Niobrara M&A Activity on the Horizon?

OilPumpGoldman Sachs sees Cabot, Range as majors’ top shale M&A targets

By  SNL Financial, July 17, 2015

“We see an active opportunity for intra-shale consolidation among E&Ps,” Goldman said. “Multiple shale plays have very fragmented ownership, particularly the Permian Basin, Marcellus Shale, Utica Shale and DJ Basin.”

Appalachia’s Cabot Oil & Gas Corp. and Range Resources Corp. are among the top upstream candidates to be picked off by a supermajor as those giants go hunting for M&A later in the year, Goldman Sachs Global Investment Research analysts said.

Buying oil and gas reserves on Wall Street will be cheaper than finding them in the field at current prices, Goldman said, and the majors have $150 billion ready to spend. Snapping up a healthy independent with quality acreage would go a long way to balance out the shale-light portfolios of the majors, as well as provide cost-effective reserve replacement, Goldman told its clients July 15. Continue reading “Niobrara M&A Activity on the Horizon?” »

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More crude oil is being shipped out of Rockies by train, despite more pipes

A DOT-111 tank car, specification 111A100W1, constructed by fusion welding carbon steel. This car has a capacity of 30,110 US gallons (113,979 L; 25,071.8 imp gal), a test pressure of 100 psi (690 kPa), a tare weight of 65,000 pounds (29,500 kg) and a load limit of 198,000 pounds (89,800 kg). - Image Source: Wikepedia

A DOT-111 tank car, specification 111A100W1, constructed by fusion welding carbon steel. This car has a capacity of 30,110 US gallons (113,979 L; 25,071.8 imp gal), a test pressure of 100 psi (690 kPa), a tare weight of 65,000 pounds (29,500 kg) and a load limit of 198,000 pounds (89,800 kg). – Image Source: Wikepedia

As the amount of oil production from Colorado’s Niobrara field north of Denver has skyrocketed in the last few years, pipeline and railroad companies that specialize in shipping oil out of the region have scrambled to keep up.

Pipeline capacity out of the Rocky Mountain region has grown, but oil and gas companies — pressed by time and money — have increasingly turned to shipping the newly pumped crude oil to market by rail.

It’s faster and cheaper to build new crude-by-rail terminals to unload crude oil from trucks and onto rail cars for shipment than to plan and build new pipelines. Continue reading “More crude oil is being shipped out of Rockies by train, despite more pipes” »

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Ballot fight over fracking could be shaping up in Colorado

Hydraulic Fracturing Illustration - Idealized

Hydraulic Fracturing Illustration – Idealized

By DAN ELLIOTT – Associated Press – Jul. 11, 2015

DENVER (AP) — Environmentalists and the energy industry have fought decisive battles over fracking in New York, Oklahoma and Texas, but the outcome is unclear in Colorado, where the issue could go to a ballot fight in the 2016 election.

A task force convened by Colorado Gov. John Hickenlooper tried to find a compromise over who should regulate the industry — the state or local government — and to what extent. But fracking critics were bitterly disappointed when the panel suggested leaving regulatory power in state hands and avoided recommending specific health, environmental and safety rules.

“I think the fossil fuels industry won,” said Karen Dike, a member of Coloradans Against Fracking.

Fracking is a pressing issue in Colorado, the nation’s No. 7 energy-producing state. Along the urban Front Range, expanding suburbs and booming oilfields are running into each other, and drilling rigs sometimes show up near public schools. Several municipal attempts to ban fracking have failed, and the industry warns that local control would stifle energy development.

Dike and others won’t say whether they plan to put measures that would restrict fracking on the 2016 ballot, but they don’t rule it out.

Frank McNulty, a Republican former state lawmaker who sponsored a pro-industry ballot measure in 2014, expects fracking opponents to turn to voters next year.

“I don’t think that it’s settled,” he said.

Fracking, or hydraulic fracturing, injects water, sand and chemicals under high pressure to crack open underground formations and make it easier to recover oil and gas. The industry says it’s safe.

Opponents won a significant victory in New York, where regulators formalized a statewide fracking ban on June 29, citing environmental and public health risks.

In May, the industry prevailed in Texas and Oklahoma, where new state laws prevent local governments from banning fracking.

Colorado hasn’t imposed sweeping measures favoring either side, in part because of a nearly even three-way electoral split among Republican, Democratic and unaffiliated voters.

Continue reading story at The Associated Press

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Industry gets first crack at shaping new Colorado oil, gas rules

Colorado Oil and Gas Commission

Colorado Oil and Gas Commission

State kicks off series of meetings about new regs that give local governments more power by hearing from drillers

By Mark Jaffe – The Denver Post – July 7, 2015

Colorado’s oil and gas industry had the first crack Tuesday at offering input to state regulators on how to implement the two most sweeping recommendations from the governor’s oil and gas task force.

The recommendations aim to involve local government in planning and siting large-scale oil and gas facilities.

The about 30 industry representatives who attended the meeting stressed keeping the approach clear and flexible and relying on existing rules where possible.

There will be five more outreach sessions to gather the views of local officials and the public.

“We need to be hearing all sides before we put pen to paper,” said state Department of Natural Resources director Mike King.

The task force, created by Gov. John Hickenlooper to resolve land use conflicts between oil and gas operations and communities, offered nine recommendations in February.

Most could be implemented through budget allocations and staffing, but the local government requirements need new regulations from the Colorado Oil and Gas Conservation Commission.

Continue reading story at The Denver Post

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Refracking Is the New Fracking

Hydraulic Fracturing Illustration - Idealized

Hydraulic Fracturing Illustration – Idealized

, and  – Bloomberg Business – July 6, 2015

The technique itself is nothing new. Oil crews across the world have been schooled on its simple principles for generations: Identify aging, low-output wells and hit them with a blast of sand and water to bolster the flow of crude. The idea originated somewhere in the plains of the American Midwest, back in the 1950s.

But as today’s engineers start applying the procedure to the horizontal wells that went up during the fracking boom that swept across U.S. shale fields over the past decade, something more powerful, more financially rewarding is happening.

The short life span of these wells, long thought to be perhaps the single biggest weakness of the shale industry, is being stretched out. Early evidence of the effects of restimulation suggests that the fields could actually contain enough reserves to last about 50 years, according to a calculation based on Wood Mackenzie Ltd and ITG Investment Research data.

If the word fracking has carved out a spot in the lexicon of Americans as the nation advances toward energy independence, then refracking, as roughnecks have begun calling it, could be next. And for an industry that has been hammered by the 50 percent drop in crude prices over the past year, the finding on the technique’s potential — at a fraction of the cost of the initial well — provides a much-needed sense of hope.

The risks abound — from inadvertently siphoning oil from an adjacent well to ruining a whole reservoir — and the sample size so far isn’t big enough to be conclusive, but oil giants like Marathon Oil Corp. and ConocoPhillips aren’t waiting to incorporate refracking into their shale operations.

Continue reading story at Bloomberg Business

 

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EIA Report – New Niobrara Wells Averaging 500 BOEPD

New-well oil production per rig - EIA - July 2015

New-well oil production per rig – EIA – July 2015

The U.S. Energy Information Administration (EIA) Drilling Productivity Report for key tight oil and shale gas regions for June, 2015 shows new wells drilled in the region will be averaging 500 BOEPD by July 2015.

This figure is up approximately 125 BOEPD from July, 2014.

EIA Projected Rig Count  - July 2015

EIA Projected Rig Count – July 2015

Other statistics in the report show that Niobrara oil production is projected to remain stable at 400 thousand BOEPD.

Rig counts in the region are projected to have dropped from a high of ~150 active rigs in late 2014, to only ~50 in July 2015.

View the full EIA Drilling Productivity Report for all key tight oil and shale gas regions.

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Colorado to define bigger role for local governments in oil and gas

Colorado Oil and Gas Commission

Colorado Oil and Gas Commission

Cathy Proctor – Denver Business Journal, June 19, 2015

The biggest recommendations to come out of Colorado Gov. John Hickenlooper’s oil and gas task force in February called for requiring oil and gas companies to share more information with local governments before deciding where to locate new wells and support facilities or seeking the state’s approval for those locations.

Now, months after the task force disbanded, and weeks after some of the group’s recommendations moved forward as part of the state’s budget, Colorado officials are turning their attention to crafting the rules needed to implement those major elements of the task force’s final recommendations.State officials are launching a statewide tour to gather public input on the crucial details of will become the new regulations, according to a July 16 letter from the Colorado Oil and Gas Conservation Commission (COGCC) and obtained by the Denver Business Journal.

The letter said the COGCC will hold meetings in Brighton, Broomfield and in a town in Weld County. The commission also will hold meetings on the Western Slope and in La Plata County.

Continue reading story at The Denver Business Journal

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ConocoPhillips Investor Update shows Niobrara Production at 1000+ BOED

Slide from ConocoPhillips Investor Presentation May 2015

Slide from ConocoPhillips Investor Presentation May 2015

In their most recent Investor Update Package, ConocoPhillips reported that production from their Niobrara wells were now averaging over 1000 barrels of oil equivalent per day (BOED) over a 30 day period.  The company continues to optimize its completion design  and well lateral length.  ConocoPhillips has already realized a 200% increase in cumulative oil production  between the 1st and 4th quarters of 2014 after building on previous increases from 2013.

ConocoPhillps Niobrara oil properties are mainly located around the Lowry Bombing Range and surrounding areas in Adams, Arapahoe, Elbert, and Douglas county, Colorado.

Read the Investor Update Package

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