Research

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    Energy M&A Deals Hardest Hit in 2015, 6.8% Fewer Deals than 2014

    Mergermarket, a company that provides intelligence and news to people involved in big mergers and acquisitions (M&A) deals recently released its Energy, Mining & Utilities (EMU) Trend Report for 2015. It is a recap of M&A deals in the energy sector for last year. Among the findings: the energy sector was the hardest hit sector for M&A deals. There were 957 deals worth $547.7 billion last year, a 6.8% decrease from 2014. The report (full copy below) contains a lot of interesting information about the biggest M&A deals from last year, along with identifying the companies that worked on putting those deals together…
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    Wood Mackenzie Says Cuts in Drilling Projects “Brutal”

    Global research firm Wood Mackenzie has just released an update to their July analysis on the continuing impact of low oil and gas prices on upstream (drilling) projects. The new analysis finds that in the last six months of 2015 an additional 22 major projects and seven billion barrels of oil equivalent (boe) of commercial reserves have been put on hold, on top of the 46 developments and 20 billion boe of reserves identified previously. The “good news,” if you can call it that, is that deepwater projects have been hit the hardest, more so than shale projects. One Wood analyst calls the impact of lower oil prices “brutal” for new projects. He says, “What began in late-2014 as a haircut to discretionary spend on exploration and pre-development projects has become a full surgical operation to cut out all non-essential operational and capital expenditure”…
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    EIA’s STEO Predicts NatGas Price Constant This Year, Up Next Year

    Yesterday the U.S. Energy Information Administration (EIA) released their monthly Short-Term Energy Outlook (STEO) report. It contains some interesting predictions. Among them: EIA predicts the average Henry Hub price for natural gas in 2016, when the year is completed, will end up being $2.65 per million British thermal units (MMBtu). The average price for 2015 at the Henry Hub was $2.63/MMBtu–so the EIA believes this year will be virtually unchanged from last year, when the final chapter is written. The EIA goes on to predict the average HH price in 2017 will be $3.22/MMBtu. Another interesting prediction in this month’s STEO: EIA says natural gas’ share of the electric generation pie will actually fall–with natgas generating 33% of all electricity in 2015 to 31% in 2017. Why? More renewable sources coming online…
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    EIA Jan DPR: Marcellus Production Way Down Again, Utica Up

    EIAYesterday our favorite government agency, the U.S. Energy Information Administration (EIA), issued our favorite report, the Drilling Productivity Report (DPR). The January 2016 report shows what the EIA predicts oil and natural gas production will be in February from the seven largest commercial shale plays in the U.S. What does the report (full copy below) show? The biggest drop in production will once again be the biggest natgas producer in the country–the Mighty Marcellus. The EIA predicts the Marcellus will produce 15.222 billion cubic feet per day (Bcf/d) in February, vs. 15.447 Bcf/d in January, a decrease of 225 million cubic feet per day (MMcf/d). Meanwhile the Utica Shale will continue to show an INCREASE in production month over month–from 3.206 Bcf/d in January to 3.249 Bcf/d in February, a 43 MMcf/d increase month over month. The Utica, for a second month in a row, shows the largest increase in natgas production of all seven plays covered in the DPR. Overall the DPR shows that oil production month over month will decrease in February, the seventh month in a row, and natural gas will decrease for the eighth month in a row…
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    Which Marcellus/Utica Drillers are Part of the “Thousand Club”?

    It’s difficult to compare apples with apples when it comes to evaluating how productive, or profitable, a hydrocarbon-producing well is. We typically think of wells as “oil wells” or “natural gas wells” or perhaps “wet gas (NGL) wells.” While there are some wells that produce almost all natgas or almost all oil, etc., most wells produce multiple hydrocarbons. Oil wells in the Permian Basin or Eagle Ford Shale (in TX) produce natural gas along with the oil coming out of the well. Many Marcellus and Utica wells in southwestern PA and eastern OH produce very profitable quantities of natural gas liquids, a mish mash of ethane, propane, butane, isobutane, and pentane. And don’t forget condensate (natural gasoline). So how do you compare the relative output/profitability/production for different “types” of wells? One way is to convert all of those hydrocarbons into one hydrocarbon–oil. Specifically, barrels of oil. Once you convert all hydrocarbons into barrels of oil, you have a way to compare apples to apples–comparing wells located in the same shale play or comparing wells from one play with wells from another. Recently the sharp analysts at investment firm Sanford C. Bernstein & Co. ran the numbers to convert and compare wells across different plays. They issued a report showing wells that belong to the “Thousand Club”–wells producing at least 1,000 barrels of oil equivalent per day. Where are the most such wells located? The Eagle Ford Shale, the Bakken Shale, and yes, the Marcellus and Utica Shale. Which drillers are in the club?…
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    EPA Takes First Step to Renounce its Own Fracking/Water Research

    junk-science.jpgAs we pointed out just last month, the so-called “scientists” who belong to the federal Environmental Protection Agency’s (EPA) Science Advisory Board have begun the long process of getting the EPA to change the outcome of its 4-year study of fracking that concludes fracking doesn’t pollute groundwater (see Will EPA Whore Itself to Antis and Change Fracking Water Study?). The EPA originally launched a 2-year study, that later turned into a 4-year study, in which they analyzed 950 studies related to fracking. The EPA also designed and completed 9 of their own studies. At the end of this arduous and scientifically rigorous process, the EPA concluded, in a published report in June 2015, that fracking does not pollute water (see EPA Draft Report Says Fracking Doesn’t Pollute Groundwater Supplies). Ever since the EPA report was issued anti-drilling radicals have demanded the EPA change the outcome of its science (see Anti Groups Try to Convince EPA They Got it Wrong with Water Study). True science doesn’t change nor cave to political pressure. A few dozen members of what is called the EPA Science Advisory Board (SAB) released a draft a letter (copy below) yesterday. The letter calls into question the conclusion that fracking doesn’t pollute water. Voila. Another example of “science” being corrupted by political philosophy…
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    API 2016 State of American Energy Report

    Earlier this week the American Petroleum Institute (API) released its annual report, the State of American Energy (full copy below). Several themes are prominent in the report: shale energy’s creation of jobs, the economic growth we’ve experienced due to shale energy, and the fact we are now more secure than we’ve been in generations with respect to energy. We’re far less dependent on foreign oil than we were just a few years ago. That’s great news!…
    Read More “API 2016 State of American Energy Report”

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    2015 NatGas Prices Traded at Lowest Level Since 1999

    Anecdotally we know that the price of natural gas in the U.S. as bought and sold along hundreds of locations on major pipelines was low in 2015. At least it seemed low. Story after story told us it was low. The price of gas as traded at the Henry Hub delivery point in southern Louisiana is used as a proxy for “the price” of natgas nationally–and it was low. But what does the actual data tell us? According to our favorite government agency, the U.S. Energy Information Administration (EIA), the data confirms what everyone already “felt” was the case: the price of natgas in 2015 traded at its lowest level since 1999. Here’s the proof…
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    IHS Study: M&A Deals Plunged in 2015, So Did Shale Investment

    No doubt about it, 2015 was a tough year in the shale energy industry. With shale energy, investment happens when drillers decide to drill holes in the ground. Without a hole, money doesn’t get spent. And when money isn’t being spent on drilling, other businesses along the supply chain begin to see their revenue dry up. Global consulting and research firm IHS, or Information Handling Service, has just published the “IHS Energy Global Upstream M & A Review.” As part of their promotion of the new study (must be a customer to score a copy), IHS released a detailed summary of their findings. One finding in particular stood out to MDN: In 2014 unconventional/shale drillers spent $75 billion on upstream (exploration & production) activities. In 2015 that number plunged to less than $30 billion–a 60% drop. That statistic more than any illustrates what happened to the oil and gas industry in 2015. Here’s more great insights from IHS on what happened in 2015…
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    Industry Navel Gazing – Survey, Opinions of What’s Ahead in 2016

    MDN spotted a couple of “what’s coming in 2016” reports. One report shares conclusions from a survey of 100 oil and gas company CFOs (Chief Financial Officers, or “the money guys”) conducted in September/November last year. What do industry money people say is coming in 2016? Read it below. The second report was just issued by Moody’s Investors Service. Several Moody’s analysts offer their predictions about what lies ahead for the oil and gas industry this year. We call these kinds of reports “industry naval gazing” as they tend to be focused on our specific piece of the energy industry (oil and gas) to the exclusion of the complex world that exists outside of our own industry. Still, such reports have their place and can often shed light on what may lay ahead on the road we will all travel on the way to 2017…
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    Morningstar Outlook/Predictions for Oil & Gas in 2016 & Beyond

    Morningstar, Inc. is one of, if not THE leading providers of independent investment research in North America, Europe, Australia, and Asia. Morningstar’s analysts keep a close eye on many different sectors, including the energy sector. Yesterday Morningstar published its Quarter-End Insights for the oil and gas sector, which include not only a look back at what happened, but predicts what they see coming in 2016 and beyond. Among Morningstar’s predictions: “Long-term” prices for oil will hit $70 per barrel for Brent crude and $64 per barrel for WTI. Near-term oil prices? They “could be ugly.” Morningstar recommends three specific E&Ps in which to invest. Two of them operate in the Marcellus…
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    DOE Study: More LNG Exports Don’t Mean Higher Prices at Home

    What would happen if the U.S. increased LNG (liquefied natural gas) exports from 12 billion cubic feet per day (Bcf/d) to 20 Bcf/d? A new report just published by the Dept. of Energy and researched by Rice University and Oxford Economics, titled “The Macroeconomic Impact of Increasing U.S. LNG Exports” (full copy below) finds that although prices for U.S. consumers may go up a little, what would happen is that the production pie would grow and most of the delta (the difference between 12 and 20 Bcf/d) would come from new production. In other words, it’s a win/win. More jobs, more money flowing into the U.S., while at the same time very little rise in gas prices here at home–even if we ratchet up exports significantly…
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    Duke U Study: Property Values Drop When Marcellus Drilling Begins

    Once or twice a year anti-fossil fuel “researchers” at Duke University issue another “publish or perish” term paper that takes aim at the Marcellus/Utica and call it a study. A few weeks ago the latest in a string of such biased reports was issued by Duke–this one claiming that property values go down when Marcellus Shale drilling comes to a community. Three researchers wrote the report. One of the researchers is from the Environmental Defense Fund (EDF). The EDF is as anti-drilling as any of the far-left enviro-Nazi groups like the Sierra Club, Food & Water Watch, various Riverkeepers, et al. But the EDF usually tries to work with the industry, which often ostracizes them from the kooks on their left. It’s disappointing to see the EDF piling on in this latest sham study. The study is titled, “The Housing Market Impacts of Shale Gas Development” (full copy below). The problem for this study is that there are numerous other studies that look at property values and conclude the opposite–that property values go UP when drilling comes to an area. When you dig in to the the Duke study you’ll find that in some cases they did find property values increased, and other cases values decreased. We bring you this study to prepare you for the onslaught of sycophantic mainstream media stories that will mention it a time or two and then move on–typical “drive by” misinformation from the media where truth is the casualty…
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    OPEC’s 2015 World Oil Outlook Paints a Rosy Price Picture

    There is nobody on the planet who watches the oil market more closely than OPEC–the Organization of the Petroleum Exporting Countries. OPEC is made up largely of tinpot Middle Eastern dictatorships who keep their general populations pacified by sharing some of the riches from oil sales with them via socialist government programs. While the leaders of OPEC countries often lie to each other and lie to the world, one thing they typically don’t lie about is the oil industry, where it’s headed–and their own very vital role in it. Last week OPEC released its annual 2015 World Oil Outlook (WOO, full copy below), which outlines OPEC’s expectations for the global energy sector–in particular oil and gas–from now until 2040. One admission in the 2015 WOO: US oil production from shale plays will be “more robust” than OPEC had predicted as recently as last year. Another prediction in this year’s WOO: oil will hit $70 per barrel by 2020 (four short years from now) and climb to $95 per barrel by 2040 (15 short years from now). There are plenty of other interesting predictions and observations in this year’s WOO…
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    Lawsuit Forces NOAA to Disclose Climate Data Tampering

    It turns out that the National Oceanographic and Atmospheric Administration (NOAA) has something to hide with respect to the data it collects on so-called climate change. NOAA is the point agency in the United States for collecting weather and temperature data and disseminating that data for others to use. Science should be science–facts should be facts. But there’s been funny business going on inside of NOAA, and now they’re trying to cover it up. The so-called data coming from NOAA, it’s now being discovered, has been tampered with. Changed. Modified. Cherry-picked. Use whatever term you want. We’d call it scientific fraud. It took a lawsuit by the valiant organization Judicial Watch to force NOAA to release internal documents at NOAA that prove NOAA has been playing fast and loose with climate data…
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    Dela. Riverkeeper Attempts to Discredit PA DEP Shale Radiation Report

    Stay tuned for five feet of snow. No, it’s not a weather report, it’s the snow job THE Delaware Riverkeeper (i.e. Maya van Rossum) is attempting with respect to a research report issued by the Pennsylvania Dept. of Environmental Protection (DEP). In January 2015, the DEP filed a report following two years of intense study to determine whether/if/how much radiation exposure is an issue in shale drilling. While the DEP found there is sometimes some low levels of radiation, the report concluded there is “little harm” from radiation in shale drilling (for the study results, see PA DEP Completes Fracking Radiation Study, Concludes “Little Harm”). When real science is published that contradicts the political science of global warming advocates like Maya van Rossum, the real science must go. And so van Rossum hired a discredited scientist to produce a review of the January 2015 report by the DEP, calling it “inaccurate and incomplete.” Van Rossum dragged out Dr. Marvin Resnikoff, who was humiliatingly slapped down by none other than the U.S. Geological Survey in 2012 (see Radon Debate: USGS Responds to Marvin Resnikoff Accusation). Resnikoff is the scientist-for-hire van Rossum used in concocting the latest snow job coming from her outfit…
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