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Eagle Ford Shale News
The prolonged oil and gas downturn is causing people to leave the Eagle Ford and other shale regions in search for jobs, according to analysts.
Related: Energy Giants Announce More Layoffs
It’s been one year since OPEC challenged the U.S. shale industry by refusing to let up on production, which caused a dramatic drop in crude prices that continues to take a toll.
In the first half of 2015, U.S. shale producers lost more than $30 billion and almost two dozen oil & gas companies have filed for bankruptcy.
Many oil companies have been forced to cut their workforces. Employment in the oil and gas sector has fallen by 5% in since November 2014, in stark contrast to the 5.1% improvement in total U.S. employment. Swift Worldwide Resources reports that more than 200,000 workers in the global oil and gas industry may now have lost their jobs following the collapse in crude prices.
The petroleum industry lost another 25,000 jobs in the last two months increasing the numbers to a staggering 233,000 since late last year. It is estimated that more than 56,000 of those jobs are from Texas alone. And when jobs vanish, people leave.
In this short clip from Houston Public Media, analysts discuss workers leaving the industry.
Recent layoffs include:
- Devon Energy and Marathon Oil Corp.: A combined 400 job cuts
- U.S. oil service supplier Superior Energy Services: 4,760 jobs
- Husky Energy: 1,400 jobs
- Maersk Oil: 1,250 jobs
- Chevron: 6,000-7,000 jobs
In a third quarter earnings call last week, Sanchez Energy reported a net loss of $421 million while boasting cost reductions and increased production.
CEO Tony Sanchez acknowledged that the downturn is proving challenging, but that he believes the company has been performing exceptionally well. He emphasized that the company is positioning itself for even better performance once the market recovers.
Sanchez reported substantial cost savings due to the company’s supply chain initiatives, process improvements and a reduction in production costs by a $1 per BOE this year. The company also reduced costs for its recent pads to below 4 million each, representing a significant reduction in total costs relative to 2014.
Catarina remains Sanchez’ focus in the Eagle Ford, with the Company planning to average two gross (two net) rigs for the remainder of 2015. In the third quarter 2015, the Company brought 27 gross (26.5 net) operated wells online. Other highlights include:
- Joint ventures with a midstream partner to enhance the marketing capability at Catarina
- Preliminary 2016 upstream capital spending guidance of $250 million to $300 million
- During the third quarter, the company brought 27 gross operated wells, 26.5 net
- Have a total of 592 gross producing wells online with 30 wells currently in the process of waiting on completion
Read more at sanchezenergycorp.com
The Eagle Ford Shale rig count increased by one this week ending with 88 rigs running across our coverage area by midday Friday.
In recent Eagle Ford news, the U.S. Energy Information Administration (EIA) released the latest drilling productivity report showing production across the shale basins continues to decline with the Eagle Ford taking a big hit.
Read more: EIA: Eagle Ford Production Plummeting
A total of 757 oil and gas rigs were running across the United States this week. 193 were targeting natural gas (the same as the previous week) and 564 were targeting oil in the U.S. (10 less than the previous week). The remainder were drilling service wells (e.g. disposal wells, injection wells, etc.) 342 of the rigs active in the U.S. were running in Texas.
Baker Hughes reports its own Eagle Ford Rig Count that covers the 14 core counties. The rig count published on EagleFordShale.com includes a 30 county area impacted by Eagle Ford development. A full list of the counties included can be found in the table below.
Eagle Ford Oil & Gas Rigs
Natural gas rigs in the Eagle Ford are at 13 this week as natural gas prices fell slightly, trading at $2.17/mmbtu, a $.19 decrease from the previous week.
The Eagle Ford oil rig count is to 75 with WTI oil prices ending the week at $42.11, an increase of $1.37. A total of 81 rigs are drilling horizontal wells, two are drilling directional wells, and five are vertical rigs. Karnes County leads the region in development with 20 rigs this week. See the full list below in the Eagle Ford Shale Drilling by County below.
Eagle Ford Shale Drilling by County
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Eagle Ford Shale News
What is the Rig Count?
The Eagle Ford Shale Rig Count is an index of the total number of oil & gas drilling rigs running across a 30 county area in South Texas. The South Texas rigs referred to in this article are for ALL drilling reported by Baker Hughes and not solely wells targeting the Eagle Ford formation. All land rigs and onshore rig data shown here are based upon industry estimates provided by the Baker Hughes Rig Count.
Read more at bakerhughes.com
Carrizo Oil and Gas released third quarter earnings that included plans to jump on new opportunities in the Eagle Ford.
During the third quarter of 2015, Carrizo reported a net loss of $708 million. They also achieved record oil production of 23,573 Bbls/d, 18% above the third quarter of 2014.
Carrizo’s executives are quick to credit the company’s Eagle Ford operations for the strong production growth. In an earnings call earlier this month, the CEO revealed that they are looking around for additional opportunities to acquire more Eagle Ford assets
Eagle Ford highlights:
- Cost reduction initiatives, including the saltwater disposal system in the Eagle Ford that has substantially reduced the amount of water being trucked to disposal sites
- Drilling and completion capital expenditures for the quarter were $122 million, over 85% of which was in the Eagle Ford
- Producing from 250 gross or 219 net wells with two drilling rigs running and one 24/7 frac crew
- 25 gross or 23.2 net operated Eagle Ford wells waiting on completion, equating to net crude oil production potential of approximately 8,700 barrels per day
For more information go to carrizo.com
Eagle Ford Shale counties must diversify to stay afloat, advises new university study.
Over the last year, the decline in oil prices has caused a wave of bankruptcies, restructuring and budget cuts for oil and gas producers and the industries that serve them. Also at risk are the smaller counties and communities in the Eagle Ford.
The UTSA Institute for Economic Development works to foster economic development in south Texas and with the current downturn their services are needed more than ever. The agency recently published a new study in the The Journal of Regional Analysis & Policy outlining their their concern over how smaller Eagle Ford counties may fair long term due to the oil crisis.
Research director, Thomas Tunstall says “There may be 1,000 or more ghost towns in Texas. We have to figure out a way to keep the communities that are still here viable.”
Tunstall concluded that communities that avoided immediately spending their newfound oil and gas wealth are doing better than those who did not, and that those that diversified are doing best of all. The study goes on to say that good local governance and thoughtful long-term planning are the keys to future health.
Examples of cities getting it right include Gonzales, Karnes City and Pleasanton, the latter of which boasts:
- Sales tax increases of 3.64%
- A new building program for the Pleasanton Independent School District
- The city is expanding water service out to Interstate 37
- An extension plan for the Pleasanton Municipal Airport runway from 4,000 to 5,002 feet.
- A new well-designed Pleasanton Civic Center
- H-E-B has completed a new store
- Atascosa Health Center is completing its new building
- Plans to build a new fire station with EMS facilities and AirLIFE for 24/7 operations
Read more at iedtexas.org