NAPE Business Conference 2015

February 12, 2015 Elizabeth Alford

Hundreds gathered in Houston today for the opening of the NAPE Summit Business Conference. This annual networking event is designed to bring prospects, producers and purchasers together to forge important business connections and mine opportunities.

In an industry riddled with recent uncertainty, the atmosphere at the conference was marked by optimism. Bob Fryklund, Chief Upstream Strategist for IHS, set the tone in his opening comments as he encouraged participants not to push the panic button too quickly. Though he acknowledged the conversation has changed in recent months, he reminded participants of the record production set by North American producers in the last five years.

“Fryklund commented, “OPEC and others discount the resilience of North America,” and added that, “we will not be a diminished producer because of what we are going through.”

Many of the speakers spent part of their time talking about record production set by North American producers over the years and cyclical nature of the industry. History showed we would weather this storm.

Jack Stark, President and COO of Continental Resources continued the theme by listing some of the industry wins including:

Unprecedented growth from 2005-2015
World changing upstream technologies
Discovering a whole new, vast class of reservoir (shale plays)
Reserves at all time highs
Created jobs and increased our energy independence
Improved efficiencies such as cutting drilling time from 45 days to 17
A midstream evolution: pipelines, rail, rail to barge and connections to all coasts

For more about NAPE, visit napexpo.com

North Dakota Tax Trigger Getting Closer

February 11, 2015 Elizabeth Alford

The countdown has begun on North Dakota's small oil tax trigger.

This measure, which kicked in at the beginning of the month, was introduced by lawmakers to provide tax incentives to strained producers in order to ease the sting of prolonged lower crude prices.

The formula for the tax trigger states that when West Texas Intermediate (WTI) stays below $52.58 (2015) for five consecutive months, then the state waives its 6.5% oil extraction tax. Since January crude prices averaged $47.98 per barrel, the trigger took affect February 1st. As long as the price stays below $52.59 for the next four months, the incentive will take effect. Once the prices inches up, the calculations start over.

North Dakota state legislators jumped this week to take measures to extend the trigger through June 30, 2019. House Bill 1437 extends a smaller trigger that would take place the month after an average price point of $57.50 is reached. Both triggers would not be able to occur at once and there is provision to allow time for the state to recover from the huge losses that are inevitable.

“The bill’s sponsor, Rep. Glen Froseth said that, “It’s probably the best time to be doing it. We want the industry to keep working.”

To read the full bill, visit nd.gov.

Image: CCo Public Domain

Occidental Petroleum Reduced 2015 Capex by 33%

February 10, 2015 Elizabeth Alford

Occidental Petroleum Corporation reported during its earnings call in late January that the company sustained a fourth quarter loss of $3.4 billion.

In response to low oil prices, Occidental announced it will scale back its 2015 capital spending by 33 percent to $5.8 billion from $8.7 billion spent in 2014. In addition to the cuts, the company will also be reducing its activity in the Bakken.

This confirms the news we reported in October that the company was in the process of restructuring, and looking to sell off its Williston Basin assets. Read more here.

“Stephen Chazen, President and Chief Executive Officer confirmed that the company “minimized our development activities in the Williston Basin, domestic gas properties, Bahrain, and the Joslyn oil sands project, as these have subpar returns in this current product price environment. These efforts should result in a reduction in the cost of executing our capital program, as well as reducing our operating expenses”

Occidental may be moving out of the Bakken sooner than later. The Dickinson Press reported this week that the company had one rig finishing up in Dunn County and plans to move the equipment offsite within a week.

Other company highlights include a year-end 2014 cash balance of $7.8 billion, which exceeds their total debt of $6.8 billion. Additionally, the company projects that oil and gas production will grow 6 to 10 percent in 2015.

Learn more about Occidental's Bakken operation

Hess to Reduce Bakken Spending by 18%

February 4, 2015 Elizabeth Alford

Hess Corporation recently announced revisions to its 2015 capital and exploratory budget that includes a big cut in the Bakken. The company plans to reduce spending in the region by 18% from 2014 numbers, hoping to allow the company to remain flexible in the face of an extreme pricing environment.

The company has revised its budget several times in response to the sharp decline in crude prices throughout 2014. The company reduced 2014 capital expenditures below its planned capital budget of $5.8 billion and the capex budget for 2015 is is $4.7 billion.

“Greg Hill, President and COO, stated that “We are reducing our 2015 spending in the Bakken to $1.8 billion, compared with $2.2 billion in 2014. In 2015, we plan to operate an average of 9.5 rigs and bring approximately 210 new operated wells online, compared with 17 rigs and 238 operated wells brought online in 2014. Hess has some of the best acreage in the Bakken, and we will continue to drill in the core of the play which offers the most attractive returns. As oil prices recover we will increase activity and production accordingly.”

Overall, Hess reported an $8 million net loss for the fourth quarter of 2014 with oil and gas production increasing to 362,000 (boepd). This is an increase of 16% (55,000 boepd) from the fourth quarter of 2013. Bakken oil and gas production was up 50% from 2013 to 102,000 boepd. This increase was due to continued drilling activities and the completion of the Tioga gas plant expansion project.

Hess Corporation has been involved in the Bakken Shale Play since they first discovered oil in North Dakota in 1951. Today the company owns substantial acreage in the region and has operations in Tioga, Minot, Keene, Killdeer and Fryburg, making Hess one of the largest oil and gas producers in North Dakota.

Keystone Bill Hits Another Snag

January 27, 2015 Elizabeth Alford

Senator Heidi Heitkamp — Heitkamp votes on keystone

Republican senators attempted to wind down debate on the construction of the Keystone XL pipeline Monday, but the effort failed to receive the necessary support.

Republicans needed 60 votes in order to advance approval of the bill and end filibusters, but bad weather and absenteeism were blamed on the final tally of 53-39.

U.S. senator Heidi Heitkamp (ND), a long time advocate for the pipeline, authored five amendments to this piece of legislation last week. She believes the construction of Keystone is critical for the nation’s energy infrastructure. After yesterday’s vote Heitkamp expressed her extreme disappointment in the process

“In a press release, Heitkamp said, “For years I have said we need to approve the construction of the Keystone XL pipeline so that we can build our energy infrastructure, increase our energy independence, and move our country closer to a true all of-the-above energy strategy...I’m still disappointed in the process that got us to this point. Congress needs to work together, which includes robust debate, calling up amendments, and voting.”

In the following video, Senator Heitkamp speaks on the senate floor and urges colleagues to find common ground.

Read more at Senator Heitkamp’s website

photo credit: ruralhome cc