Facts & Rumors # 559
July 13, 2024
O&G Industry Applauds Chevron Ruling. Oil and gas trade group applauds Supreme Court’s Chevron ruling. World Oil. The American Petroleum Institute (API) released a statement from API Senior Vice President and General Counsel Ryan Meyers on the Supreme Court’s decision to overturn the 1984 Chevron precedent. “We agree with the Court that agency actions must faithfully implement the laws passed by Congress. Today’s decision is a reminder that it’s time for both parties to work together and advance bipartisan, commonsense policies that provide regulatory certainty and secure an affordable, reliable energy future.”
Permian to Stay Strong. Permian Basin shale production to remain strong. Offshore Technology. The Permian Basin is the largest oil-producing shale play in the US. Chiefly located in Texas, it benefits from the dense network of oil and gas pipelines in the state as well as access to downstream and export infrastructure along the Gulf Coast. Global oil demand has been on the rise after the Covid-19 pandemic. According to GlobalData, crude oil production in the Permian Basin was 5.5 mmbd [million barrels per day] in March 2024. Meanwhile, natural gas production in this play was 23.1 bcfd [billion cubic feet per day] during the same month. Europe’s strategic shift away from Russian energy exports has resulted in key changes to the global energy supplies.
Oil and NatGas Production Slowing. Why U.S. oil and gas production is slowing down. Oil Price. Slowing drilling activity in the U.S. shale patch is capping oil production growth while natural gas output is down from year-ago levels amid above-average inventories and unsustainably low prices earlier this year. Oil and gas prices have dropped since the highs from the summer of 2022 when they spiked following the Russian invasion of Ukraine. The decline in U.S. benchmark oil and gas prices over the past nearly two years has reduced – with a lag – drilling activity in the shale patch.
“Drill Baby Drill” Never Died. The U.S. has expanded its Energy Dominance. Barron’s. A central plank of former President Donald Trump’s election campaign is that he’ll restore America’s “drill baby drill” energy policy. But new data makes it clear that the U.S. is already drilling for oil and natural gas at a record clip, and is on pace to become even more energy-dominant next year.
Oil and NatGas Companies Find Financing. Oil and gas companies continue to find financing. Bloomberg. More than $5 billion in private credit deals have been written for oil & gas projects since the start of 2023. HighPeak’s $1.2 billion transaction provides financial flexibility and potential for the company to add a third drilling rig, increasing HighPeak’s oil production, which averaged 50,000 barrels of oil a day. Whitehaven’s $1.1 billion acquisition of the Daunia and Blackwater metallurgical (coking) coal mines adjusts their revenue mix to be 70% coking coal and 30% thermal. The IEA calculated that more methane is released from coking coal mining than from gas pipelines and LNG facilities combined, and is generally unaccounted for in steelmaking.
Family Oil Companies Attract M&A Attention. Family oil companies attract huge M&A attention. Hart Energy. After more than a century of exploration and development, the Permian Basin is the gift that keeps on giving. And as operators jockey for scale and runway in America’s biggest resource basin, they’re knocking on the doors of wildcatting families that have been in the Permian since the play’s beginning.
Repsol May Sell South Texas Assets. Repsol explores sale of minority stake in South Texas oil assets, sources say. Reuters. Spanish oil major Repsol (REP.MC), plans to sell a minority interest in its Eagle Ford shale assets in South Texas, in a deal that could value the assets at up to $2 billion, three sources familiar with the talks told Reuters. The sources said Repsol has hired Scotiabank to assist with the process, and aims to bring in a partner or partners to hold so-called non-op positions, earning a cut from sale of hydrocarbons while paying a share of operating costs.
Consolidation Wave in O&G Boon to Private Equity. Consolidation wave in U.S. oil and gas is big boon for private equity. Oil Price. A couple of years ago, private equity funds were having trouble convincing investors that there was still money to be made in oil and gas. At that time, everyone wanted in on the ESG game. Fast forward two years—private equity funds that stayed exposed to the oil and gas industry are making billions from their exits. At the end of last month, EnCap Investments sold its portfolio company XCL Resources to SM Energy and Northern Oil and Gas. The total price tag was about $2.5 billion. Also in June, EnCap sold assets of another portfolio company, this one in the Permian, to Matador Resources for close to $2 billion.
Big Tech Testing the Grid. Big Tech is stress testing the grid. It doesn’t have to be a disaster. E&E News. America’s digital economy is turning electricity into a growth industry after years of flat demand. Nvidia, the dominant maker of high-end artificial intelligence chips, is pressing its cloud-computing customers, which include Amazon, Google, Microsoft and Meta, on where they will find the power to run servers in for generative AI. Microsoft has agreed to buy more than 10 gigawatts of renewable energy to power data centers in the United States and Europe. And energy demand in West Texas could double because of the influx of data centers and cryptocurrency miners hoping to generate electricity from natural gas produced nearby.
NatGas a Winner. American natural gas is a win for climate, economy, and security. Washington Examiner. In a win for both American energy and climate policy, a federal court this week blocked the Biden administration’s pause on new permits for liquefied natural gas exports. It’s clear that unleashing cleaner, abundant energy, produced in the United States, will support global emissions reduction efforts while increasing energy security for us and our allies.
Deven Makes $5 Billion Purchase. Devon Energy buys $5 billion of oil wells, land and other assets from Houston-based company. KOSU Local. This week, Devon announced it acquired $5 billion worth of assets from Houston-based Grayson Mill Energy, which is owned by private equity firm EnCap. The sale includes about 500 oil wells on 307,000 acres of land — a swath about 16 times the size of Stillwater. It’s on the Williston Oil Basin, which covers parts of the Dakotas, Montana and southern Canada. Devon paid for that land and other assets using about $3 billion in cash and $2 billion in stocks. Devon says the acquisition will bring total energy production up to 765,000 barrel-equivalents per day, meaning the company will be producing as much energy as you’d get from that many barrels of oil.
Safe Oil Export Project. Oil export project likely won’t boost US emissions, feds say. E&E News. A large oil export terminal proposed for the Gulf of Mexico is likely to have little effect on the emissions footprint of the overall U.S. crude oil supply chain, according to a new assessment from the Department of Transportation. DOT’s Maritime Administration analyzed the environmental and climate effects of the planned Texas GulfLink project. The agency said in its report last week that — while greenhouse gas emissions associated with potential crude oil production and use of oil exported by the project “represent a significant amount” of emissions — the majority of those “likely already occur as part” of the U.S. oil supply chain.
June DUC’s Report. More than 9% of the drilled, but uncompleted wells located in four of the US’s most prolific shale plays in June 2023, were brought online one year later, the latest Federal data shows.
A total of 2,328 “DUCs” were in place last month in the plays of Appalachia (the Marcellus and Utica Shales), Bakken, Eagle Ford, and Permian plays, down 235 wells from June 2023.
The latest total was down 15 DUCs from May 2024’s 2,343 total, according to EIA’s latest Short-Term Energy Outlook (STEO), released July 9.
The Bakken and Eagle Ford plays each recorded triple-digit drops in DUCs year-over-year. The Bakken’s well total fell by 184, or 35.7%, to 331 from 515. The June total was down three DUCs from May’s total.
The Eagle Ford saw its DUCs total fall 157 wells, or 32.6%, year-over-year, to 324 from 481, the STEO reveals. In May, the play’s DUCs total was 327.
Appalachia and the Permian each reported a year-over-year increase in DUCs. Appalachia’s total rose by 76 wells, or 10.7%, to 786 from 710. Last month’s total was down four wells from May’s 790 total.
The Permian Basin’s total of drilled, but uncompleted wells rose by 30, or 3.5%, last month, to 887 from 857. June’s total was down five wells from May’s 892, according to the STEO report.
PA Permits June 17, to July 11, 2024
County Township E&P Companies
1. Allegheny West Deer Olympus
2. Beaver Independence Range
3. Bradford Wyalusing Chesapeake
4. Bradford Wyalusing Chesapeake
5. Greene Aleppo EQT
6. Tioga Richmond Seneca
7. Tioga Shippen Seneca
8. Tioga Westfield Seneca
9. Tioga Westfield Seneca
10. Washington North Franklin Range
11. Washington North Franklin Range
12. Washington North Franklin Range
13. Washington North Franklin Range
14. Westmoreland Salem Apex
15. Westmoreland Salem Apex
16. Westmoreland Salem Apex
OH Permits June 30, to July 6, 2024
County Township E&P Companies
1. Guernsey Center EAP OHIO
2. Guernsey Center EAP OHIO
3. Guernsey Center EAP OHIO
4. Guernsey Center EAP OHIO
WV Permits June 17, to June 21, 2024
1. Harrison Arsenal Resources
2. Harrison Meadow Ridge Dev
3. Tyler Antero
4. Tyler Antero
5. Tyler Antero
6. Tyler Antero
7. Tyler Antero
8. Tyler Antero
