SCOOP/STACK Play – Oklahoma
The SCOOP/STACK continued to shed oil rigs in August according to both the Baker Hughes and Enverus rig count numbers, as operators continued to pare back drilling budgets for the second half of 2019. According to Enverus (formerly DrillingInfo), the count in the Anadarko Basin — which includes the SCOOP/STACK — fell by 55 rigs for the 12 months ended Aug. 31. The decline in the Anadarko Basin was the largest for any area in the country, as measured by Enverus.
Continental Resources and Lagoon Water Resources, an Oklahoma-based midstream company, announced an $85 million deal for Lagoon to acquire Continental’s eastern STACK water recycling facility, gathering system and three related disposal wells in Blaine County. Lagoon also agreed to a long-term deal to gather and dispose of produced water and source recycled water for Continental.
Eagle Ford Shale – Texas
Japan’s largest oil producer, Tokyo-based Inpex, filed for 11 drilling permits with the Texas Railroad Commission in August, as it prepares to commence drilling operations on its Eagle Ford acreage before the end of the year. Inpex acquired leases and existing production in Karnes and LaSalle Counties in March from Gulftex Energy. Its permit filings include plans to test both the Eagle Ford Shale and Austin Chalk formations in its drilling efforts.
Chesapeake Energy reported in August that it produced a record amount, 122,000 barrels of oil daily during the second quarter, which is a 36% increase compared to the same quarter in 2018. The company attributes much of its increase to additional Eagle Ford assets obtained earlier this year in its acquisition of WildHorse Resource Development Corp.
Marcellus/Utica Shale – Pennsylvania/West Virginia/Ohio
President Donald Trump visited Beaver County, Pennsylvania in August to help Royal Dutch Shell celebrate the opening of its new ethane cracker/petrochemical complex outside of Potter Township. The new plant, which represents the largest capital investment in Pennsylvania history, will take advantage of the high ethane content contained in Marcellus Shale natural gas. Ethane is one of the main feedstocks for the manufacturing of plastics.
The Pennsylvania State PUC’s annual report projects that natural gas-fired electricity in the state will rise in the coming years as natural gas continues to displace coal and nuclear in the power generation sector. The report projects that gas-fired power generation will account for as much as 45% of the state’s installed capacity by the end of 2022, up from about 34% today.
Bakken Shale – North Dakota/Montana
The flaring of natural gas continues to be a lingering issue in the Bakken Shale, one that will place constraints on future production growth if it is not resolved. This is a finding in a report from Research and Markets titled “Bakken Shale in the US, 2019 — Oil and Gas Shale Market Analysis and Outlook to 2023.” The report states that about 19% of produced gas in the basin ends up being flared, well above the 12% limit prescribed by North Dakota regulators.
Despite the new report’s findings, North Dakota’s industry achieved record levels of production for both oil and natural gas during the month of June. The nation’s second-largest oil producing state — behind only Texas — produced 1,424,625 barrels a day, up 29,977 barrels a day from May. The state also produced 2,876,689 mcf of natural gas per day in June, an increase of about 57,000 mcf over May.
Denver/Julesberg (DJ) Basin – Colorado
Despite his signing of Senate Bill 19-181, a Democrat-passed bill clearly designed to restrict future oil and gas development in his state, Colorado Governor Jared Polis assured an oil and gas audience that his policies will have “nothing to do with” the industry’s future health.
“As long as commodity prices are good, you’re gonna have a good business,” Polis told the crowd. “It has nothing to do with me, and nothing to do with our state politics, and less even to do with national politics; it really all comes down to supply and demand.”
Colorado Oil and Gas Association CEO Dan Haley disagreed: “With all due respect, what you do, what you say, does matter,” Haley said. “And what happens in Colorado does matter. There is a lot of talk out there of people wanting to ban fossil fuels. It makes our folks nervous. I think you underestimate the impact that political rhetoric, political actions and regulatory actions have.”
PDC Energy announced on Aug. 26 that it would acquire SRC Energy in an all-stock transaction valued at just over $1.7 billion in assets and assumed debt. The two Denver-based companies will form the second-largest oil and gas producer in Colorado’s DJ Basin and adds to PDC’s position in the Permian Basin.
Haynesville/Bossier Play – Louisiana/East Texas
With natural gas prices hovering in the $2.20 per mcf range, Chesapeake announced it would reduce its Haynesville-related capital budget in order to focus more money in oiler areas like the Eagle Ford Shale. The company said it plans to reduce its rig count in the Haynesville play from the one rig operating currently “to zero in the near future.”
On the positive side, Japanese company, Osaka Gas, announced that it would acquire Haynesville-focused Sabine Oil & Gas Corporation for $610 million. Osaka will assume operations of 175,000 net acres in East Texas with about 1,200 wells producing about 1.7 million tonnes of shale gas a year. Osaka is also a partner in the Freeport LNG liquefaction facility offshore of Freeport, Texas.
Permian Basin – Texas/New Mexico
Concho Resources announced in early September that it would sell various non-core Permian Basin properties to Houston-based Spur Energy Partners for $925 million. Concho said the transaction was part of its ongoing plan to high-grade its asset base. The company plans to use the proceeds to pay down debt and initiate a stock buy-back program.
In its annual revenue tracking report for the fiscal year ended June 30, the New Mexico legislature said that the state government took in a record $7.8 billion, thanks in large part to Permian-based activity.
The state had already anticipated enjoying a record $1.3 billion budget surplus for the year, but this final report represents an increase of $273 million above that expected outcome. The final budget surplus represents about 25% of the entire state budget.