Is There A War on Oil and Gas?

Newsletter No. 27

Good evening!

Hope everyone had a great week last week.   


Today’s Headlines

  • Blackmon Discusses Gas Prices and Biden Energy Department

  • King Operating News from the Field

  • Oil and Gas News: Talos Energy Finds Discovery in the Gulf

  • On a Personal Note …


David Blackmon Discusses Gas Prices and Biden Energy Department

An article by public policy analyst David Blackmon in The Daily Caller discusses the rise in gasoline prices, which are now at an average of $3.83 per gallon of regular gas, up from $3.53 in July. It points out that these prices follow the increase in crude oil prices, which are expected to keep rising due to global supply cuts.


The Biden Energy Department’s decision to cancel a planned purchase of oil for the U.S. Strategic Petroleum Reserve is criticized in the article, suggesting political motives may be affecting the management of the reserve. In the article, Blackmon also highlights the misuse of the reserve for political gain during the 2022 midterm elections, noting that it was originally intended for emergencies, not politics.


I recently sat down with David Blackmon for my podcast, The Jay Young Show. We covered everything from the boom-and-bust cycles of the industry to new technologies like horizontal drilling and fracking that have been total game changers.


David I do a deep dive into energy policy, politics, supply and demand dynamics in oil/gas markets, and make some bold predictions about where prices are headed.


Whether you’re in oil/gas or just want to understand energy markets better, this episode is packed with insider knowledge.

King Operating News from the Field

We’re now in August, but July was a busy month in the oilfield as we finished drilling our fifth well in Borden County, Texas. The great news is that we came in on time and under budget! 


We have brought two of the wells online and have completion plans for the other three for August and September. 


We are very encouraged with our results and await completion numbers on previous wells before we start our new drilling plan on the Believers project. The project gives us many different opportunities to produce in the field.  You will read about them below as we continue doing our homework searching for the completions that will bring the most value to our investors. This is not easy. It takes a lot of time, money and patience to look for the combination of the right drilling prospects for our current partners and buyers of the field in the future.


We are contemplating completing Believers 1 in the Wolfcamp section. We have up to five zones in the Wolfcamp and we are studying the most effective way to multi-stage frac this zone in the well vertically. Our engineers are working with different completion companies and outside engineers to produce the well with commercial amounts of oil and gas. 


We are also excited about the Spraberry formation. There are offset wells that produce over 100,000 barrels of oil and we could either frac the zone along with the Wolfcamp or leave it behind the pipe, and produce it in the future. The oilman in me wants to multi-stage frac the Wolfcamp and Spraberry at the same time and gain as much production immediately, but of course, I didn’t get a petroleum engineering degree and have to listen and ask questions from the individuals with degrees and experience.  


Believers 2 started flowing at the end of June, and it flowed all month. It’s still flowing. This is great because the downhole pressure is enough to produce the oil to surface without any artificial lift such as a pumping unit. (This is not quite like Jed Clampitt with his shotgun on the Beverly Hillbillies, but close). We sold over 3,000 barrels of oil by the end of July.  This will be great for our partners as revenue will be distributed next month. 


The Believers 3 well also came on this week, and we are currently working out some minor kinks with the Electric Submersible Pump (ESP). Most ESPs must be recalibrated for several days or weeks as the ESP works with downhole pressures, fluid entry and production numbers before finding the right combination. 


Garrett Stacey, King Completions Expert, and a Petroleum Engineer, has also mentioned we could perforate the pipe with additional holes to increase production.  The more perforations in the pipe could increase the amount of flowback but he wanted to be careful on our first completion.  He didn’t want too much water in the wellbore initially and called for 104 perforations in the pipe.  We are looking to increase the perforations in the pipe substantially as we look for ways to increase production.


Believers 4 will be perforated in the Wichita Albany initially. This zone will be perforated and initially completed to look at production rates.  The Wichita Albany formation is 250 feet thick, and we will perforate the top 40 feet thick. Bley Unit #1 was produced in that area and produced an astonishing 464,014 barrels of oil.  Another Wichita Albany that produced 65,966 barrels of oil was the Drum 467 well. Engineers will decide when to move up hole to the Sprabery formation. Chances are we will commingle production from the Wichita Albany and Spraberry at the same time. 


Finally, we have Believers 5, which will be fracked in the Wolfcamp B zone.  We continue to look at other Wolfcamp completions to shape the frac design. This is a long lateral and will need to be multi-stage fracked. We are looking at the number of zones, barrels of water, sand and chemicals to make the best completion possible. 


Oil and Gas News: Talos Energy Finds Discovery in the Gulf

Talos Energy, a company that looks for oil deep under the sea, recently found a lot of oil and gas in the Gulf of Mexico. This discovery is important because it can help ensure we have enough energy and might even affect how much we pay for things like gas.


Talos Energy is really good at using special tools to find oil and gas hidden under the ocean floor. They’re careful to do this in a way that doesn’t harm the environment.


This discovery could make other companies interested in finding oil in the Gulf of Mexico too. It’s also a big deal for Talos Energy’s business and could change how we get our energy in the future.

On a Personal Note …

I returned from a great trip to Scotland, with three of our pastors from church.  We were among the eight golfers trying to conquer the various courses including Kingsbarns, Castle, Dumbarnie Golf Links, Gleneagles and Carnoustie Golf Links. 

This has been a bucket list item for as long as I have been playing golf and I would recommend this trip to everyone.  

Hopefully, some will be encouraged to take a trip. It may not be in your budget but there are several ways to save money in order to go, and this would give everyone a trip they would never forget. 

One hiccup encountered, though: We tried to get on the Old Course (first golf course dating back to the 1700s) but the four that had tee times had already played so they allowed us to go in their place.  Before the tee time, they wanted to see our ID and of course, the tee time wasn’t in our name, so we were turned away. Note to self: Get tee times in your own name next time. This will give us something to look forward to on our next trip to Scotland. 

On another note, since touching down back in Texas, school is back in session. Our youngest, Mikala, is a senior in high school this year.  Her volleyball team has a chance of being the #1 team in the nation!! That’s right, not only the state of Texas, but the nation. Be sure to check here for updates on that journey and much more.

 Lastly, if you have a subject you would like me to discuss, please do not hesitate to reply to this email.  I will do my best to include it as soon as I can. 


Recommended Reads

IEA Says Global Oil Demand Hits Record and Prices May Climb

Colombia’s Ecopetrol hails new oil and gas discovery

How AI Is Breathing New Life Into Oil And Gas Operations

Lastly, if you have a subject you would like me to discuss, please do not hesitate to reply to this email.  I will do my best to include it as soon as I can. 

 All the best,