When Midstream Shows Its Teeth
Understanding volume risk has become a major concern for midstream operators and their investors as commodity price volatility this year impaired growth expectations among upstream counterparties. Once regarded as relatively safe investments due to contracted volumes and seemingly endless production growth, the midstream industry (loosely defined as the companies that gather, process and transport hydrocarbons) […]
OPEC + Cuts: Credit Where It’s Due
OPEC’s oil market balancing challenge got tougher and more complex over the past two decades. The organization cut oil production in the face of the 2008 financial crisis, the surge in U.S. liquids growth and most recently the COVID-19 crisis. The scale of OPEC cuts required to balance the market through these crises has risen […]
DUCs Thin the Bill
During the height of the downturn in May, rigs and completions crews dwindled quickly – completion crews dropped over 85% while the rig count dropped 60% in just three months. That disconnect helped create a large accumulation of drilled uncompleted (DUC) wells as E&Ps waited for higher prices before completing wells and turning them sales. Operator […]
Net Reservoir Mapping – A Geologist’s Key to Reservoir Definition
When it comes to prospecting for hydrocarbon-bearing rock formations at the basin level, geologists utilize net reservoir maps to help define fluid-rich intervals within geological units. To develop an effective net reservoir map, knowledge of what geological properties separate productive rock from non-productive rock is essential. Positive production trends can be associated with geologic parameters […]
A Conventional Approach Could Pay Off for Investors
Oil and gas investors are no longer focused on rapid production growth and are placing more importance on a company’s ability to return value to shareholders. Favored companies have low sustaining capital efficiencies and the ability to generate free cash flow. This pivot by investors makes Canadian conventional plays, such as the Bakken, Shaunavon and […]
Tullow — Torn to Pieces or Swallowed Whole?
Sharks in the Water — Part Four Following our recent three-part series highlighting supermajors, and before we turn your attention to independent “sharks” — companies with solid balance sheets, long-term growth strategies and cash to spend on acquisitions from stressed rivals we want to offer our best guess as to where the remains of […]
The Oil & Gas Industry Searches for the Truth Amid COVID-19
These are great times for pundits. We consume so much conflicting data daily; it seems anyone can predict just about anything — proving their point by cherry picking data. It appears the economy has come roaring back. But has it? Wage growth has been stellar — at least it seems so when you ignore the […]
Credit Markets Reopen for Levered E&P Refinancing
Several exploration and production (E&P) companies in August accessed debt markets to refinance near-term maturities despite carrying higher-than-average debt loads. Antero Resources (AR), Range Resources (RRC), Southwestern Energy (SWN) and Occidental Petroleum (OXY) issued new bonds to repay debt coming due from 2021 to 2023 despite carrying one to three more turns of leverage than […]
Rig and Fracture Activity Response in Real-Time
Oilfield activity levels have changed rapidly in response to falling commodity prices this spring. Enverus’ near real-time activity analytics, however, show a stark difference in how completion and drilling activity is responding. This has important implications for operators, oilfield service providers and forecasters. Figure 1 displays the average monthly Lower 48 horizontal rig count and […]
Cash Flow or Grow?
As second-quarter earnings season concludes, a major trend in the Permian was well cost savings from both efficiency gains and service cost reductions. Second-quarter guided well costs are down ~20% in the Midland and Delaware from initial 2020 budgets (Figure 1). Although how well these costs savings survive as rig count recovers is unknown, they […]