Newsletter No. 16
Good evening.
Today, we pause to remember the many brave soldiers who have fallen in sacrifice for our country. Today, may we put aside differences to honor their memory.
Today’s Headlines
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SUPER DUG Conference Highlights
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A Billionaire Buys Directly into an Oilfield
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Rig Count Falls in May by Most in a Month Since 2020
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Deal of the Week
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Well of the Week
SUPER DUG Conference Highlights
It was a great event this year ast Hart Energy, a leading Oil and Gas news publisher, put together the largest event for OG industry leaders.
The 3-day shale event focuses on energy production in the shale plays of the Permian Basin, Eagle Ford, Bakken, Midcontinent and the Rockies. These five major plays constitutes the super majority of all shale drilling in the continental U.S. and will attract executives and attendees from every shale producing area.
Other companies involved in the event included Accelerate Resources, Bayswater Exploration, BP, BPX Energy, Chevron, ConocoPhillips, Continental Resources, Devon Energy, EOG Resources, ExxonMobil, Pioneer Natural Resources, OXY, Rockies Resources, Sandridge Energy, Tall City Exploration and more.
Topics centered on: Price Inflation Impact on Economics, Carbon Management, Blue Oil and Green Gas, M&A & Markets, and Operator Panels by Shale Play. Among the many speakers, below were highlights for me…
Cody Campbell of Double Energy IV. Cody, with partner John Sellers, sold Permian assets two years ago (Double Energy III) to Pioneer Natural Resources for $6.4 billion. The transaction included 100,000 acres and 100,000 barrels of oil per day. This equated to $30,000 per flowing barrel and $40,000 per acre for undeveloped land. Their new company, Double Energy IV, has 4 rigs in the Permian and will pick up another rig in July. They have access to over $2 billion in capital to increase assets and divest in the future.
CEO Jody Dominic with Anschutz discussed their plans in the Powder River Basin of Wyoming, with 4 rigs. They are looking at drilling 2 ½ mile laterals to view economics between lateral lengths of 2-mile and 2 ½ mile or 3-mile laterals. They have a large acreage position and have studied the PR Basin for a couple of years and are optimistic about their drilling activities.
I had the pleasure of introducing Tim Helms of Citizen Energy to the stage. Citizen has 585 horizontal wells producing 80,000 bbl/d on 350,000 acres. The Mid-Continent region sometimes is overlooked with bigger companies looking at the Permian and Haynesville. Helm said they are going down to 3 rigs and have plenty of inventory with many different prospects ranging from shallow to deeper horizons. He is optimistic natural gas prices will increase in the next couple of years.
Danny Wesson, Executive VP and COO of Diamondback Energy stated they are currently running 16 rigs in the Permian with 4 frac fleets. They should complete 325 wells in 2023 and increase barrels of oil per day to 260,000 and spend $2.6 billion. Prices of casing and diesel are starting to soften after the 2nd quarter this year. Drilling is coming down from the peak in 2021 but completion costs are staying the same. He also mentioned deals are still getting done and private companies are still increasing production and looking to divest in the A&D markets.
A Billionaire Buys Directly into an Oilfield
Currently listed as Forbes number 10 in richest people on the planet, Mexican billionaire Carlos Slim bought a 49.9% minority stake in Talos Energy’s (NYSE:TALO) Mexico unit for $125 million, seeking to tap into the hydrocarbon riches of the Zama field which is believed to contain up to 2 billion barrels of oil.
Rig Count Falls in May by Most in a Month Since 2020
As we’ve noted in recently newsletters, Natural Gas drillers continue to drill. But rig counts are now on the decline in the Natural Gas plays. Companies aren’t shedding all rigs, but they are slimming down as they feel the pinch with lower Natural Gas prices. Most companies have acreage that is already held by production (HBP), so leases remain live as long as current production flows. They don’t need to drill immediately and they can “afford” to wait until prices come back up.
Deal of the Week
Chevron deepened its commitment to oil-and-gas drilling in the US, spending more than $6 billion to acquire a rival with sizable operations in Texas and Colorado, reported the Wall Street Journal. In buying PDC Energy in a $6.3 billion all-stock deal, the US oil major is aiming to build a bigger foothold in two prolific oil patches, particularly the Denver-Julesburg Basin that straddles Colorado and Wyoming, a region where Chevron already has a large stake. The transaction also boosts Chevron’s position in its major US onshore play, the Permian Basin of West Texas and New Mexico. The deal will spin off $1 billion annually in extra cash while adding 1 billion barrels of proved reserves to its portfolio.
Well of the Week
I have been looking for a current well of the week and found an article in Hart Energy (paid subscription, so you’re getting a peek through my lens). I was asking, “What are the largest IP (initial production) wells in the Permian Basin?” The article came up discussing EOG drilled a Wolfcamp well in 2019 in Loving County, Texas, and the initial production numbers were over 15,000 barrels of oil equivalent per day!!! The first revenue check would be over $30 million! This is gross before royalty, lease operating expenses (LOEs).
Recommended Reads
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Is This the Supermajor of the Century?
Can China Secure its Long Term Goals in Afghanistan?
There are some outstanding results developing in the current program… KOPX Program 4. If you are not in it, and you are accredited, it’s a good time to have a conversation! You can schedule a Zoom here.
All the best,
Jay
