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Colorado Rig Count Surrenders to National Trend

Colorado Weekly Rig Count Chart showing statewide rig count since Jan 2013 - Data Source - Baker Huges

Colorado Weekly Rig Count Chart showing statewide rig count since Jan 2013 – Data Source – Baker Huges

The number of active U.S. land rigs plunged by 98 this week in one of the biggest declines in the past three decades as fallen oil prices continued to pummel the industry’s drilling ambitions as reported by Fuel Fix.

In the week ending February 13, the Colorado rig count had fallen to 49 as reported by Baker Hughes, a count that is lower than any count during the last four years of the current statewide oil boom.  Colorado’s oil industry had been resisting the national trend to idle rigs up until the last two weeks.

The latest weekly figures for Colorado’s oil industry, including rig counts, and permitting for the last the four years can be found in the staff reports at the COGCC.  View the latest (January 26, 2015) COGCC staff report.

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Colorado Senate Weighs Payments To Mineral Owners Over Fracking Rules

Hydraulic Fracturing Illustration - Idealized

Hydraulic Fracturing Illustration – Idealized

CBS Denver,  February 12, 2015

DENVER (AP) — Mineral owners would get compensation from local governments that restrict fracking under a Republican bill advanced by the Colorado Senate Thursday.

The question pits homeowners concerned over industrial activity in residential areas and mineral owners who want to develop their property. Sometimes the matter is further complicated in Colorado by the fact that minerals belonging to one person are underneath a house owned by someone else.

The sponsor of the compensation bill, Sen. Jerry Sonnenberg, R-Sterling, said his goal is to protect property rights when a local government implements restrictions on fracking, or hydraulic fracturing. It involves extracting oil and gas from rock by injecting high-pressure mixtures of water, sand or gravel, and chemicals.

“It’s basically a, ‘You ban it, you buy it,’ philosophy,” he said. “I would argue that it’s not much different than somebody that may buy a piece of property in the hopes to build a house someday and then government comes in and says, ‘I’m sorry, we’re not going to be allowing any more housing built along this street.’”

Sonnenberg’s proposal would require compensation to mineral owners if regulations reduce their property value by at least 60 percent.

A Senate committee voted 5-4 with Democrats in opposition. The full Senate now will consider the proposal.

Fracking is expected to be one of the most hotly debated questions lawmakers will take on this legislative session. A task force assembled by Democratic Gov. John Hickenlooper will deliver recommendations to lawmakers later this month about how to reduce land-use conflicts among local governments, homeowners and the energy industry.

Continue reading story at CBS Denver

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IEA: North American cuts to bolster crude price

oil-drop-dollarsignby Collin Eaton on Fuel Fix – February 10, 2015

HOUSTON – The world’s foremost seers of future oil prices are adjusting their calculations to include this year’s  brutal cost-cutting in North America’s shale plays.

In a forecast Tuesday, the Paris-based International Energy Agency said upstream budget cuts and a shrinking number of active U.S. land rigs could bolster the price of oil by inciting greater global demand and choking off the rapid expansion of crude supplies in North America and elsewhere outside  the Organization of the Petroleum Exporting Countries.

These oil fields from Texas to North Dakota have been the biggest sources of a global glut in crude supplies, which has cut petroleum prices in half since June.

“Barring any unexpected supply disruption or major, energy-related change in policy, the market rebalancing will likely occur relatively swiftly,” the IEA said.

But the resurgence, the agency with 29 oil-importing member countries said, “will be comparatively limited in scope, with prices stabilizing at levels higher than recent lows but substantially below the highs of the last three years.”

The IEA’s medium-term forecast comes a day after OPEC cut its forecast for U.S. oil production by 130,000 barrels a day, citing the rapid decline in drilling activity across the nation. Analysts say domestic production could fall in 2016.

U.S. oil has climbed around $5 a barrel in the past two weeks as hundreds of domestic drilling rigs have gone idle and U.S. producers have announced tens of billions in budget cuts.

Continue reading story at Fuel Fix

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Activists demand fracking ban in Denver; oil and gas backers say they’re ready for a fight

Downtown Denver Skyscrapers - Image Credit - Wikepedia

Downtown Denver Skyscrapers – Image Credit – Wikepedia

 – Reporter-Denver Business Journal

Colorado’s fracking wars arrived at Denver city hall Tuesday, with a coalition of 25 groups that included some of the standard bearers of the anti-fracking movement in the state delivering a statement calling for Mayor Michael Hancock and the City Council to ban the use of hydraulic fracturing within the city limits.

“We think it’s just a matter of time before they start fracking in Denver,” Sam Schabacker, the western region director forFood & Water Watch, who’s been working on the fracking issue in Colorado for the last few years, told the Denver Business Journal.

The Don‘t Frack Denver coalition includes photographer John Fielder, Food & Water Watch; Greenpeace, Kids Against Fracking, Mercury Café, MM Local, Mo’ Betta Green Marketplace, Padres & Jóvenes Unidos,Rosenberg‘s Bagels, Sierra Club – Denver Metro Network, Slow Food Denver; and the WildEarth Guardians.

And if the coalition is looking for a fight, the chairman of Vital for Colorado, a coalition of more than 35,000 Coloradans, businesses, civic leaders and trade organizations that support the oil and gas industry, says the organization is ready

Continue reading story at The Denver Business Journal

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Oil prices are down, but are layoffs inevitable? One HR expert says no

oil-drop-dollarsign – Reporter – Denver Business Journal

Citibank on Monday dropped its forecast for crude oil prices, warning that U.S. oil prices could dip to $20 per barrel and average $46 per barrel for 2015, but one human resources expert is warning belt-tightening oil and gas companies to think twice before resorting to mass layoffs to meet newly shrunken budgets.

“This is a cyclical market,” said John Koob, a Houston-based partner focused on the energy industry for Mercer LLC, a unit of Marsh & McLennan Cos. Inc. (NYSE: MMC) that focuses on human resources advice.

“It’s not the first time this has happened and it’s not the last time it will happen, but actions today will have a long-term effect,” Koob said.

Koob was in Denver last week to talk to several oil and gas clients who are scrambling to adjust budgets, staffs, and plans to accommodate crude oil prices that are far below the high of $107 per barrel seen last summer — a point some say may not be seen again for several years, if ever.

He also was discussing the results of a recent Mercer survey of 154 of its oil and gas industry clients that focused on how companies are reacting to the price decline. The survey, available here, launched in mid-December and wrapped up in mid-January.

Continue reading story at The Denver Business Journal

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Bonanza Creek Reduces CAPEX by 36-38% for 2015

Slide from Bonanza Creek Energy January 2015 Investor Presentation

Slide from Bonanza Creek Energy January 2015 Investor Presentation

In their Investor Presentation on January 20 2015, Bonanza Creek Energy Inc, (BCEI) said that they would be reducing their 2015 capital expenditures by 36 to 38 percent.  The company’s plans for its Wattenberg Field Asset is to grow its sales volumes by 23% year over year, have an average of 2.5 drilling rigs running during the year, and drill 77 gross wells of which 29% will be XRL (extended reach laterals).  Bonanza Creek has approximately 70,000 acres in the Niobrara extension area, with no exposure to urban populations with a near established infrastructure and blocky acreage that is attractive for long laterals.

View the entire Bonanza Creek Energy Investor Presentation for January 2015

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Weld County vulnerable if oil prices remain low, Wells Fargo warns

Wells Fargo SecuritiesBy Aldo Svaldi – The Denver Post – February 4, 2014

Colorado overall will fare better than other states in the oil patch if crude prices remain low, but the same can’t be said for Weld County, according to a report Wednesday from Wells Fargo Securities.

“Weld County is likely to suffer the worst in the state. Denver may also face some downside risk, as it serves as a hub for the energy business in the surrounding state,” said Mark Vitner, a senior economist with Wells Fargo Securities.

A barrel of crude oil sells for less than half of the near-term peak of $107 it reached in June, and is below the break even point where many domestic producers can afford to keep drilling.

“We feel that Colorado will hold up relatively well given the slide in energy prices,” Vitner said on a conference call.

The state ranks as the nation’s seventh largest oil producer and has the 10th highest concentration of workers employed in oil and gas. But it has a more diversified economy that went into the oil slump with momentum.

About 1. 2 percent of the state’s workforce is in oil and gas extraction and supporting industries. In North Dakota and Wyoming, upwards of 6 percent of workers make a living directly from petroleum.

Continue reading story at The Denver Post

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Anadarko’s 2014 Niobrara Growth Surpasses Expections, will Reduce 2015 CAPEX in Line with Peers

Anadarko_logoAnadarko Petroleum reported stellar growth on February 3rd, 2015 for their Q4 2014 Earnings Call.

R. A. Walker, Chairman, President and CEO reported that their Niobrara Wattenberg asset’s growth “has surpassed even our expectations. You might recall during 2013 this asset had grown to more than 100,000 BOE per day and in 2014 volumes grew another 60,000 BOE per day or about 55%.”

He also said that “Wattenberg’s exceptional performance was facilitated by the growing up of our acreage positions, outstanding reservoir performance, improved efficiencies, enhanced drilling and completions and importantly the investments we made in key infrastructure expansions. Now we’ve taken that same model and are working to replicate this success in the emerging Wolfcamp Shale opportunity in West Texas.”

Mr. Walker also talked about the current market environment for oil. He said that: “As we mentioned earlier we’re approaching 2015 with caution, given the uncertainty surrounding commodity prices and service cost. We will provide you details about our 2015 capital program and guidance for key performance metrics on our investor call on March 3rd.

When asked by an Analyst about their 2015 capital spending, Mr Walker explained: “our capital plan for 2015 will be significantly lower than it was for 2014. And I think you can expect it will probably be in line with the type of reductions you have seen from our peers.” I think with that, coupled with the comments I made about not chasing growth and a low environment for commodities and economics and that we want to maintain flexibility doing this along with financial capability, those are going to be watchwords. I mean we don’t really see the need to grow in an environment where we don’t have well head economics, purely for the simple purpose of having production growth as an objective.”

Anadarko Petroleum is currently one of the largest Niobrara Operators and controls over 350,000 net mineral acres in the Niobrara Play.

Read the full transcript of the Q4 Earnings Call at Seeking Alpha

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