Industry news

A place to talk about and post articles related to the oil and gas industry.

New article talking about advances in trying to minimize the impact on performance between “parent” and “child” wells.

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XTO is building a new regional headquarters in Carlsbad, N.M.

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WSJ article about issues on interference on parent/child wells.

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The second article this week, along with Chevron, where a major is announcing plans to expand in the Permian, while most of the others are paring back their capital budgets. I worked on a deal once telling the landman we were not interested in leasing to a flipper. His response - “we’re all flippers - all of this is going to end up with a major someday.”

Exxon article

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Another article on parent/child interference issues.

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Hello Wade;

Interesting articles, and thanks for posting them.

In this particular article, it mentions how Devon and Continental were lowering their well bores to 8 per section. I have acreage in Kingfisher county, OK, and currently there are 4 horizontal wells in the section working the Oswego layer (three 640 acre spacing, and one multi-unit 1280 acre).

I got a letter of intent a couple months ago from another company who wants to establish a 640 acre horizontal drilling and spacing unit in the section. In the document, they want to target the Mississippian (less Chester), Woodford and Hunton common sources of supply.

So the question is, if I’m guessing correctly, there could be more then 8 wells per section under these guidelines providing the drilling takes place within different sources of supply at different depths? That is, if the total footage of depth between formations is equal or greater than the distance between wells operating within the same formation layer?

Thanks, Mike Taylor

Yes, depending on the number of layers of shale you have and how thick each layer is, you could have more wells. If a productive layer is thick enough they can squeeze in more wells with a wine rack configuration or stacking one above another. Not really versed in the formations in that area though.

The Cimarex 2018 Q4 investor presentation has some very nice maps and diagrams that will help you understand the relationship of the various reservoirs. Slide 20 has a good stratigraphic column.

Thanks Martha;

That is good info. Nothing like adding to one’s education too. I’ve learned a lot since a year and a half ago when I first started getting letters in the mail prior to any new horizontal wells. Now, I have a good basic understanding whenever any new documents are received, and how to followup on progress with that information.

I go to every investor presentation every quarter for my operators and download their presentations to my digital files. Some of them remove the presentations fairly quickly so I like to capture them for referral.

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Floyd Wilson and other senior management left Halcon. Big news.

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Court OKs antitrust claim against Chesapeake, Anadarko. A Pennsylvania court found that the state may pursue an anti-gaming challenge against two of the biggest natural gas developers in the Marcellus Shale. The attorney general’s office raised at least one viable claim against Chesapeake Energy Corp. and Anadarko Petroleum Corp. under the Unfair Trade Practices and Consumer Protection Law (UTPCPL), an en banc panel of the Commonwealth Court of Pennsylvania ruled last week. Now that the interim appeal is settled, the trial court can move forward on a lawsuit in which the state contends Chesapeake rigged royalty payments to Pennsylvania landowners and colluded with Anadarko to cap payouts. “[W]e hold that the Attorney General was permitted to file a UTPCPL-based lawsuit against Appellants, but can only pursue antitrust claims through the UTPCPL where the so-called ‘antitrust’ conduct qualifies as ‘unfair methods of competition’ or ‘unfair or deceptive acts or practices,’ as those terms have been either statutorily defined in the UTPCPL or by the Attorney General through the administrative rulemaking process,” Judge Ellen Ceisler wrote in her Thursday opinion. Judge Anne Covey disagreed, finding that Pennsylvania’s attorney general failed to raise a legally viable allegation.

DrillingInfo has bought Midland Map Co. They have been on a major buying spree!

Forbes analysis of why Chevron bought Anadarko.

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TIPRO report looks at changing demographics of the Permian Basin . MRT. Economic growth in the Permian Basin, while driven by the region’s oil and gas industry, is not limited to that sector. That was the message of a recent report issued by the Texas Independent Producers & Royalty Owners Association (TIPRO) detailing the Permian Basin’s demographics. The report found that while the energy sector and related industries offer some of the strongest employment rates, other industries such as health care, retail and construction also offer high employment opportunities. Speaking by telephone from his Austin office, Longanecker told the Reporter-Telegram the findings reinforced how important the energy industry is to the Permian Basin and how it cuts across all industrial sectors. For example, he pointed out that in 2018, the Texas portion of the Permian Basin purchased more than $20 billion in U.S. goods and services from 974 business sectors, from crude oil and natural gas to paper clips. Of that amount, 45 percent came from within the Permian Basin.

Driftwood project would move gas from Haynesville, Permian to the world . Longview News Journal. His Houston company is close to a final decision on a $30 billion project to carry liquefied natural gas from fields in East Texas and West Texas to a terminal proposed in Lake Charles, Louisiana, John Howie told attendees at an energy conference here this past week. And after the Driftwood pipeline and terminal are operating in 2023, gas would be shipped to overseas markets such as China, said Howie, president of Tellurian Production Co. “We are building a global natural gas company,” he said of the company founded in 2016 by Charif Souki and Martin Houston. “We are going to acquire and produce natural gas in East Texas and Louisiana.” The project, which takes its name from a town in Hays County, envisions a 700-mile pipeline carrying LNG from the Permian Basin in West Texas and New Mexico and another of about 200 miles from the Haynesville Shale in East Texas and Northwest Louisiana.

Texas drilling permits dropped 25.6% in April . Kallanish Energy. The Railroad Commission of Texas last month issued a total of 909 original drilling permits, down 25.6% from the 1,221 permits issued in April 2018, Kallanish Energy reports. The April 2019 total included 802 permits to drill new oil or gas wells, 14 to re-enter plugged well bores and 93 for re-completions of existing well bores, the commission said. Those permits are for 212 oil, 62 gas, 574 oil or gas, 45 injection, two service and 14 “other” permits. In April, the commission also processed 593 oil, 143 gas, 36 injection and three other completions. Those totals compare to 616 oil, 134 gas, 48 injection and four other completions in April 2018. Total well completion processed for 2019 year-to-date are 3,244, down 7.7% from 3,514 recorded in the same time period in 2018. The top regions for permits to drill oil/gas wells were the Midland area of West Texas, with 404 permits, followed by the San Antonio area and the San Angelo area.

Callon is buying Carrizo and merging it into Callon.

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PERMIAN BASIN SEES ANOTHER LONG-TERM NATURAL GAS TRANSPORTATION DEAL: Another transportation deal has been announced in the Permian Basin of southeast New Mexico. Lucid Energy Group has executed a new long-term natural gas gathering and processing agreement with XTO Energy, a subsidiary of ExxonMobil. XTO will deliver natural gas production from some of its leasehold position in southeastern New Mexico to Lucid’s South Carlsbad gas gathering and processing system. Lucid’s system in the northern Delaware Basin consists of more than 2,000 miles of pipeline spanning five counties in New Mexico and Texas. Lucid is also underway with development of its next large cryogenic processing plant at its flagship Red Hills Natural Gas Processing complex in Lea County, New Mexico.

How to Identify and Resolve Your Oil and Gas Royalty Underpayments

Blm O&G lease sale nets $2.88M from 3 states. The Bureau of Land Management raised $2.88 million in its June 20 oil and natural gas lease sale in the states of New Mexico, Kansas and Oklahoma, Kallanish Energy reports. The agency offered 50 parcels totaling 39,303 acres. The high bid per acre was $30,021, sold to Cimarex Energy, which acquired 40 total acres in Eddy County, New Mexico. Those same 40 acres produced the highest bid per parcel, at $1,200.84. Nearly 50% of the lease money goes to the three states, with the remainder going to the federal government. Link