Thursday, May 21, 2015

Friday

I'll be unavailable most of the day and will report US rig counts later in the afternoon...

EIA: Storage +92 Bcf to 1.989 Tcf

The EIA reported this morning that working gas in storage was up 92 Bcf to 1.989 Tcf.  The weekly injection was 13% lower than last year (+106 Bcf) but 3% above the five year average (+89 Bcf).  The current storage level is now 59.0% above last year (1.251 Tcf, a difference of 738 Bcf) but 1.7% below the five year average (2.024 Tcf, a difference of 35 Bcf).


Saturday, May 16, 2015

Haynesville Shale Rig Count Unchanged at 20

The Haynesville Shale rig count didn't budge last week, holding at 20.  Louisiana and Texas held at 11 and nine, respectively.


Friday, May 15, 2015

U.S. Rig Count: -6 to 888

Ah, the Chinese lucky number eight was big this week!  The Baker Hughes U.S. rig count was down six this week to 888.  Oil rigs were down eight to 660, gas rigs were up two to 223 and miscellaneous rigs were unchanged at five.  By type, horizontal rigs were down seven, vertical rigs held at 114 and directional rigs were up one.  Among gas rigs, horizontal rigs were up one to 171, directional rigs were up one to 37 and vertical rigs were unchanged at 15.

Thursday, May 14, 2015

EIA: Gas in Storage +111 to 1.897 Tcf

The EIA announced this morning that working gas in storage was up 111 Bcf to 1.897 Tcf.  The weekly injection was 10% higher than last year (+101 Bcf) and 35% greater than the five year average (+82 Bcf).  The current storage level is now 65.7% above last year (1.145 Tcf, a difference of 752 Bcf) but 2.0% below the five year average (1.935 Tcf, a difference of 38 Bcf).


Tuesday, May 12, 2015

Haynesville Shale Rig Count: +1 to 20

The Haynesville Shale rig count was up one last week to 20.  Louisiana held at 11, while Texas was up one (EXCO Resources) to nine.


Friday, May 8, 2015

U.S. Rig Count: -11 to 894

The Baker Hughes U.S. rig count was down 11 this week to 894.  Oil rigs were down 11 to 668, gas rigs were down one to 221 and miscellaneous rigs were up one to five.  Eleven rigs is the smallest weekly decline in oil rig count in the past 22 consecutive months of declines.  Is this an inflection point?  Might there be a bottom nearby?


By type, horizontal rigs were down seven to 692, vertical rigs were up one to 114 and directional rigs were down five to 88.  Among gas rigs, horizontal rigs were up one to 170, directional rigs were down two to 36 and vertical rigs were unchanged at 15.

Thursday, May 7, 2015

EIA: Gas in Storage +76 Bcf to 1.786 Tcf

The EIA announced this morning that working gas in storage was up 76 Bcf to 1.786 Tcf.  The weekly injection was in line with last year (+75 Bcf) but 12% above the five year average (+68 Bcf).  The current storage level is now 71.1% above last year (1.044 Tcf, a difference of 742 Bcf) but 3.6% below the five year average (1.853 Tcf, a difference of 67 Bcf).


Wednesday, May 6, 2015

Chesapeake Releases Earnings and Update on Haynesville

Chesapeake released its Q1 2015 earnings this morning.  Here are the highlights regarding the Haynesville (and Mid-Bossier) (quotation marks indicate text from press release):

  • "The full-year 2014 average completed well cost was $8.4 million with an average completed lateral length of 4,900 feet and 14 frac stages, compared to an average completed well cost of $8.9 million in 2013 with an average completed lateral length of 4,400 feet and 18 frac stages."
  • "In April 2015, the company placed its initial two modern extended lateral (7,500 feet) Haynesville wells on line, the Nguyen 8-15-14 1H ALT and the Nguyen 5-15-14 2H ALT at peak 24-hour rates of 18.5 MMcf per day and 16.7 MMcf per day, respectively, with flowing surface pressures of approximately 600 PSI per foot greater than surrounding in-unit wells." These wells have not yet been officially reported and are not yet in my completion list.

Tuesday, May 5, 2015

Einhorn Actually Likes Shale Gas

Much was made of the presentation yesterday (5/4/15) by Greenlight Capital's David Einhorn at the Sohn Investment Conference in New York where he slammed shale oil producers, questioning the economics of shale oil.  He is short Pioneer Natural Resources and EOG, calling them the Mother Fracker and Father Fracker in his presentation.  Einhorn is a celebrity "shorter" who bets against stocks and often makes a very public case against these stocks (in fairness, he also buys stocks he likes too), so his presentations often generate lots of buzz.

What was lost in the buzz was Einhorn's positive comment about shale gas producers noted by SNL, "I am not talking about the natural gas frackers, which are globally competitive, low cost energy producers with attractive economics."  I'm not used to people saying nice things about shale gas economics.

Sabine Enters Forbearance Agreement with Lenders

Sabine Oil and Gas announced this afternoon that it yesterday entered into a forbearance agreement on its revolving credit facility with its lenders, led by Wells Fargo.  Simply stated, the agreement postpones the banks from "exercising remedies" until June 30, 2015 for Sabine missing the April interest payment as well as upcoming borrowing base deficiency payments, and for its technical default caused by its auditor failing to declare the company a "going concern."  It may not sound like much, but the "going concern" wording itself could potentially crater the company by causing a domino effect of defaults.  Typically, lenders are a little more patient, though.

A forbearance usually comes at a cost, in this case tightening some borrowing covenants and mortgaging some unencumbered assets, but the price probably won't be anything like the pound of flesh the other debt holders will want to extract.  Since this forbearance covers the revolver, it takes care of some short-term problems, but the company has larger issues on the horizon with some pissed-off debt holders who were displeased about the Sabine/Forest Oil merger that was announced last year.  But with the forbearance, at least they have a little more time to come to some sort of ...arrangement (cue the sound of cracking knuckles).  The deal was too complicated for my little brain to understand, never mind explain, but here is the drawing:

A Bunch of New Texas Completions

3/27/15 - 5/4/15:
  • ACLCO Hay G.U. 2 #1H, Goodrich Petroleum: 6.018 MMcf/day IP, 10/64" choke, 11,500 psi; Perfs: 15,803-19,474, length: 3,671 ft.; Carthage Field (Haynesville Shale), Angelina Co., Survey: BERRY, WP, A-788 
  • Brent Miller Unit A2 #2H, EXCO Operating : 15.971 MMcf/day IP, 20/64" choke, 9,524 psi; Perfs: 14,830-20,846, length: 6,016 ft.; Carthage Field (Haynesville Shale), Nacogdoches Co., Survey: CHIRINO, JA, A-17 

Recent Texas Permits

3/30/15 - 5/4/15:
  • Dunaway Gas Unit #6H, Sabine Oil & Gas; Carthage Field (Haynesville Shale), Panola Co., Survey: COTTON, J, A-147 
  • Dunaway Gas Unit #7H, Sabine Oil & Gas; Carthage Field (Haynesville Shale), Panola Co., Survey: COTTON, J, A-147 

Monday, May 4, 2015

Haynesville Shale Rig Count: -1 to 19

The Haynesville Shale rig count dropped by one last week to 19.  Louisiana was unchanged at 11, while Texas dropped one (EXCO Resources) to eight.


U.S. Rig Count: -27 to 905

The Baker Hughes U.S. rig count was down 27 last week to 905, marking the 21st consecutive week of net rig decreases in the U.S.  Oil rigs were down 24 to 679, gas rigs were down three to 222 and miscellaneous rigs were unchanged at four.  By type, horizontal rigs were down 21 to 699, vertical rigs were down eight to 113 and directional rigs were up two to 93.  Among gas rigs, horizontal rigs were down ten to 169, directional rigs were up three to 38 and vertical rigs were up four to 15.


As this rig decline plays out, it is interesting to see how the 2015 drop closely mimics the 2009 drop in gas rigs.  But I expect the recovery to look nothing like 2009-10, when the oil rig count rocketed northward with the oil-driven activity increases in southern and western Texas as well as North Dakota.

Thursday, April 30, 2015

EIA: Storage +81 to 1.71 Tcf

The EIA announced this morning that working gas in storage was up 81 Bcf last week to 1.71 Tcf.  The injection was slightly higher than last year (+77 Bcf) but 47% above the five year average (+55 Bcf).  The current storage level is now 76.5% higher than last year (969 Bcf, a difference of 741 Bcf) but 4.2% lower than the five year average (1.785 Tcf, a difference of 75 Bcf).


Wednesday, April 29, 2015

More on EXCO Call

I reviewed EXCO's presentation from this morning's quarterly earnings call, and have dropped in the Haynesville-related operational slides below with a few comments following yesterday's post.  Since EXCO is as close as there is to a pure play Haynesville company, I am paying even closer attention to them than usual. The downside of that observation is that the stock is currently trading at $1.90, down from $6 last year and $20 four years ago.


Tuesday, April 28, 2015

EXCO Reports Q1 Earnings

EXCO released its first quarter earnings this afternoon in anticipation of a Wednesday conference call (with pretty PowerPoint pictures).  Here is the Haynesville-centric view of EXCO's update (all references to wells are gross numbers):
  • As advertised, EXCO drilled only two Haynesville wells in north Louisiana but completed 14, mostly in the Holly field.  
  • In January, the company also completed its first Mid-Bossier well since 2010, and it is currently flowing 5.3 MMcf/day at 6,700 psi.  I had previously guessed that the Mid-Bossier well is Branch Ranch 5, #3, serial #248472.

Monday, April 27, 2015

Haynesville Shale Rig Count: -2 to 20

The Haynesville Shale rig count was down two this week to 20.  Louisiana was down two (both Petrohawk/BHP Billiton, which is down to zero) to 11, while Texas was unchanged at nine.


Friday, April 24, 2015

Aubrey Still On Track to Launch a "Blank Check" Company

Former Chesapeake CEO Aubrey McClendon is back on track to take a new investment vehicle public.  Avondale Acquisition would be a special purpose acquisition company, presumably set up to buy oil and gas assets or companies, but the investors in the offering would not know what the target is when making the investment.  With the drop in both oil and natural gas prices, there will be lots of distressed assets coming to market, and Aubrey hopes to be there with an open checkbook.  Will he be looking at Encana's Haynesville portfolio?  Maybe not.  He's only raising $200 million, which he will of course leverage with debt, but I doubt it will be enough to buy the Encana leases outright.  Anyway, I'll bet he is looking for something with more liquids anyway.

If this thing goes through, it will be entertaining to see Aubrey on the prowl again.

U.S. Rig Count: -22 to 932 (But Gas Rigs +8)

The Baker Hughes U.S. rig count dropped 22 rigs this week to 932.  Oil rigs were down 31 to 703, gas rigs were up eight to 225 and miscellaneous rigs were up one to four.  By type, horizontal rigs were down 21 to 720, vertical rigs were down one to 121 and directional rigs were unchanged at 91.  Among gas rigs, horizontal rigs were up four to 179, directional rigs were up two to 35 and vertical rigs were up two to 11.

Thursday, April 23, 2015

New Louisiana Completions

  • Elston 2-11 HC #1-ALT, Anadarko E&P: 11.136 MMcf/day IP on 16/64 in. choke at 7,050 psi; Perfs: 11,464-17,956, length: 6,492 ft.; Elm Grove Field, Bossier Parish, S2/T16/R11; res. A, serial #248248 
  • Elston 2-11 HC #2-ALT, Anadarko E&P: 10.542 MMcf/day IP on 18/64 in. choke at 6,911 psi; Perfs: 14,424-17,598, length: 3,174 ft.; Elm Grove Field, Bossier Parish, S2/T16/R11; res. A, serial #248249 

EIA: Gas in Storage +90 Bcf to 1.629

The EIA reported this morning that working gas in storage was up 90 Bcf to 1.629 Tcf.  If memory serves, this exceeded consensus estimates by around 3 or 4 Bcf.  The weekly injection was double both last year (+45 Bcf) and the five year average (+46 Bcf).  The current storage level is now 82.6% greater than last year (892 Bcf, a difference of 737 Bcf) but 5.8% below the five year average (1.73 Tcf, a difference of 101 Bcf).


Given the current injection pace and the calls for a cooler than normal summer, I'd expect the negative difference between the current and five year storage level to evaporate in short order (although I'm not hoping for it...).  The red line on the chart below is about to blow through 2013 and is headed for zero (the five year average) in a hurry.

Monday, April 20, 2015

Encana Putting Haynesville Shale Properties on Market - Bloomberg

Bloomberg reported today that Encana Corp. has hired Citicorp to shop its Haynesville Shale properties.  This should come as little shock to Encana observers.  We noted a few months ago that the Haynesville play no longer merited a label on its map in investor presentations, instead giving it a vague reference of "natural gas optionality," which was a not so subtle hint that the company no longer valued its position.

According to the article, Encana plans to shed its gas positions and double down on NG liquids and oil.  Long-time observers of Encana likely view this as a good buying opportunity for natural gas since ECA hasn't yet gotten the timing right in the gas-liquids hokey pokey, especially now that gas is trading near $2.50/MMBtu.

Haynesville Shale Rig Count: +1 to 22

Last week, the Haynesville Shale rig count increased by one to 22.  Louisiana held at 13, while Texas was up one (EXCO) to nine.  I have updated the rig maps with current data.