believe in the compelling strategic and financial merits of this transaction, which will benefit both companies.”

    “We continue to make significant progress executing on our growth plan,” said Barry E. Davis, EnLink President and Chief Executive Officer. “This transaction marks the first dropdown from Devon to EnLink, and we expect transactions like this to play a significant role in our future growth. These assets will give EnLink a tremendous growth platform in the Eagle Ford Shale. We look forward to providing high-quality midstream services to producers and marketers in the Eagle Ford area.”
     
  • Chesapeake to make more budget cuts.  Chesapeake Energy Corp. is cutting its 2015 capital budget by $500 million due to low prices for natural gas and liquids.

    The Oklahoma-based company, the No. 1 player in Ohio’s Utica Shale, made its latest adjustment Monday.

    That means Chesapeake intends to spend $3.5 billion to $4 billion and to operate 25 to 35 rigs in 2015.

    Earlier, the company had said it intended to spend $4 billion to $4.5 billion. It operated an average of 64 rigs in 2014.

    Chesapeake intends to drill and connect to sales between 520 and 650 gross operated wells in 2015. That would be a reduction of about 50 percent from 2014.

    Doug Lawler, Chesapeake’s chief executive officer, said, “We entered 2015 with a strong liquidity position and we intend to manage it prudently.”

    The company said it expects to produce 231 million to 236 million barrels of oil equivalent in 2015, representing a growth of 1 percent to 3 percent from 2014.

    That revised forecast is down from last month when Chesapeake said it expected to produce 235 million to 240 million equivalent barrels in 2015, which would have represented a growth of 3 percent to 5 percent from 2014.
     
  • Reduced exploration costs could lead to exploration rebound in 2016.  The oil and gas industry is addressing a long standing cost inflation issue, with exploration costs on average to fall by 33%, softening the blow of exploration budget cuts which, in 2015, will average 30%, according to a new report from consulting/analytics firm Wood Mackenzie.

    Although overall well numbers will dip in 2015, Wood Mackenzie says drilling activity in 2016 is set to recover as many explorers seize their chance to drill at lower costs.

    "Rising costs are not a new problem for explorers,” according to Andrew Latham, Vice President Exploration Research for Wood Mackenzie. “Over this decade, inflation has more than offset price gains and left much of the industry struggling to create value. Now that prices have fallen sharply, this problem has become acute. Short-term, many explorers will react by simply spending less. But what they really need is lower costs."

    In the report “Upstream Cost Deflation: How Much Could Costs of Exploration Fall?,” Wood Mackenzie concludes exploration deflation will average 33% by 2016, comprising three global elements that are locally compounded by favorable exchange rate moves: Like-for-like costs will decline by 19%; simplification of activities could save 5%; efficiency improvements will save another 5%; and US dollar strength will save 4% overall.

    "Only about half of these gains will be enjoyed during 2015 as contracts unwind and operators take time to adopt new practices,” Latham said. “We expect the full benefit during 2016, unless oil prices recover quickly. Deflation at this rate could allow any companies that hold spending flat into 2016 to fund 50% more exploration vs 2014. Even those with cuts of around the average 30% may see their 2016 activity bounce back to 2014 levels."

    "Cutting back on exploration spend has been a core element in the strategic response to low oil prices,” said Tom Ellacott, Vice President Corporate Upstream Research for Wood Mackenzie. “The industry has moved more rapidly than it did during the previous, short-lived, price crash of 2008-2009, with spend now expected to be down 30% year-over-year.”

    Wood Mackenzie expects recovery in 2016 as many companies seize their chance to drill at lower cost. Companies holding exploration spending flat or make only modest cuts could achieve “more with less.”

    “The time is right for strong explorers to be counter-cyclical and increase their drilling in high-impact plays," according to Wood Mackenzie.
     
  • Dominion to build another Nat Gas powered plant.  Dominion Resources Inc. will announce today that it plans to build a 1,600-megawatt natural gas-fired power plant in Southside Virginia.

    The plant — which would be the state’s largest fueled by natural gas — would be built on a 1,143-acre property that straddles the Greensville-Brunswick county line, with most of the land in Greensville.

    It will draw fuel from a Transco pipeline that is being extended to the site, and it would eventually be supplied by the proposed Atlantic Coast Pipeline.

    The plant, which would need to be approved by the State Corporation Commission, would open in 2019.
     
  • Statoil signs deal with WV.  For an average price of $8,732 per acre with 20 percent production royalties, the West Virginia Department of Commerce will allow Norway-based Statoil to frack for oil and natural gas thousands of feet beneath the Ohio River.

    The finalized lease agreement for drilling in state-owned mineral tracts under the river is in addition to those filed by Noble Energy and Gastar Exploration, which would pay the state $4.9 million and $749,000, respectively, in addition to the 20 percent royalties. These deals are not yet official; however, the companies remain in negotiations with state leaders.

    "We are still finalizing agreements with Gastar Exploration and Noble Energy, but expect to have those executed before the end of the month," commerce department spokeswoman Chelsea Ruby said.
     
  • Consol cuts rigs by one or two.  Consol Energy Inc. has reduced the number of drill rigs it will run this year by one or two, the company disclosed in a Securities and Exchange Commission filing.

    Earlier this month, Consol said it was shaving an $80 million off its 2015 capital budget due to low gas prices. In the fourth quarter of 2014, Consol had been running 10 rigs in the Appalachian basin, eight targeting the Marcellus Shale and two targeting the Utica Shale in Ohio. The company said it will run eight or nine rigs this year.

    Despite the reduction, the company has said it expects to increase natural gas production by 30 percent this year.
     
  • Saudis bomb rebels in Yemen.  Why oil prices may move up faster than any thought.  Brent has surged more than 4% towards $59/bbl Thursday following the commencement of military operations by Saudi Arabia and its Gulf Arab allies in Yemen, which is situated on a strategically important global oil chokepoint between the Arab Gulf and Europe.

    In order to export oil to Europe, Arab producers have to send the crude past Yemen's coastlines via the Gulf of Aden to get to the Suez Canal. According to maritime sources who spoke to Reuters, four Egyptian naval vessels have traveled through the Suez Canal on the way to Yemen to secure the Gulf of Aden.

    The Bab el-Mandeb Strait is a chokepoint between the Horn of Africa and the Middle East, and it is a strategic link between the Mediterranean Sea and the Indian Ocean. It is located between Yemen, Djibouti, and Eritrea, and connects the Red Sea with the Gulf of Aden and the Arabian Sea.

    An estimated 3.8 M/bd of crude oil and refined petroleum products flowed through this waterway in 2013 toward Europe, the US, and Asia- an increase from 2.9 M/bd in 2009. Closure of the Bab el-Mandeb could keep tankers from the Persian Gulf from reaching the Suez Canal or SUMED Pipeline, diverting them around the southern tip of Africa, adding to transit time and cost.

    The air strikes against Houthi rebels, who have driven the president from Yemen's capital, are already raising fears within the market regarding the security of Middle East oil shipments. Security concerns are translated in the oil market to supply disruption fears. And the market has responded this morning.

    Saudi vs. Iran Proxy War

    The airstrike launched Wednesday night against Shiite rebel forces in Yemen were in response to distress calls from the US-supported Yemeni president who was fleeing the country amid significant advances by the rebels.

    The strikes heighten the risk that Yemen will become the epicenter of a proxy war situating Saudi Arabia and other Sunni Arab countries against Shia Iran. They also manifest a significant escalation of complexity in the growing conflict in the region besetting several countries.

    Even as Saudi forces began launching air strikes against the Shiite rebels, US fighter planes were providing support for Iran-supported Shiite fighters in Iraq's war against ISIS, a Sunni extremist group. The Saudi ambassador, Adel al-Jubeir, issued a statement saying that the Royal Kingdom "will do anything necessary" to protect the people of Yemen and "the legitimate government of Yemen."

    The Saudi ambassador said that the Houthi rebels "have always chosen the path of violence." He added that the bombing was occurring in coordination with 10 other countries, most of them reportedly other Sunni-dominated Arab nations.

Rig Count

  • Baker Hughes Rigs count for the week March 20th
     
    • PA
      • Marcellus 48 up 3
      • Utica 2 unchanged
    • Ohio
      • Utica 28 down 3
    • WV
      • Marcellus 21 up 3
    • TX
      • Eagle Ford – 138 down 8
      • Permian Basin  242 down 15
    • NM
      • Permian Basin – 50 down 4  
      • Williston – 98 down 3
    • MT
      • Williston – 1 down 2
    • CO
      • Niobrara – 29 down 2
         
  • TOTAL U.S. Rig Count 1069 down 56

PA Permits for March 19, to March 26 2015

       County               Township              E&P Companies

1.    Armstrong            West Franklin        Penn Energy
2.    Bradford                Albany                 Chesapeake
3.    Bradford                Herrick                 Chesapeake
4.    Bradford                Tuscarora             Chesapeake
5.    Bradford                Ulster                   Chesapeake
6.    Bradford                Wilmot                 Chesapeake
7.    Bradford                Wyalusing            Chesapeake
8.    Butler                    Penn                    XTO
9.    Butler                    Penn                    XTO
10.    Butler                  Penn                    XTO
11.    Clearfield              Morris                   Exco Resources
12.    Clinton                 West Keating        Enerplus
13.    Fayette                German                Chevron
14.    Fayette                German                Chevron
15.    Fayette                German                Chevron
16.    Fayette                German                Chevron
17.    Fayette                German                Chevron
18.    Fayette                German                Chevron
19.    Greene                Perry                    Vantage
20.    Greene                Washington           EQT
21.    Indiana                North Mahoning     Consol
22.    Susquehanna       Hartford                Cabot
23.    Susquehanna       Hartford                Cabot
24.    Susquehanna       Hartford                Cabot
25.    Susquehanna       Hartford                Cabot
26.    Susquehanna       Middletown           Talisman
27.    Susquehanna       Middletown           Talisman
28.    Susquehanna       Middletown           Talisman
29.    Susquehanna       Middletown           Talisman
30.    Susquehanna       Middletown           Talisman
31.    Susquehanna       Middletown           Talisman
32.    Susquehanna       Middletown           Talisman
33.    Warren                Mead                    Shell
34.    Washington         Amwell                  EQT
35.    Washington         Amwell                  EQT
36.    Washington         Amwell                  EQT
37.    Washington         Nottingham            Range
38.    Washington         Nottingham            Range
39.    Washington         Nottingham            Range

OH Permits – weeks ending March 14, 2015

       County            Township                E&P Companies

1.    Belmont             Pease                    Amer. Ener. Utica
2.    Belmont             Pease                    Amer. Ener. Utica
3.    Belmont             Pease                    Amer. Ener. Utica
4.    Carroll                Washington            Chesapeake
5.    Carroll                Washington            Chesapeake
6.    Monroe              Switzerland             Eclipse Resources

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Joe Barone jbarone@shaledirectories.com 610.764.1232
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