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.


Friday, April 17, 2015

U.S. Rig Count: -34 to 954

To nobody's surprise, the Baker Hughes U.S. rig count was down again for the 19th straight week, dropping 34 rigs to 954.  Oil rigs were down 26 to 734, gas rigs were down eight to 217 and miscellaneous rigs were unchanged at three.  By type, horizontal rigs were down 29 to 741, vertical rigs were down six to 122 and directional rigs were up one to 91.  Among gas rigs, horizontal rigs were down five to 175, directional rigs were down one to 33 and vertical rigs were down two to nine.

Thursday, April 16, 2015

EIA: Gas in Storage +63 Bcf to 1.539 Tcf

The EIA announced this morning that working gas in storage was up 63 Bcf last week to 1.539 Tcf.  The weekly injection was nearly triple last year's (+22 Bcf) and 80% greater than the five year average (+35 Bcf).  The current storage level is now 81.7% higher than last year (847 Bcf, a difference of 692 Bcf) but 8.6% below the five year average (1.684 Tcf, a difference of 145 Bcf).


Wednesday, April 15, 2015

Mid-Bossier Completions Updated

For the first time in a few years, I've updated the Mid-Bossier spreadsheet and map.  The past few weeks have seen a few completions from EXCO Resources that I believe target the Mid-Bossier as part of the company's strategy to prove more of the Mid-Bossier resource.  All of the completions reported below have been reported over the past several weeks (and years), so there is nothing new but the change in designation to Mid-Bossier.  Most I'm pretty confident about.  There are still a few more out there that are more dubious that are not being "upgraded" to Mid-Bossier.
  • Thomas SU #2HB, EXCO Operating: 10.086 MMcf/day IP, 18/64" choke, 7,630 psi; Perfs: 12,667-19,604, length: 6,937 ft.; Carthage Field (Mid-Bossier), San Augustine Co., Survey: PLATT, T, A-219 

A Few New Louisiana Completions

  • Branch Ranch 5 #3-ALT, EXCO Operating: 7.521 MMcf/day IP on 15/64 in. choke at 7,919 psi; Perfs: 12,083-16,436, length: 4,353 ft.; Caspiana Field, DeSoto Parish, S5/T13/R12; res. Mid-Bossier, serial #248472 
  • Nabors 6 #4-ALT, EXCO Operating: 9.812 MMcf/day IP on 16/64 in. choke at 8,198 psi; Perfs: 12,797-17,114, length: 4,317 ft.; Caspiana Field, DeSoto Parish, S6/T13/R12; res. A, serial #246642 
  • Teal 3 #2-ALT, EXCO Operating: 8.392 MMcf/day IP on 14/64 in. choke at ? psi; Perfs: 12,566-16,757, length: 4,191 ft.; Holly Field, DeSoto Parish, S10/T13/R13; res. A, serial #248496

Tuesday, April 14, 2015

Shell's Haynesville Hokey Pokey

Last August, Royal Dutch Shell (doing business as SWEPI, LP) divested its interests in the Haynesville Shale to Vine Oil and Gas, a subsidiary of private equity giant Blackstone.  Earlier in the summer, Shell sold its interest in the Marcellus Shale to Rex Energy Corp.  Big oil has been notoriously unsuccessful exploring for shale oil and gas, as they are built to undertake massively complex and expensive projects.  Fast forward to last week's announcement that Shell is buying BG Group and suddenly Shell is back in the Haynesville and Marcellus by virtue of BG's 50/50 joint venture arrangements with EXCO Resources in each play.

Of course, this time Shell will be a financial partner and not an operator, but the transaction is pretty ironic given the recent divestitures.  But the big question is how long Shell will stay a partner in those deals?  For a company with a capital budget in the tens of billions of dollars, the JV financial obligations represent a small amount, but to make the BG deal work, Shell will have to sell off some less "strategic" assets.

Will EXCO JV interests be on the trading block?  I'm not so sure.

Monday, April 13, 2015

Haynesville Shale Rig Count: +1 to 21

The Haynesville Shale rig count was up one last week to 21.  Louisiana was up one (Vine Oil and Gas) to 13 while Texas held at eight.


Friday, April 10, 2015

U.S. Rig Count: -40 to 988

The Baker Hughes U.S. rig count was down 40 this week to 988.  Oil rigs were down 42 to 760, gas rigs were up three to 225 and miscellaneous rigs were down one to three.  By type, horizontal rigs were down 29 to 770, vertical rigs were down eight to 128 and directional rigs were down three to 90.  This is the first week gas rigs have increased since January 30, an eleven week period during which gas rigs have dropped by 97.


Among gas rigs, horizontal rigs were up one to 180, directional rigs were unchanged at 34 and vertical rigs were up two to 11.

Thursday, April 9, 2015

EIA: Gas in Storage +15 Bcf to 1.476 Tcf

The EIA announced this morning that working gas in storage was up 15 Bcf to 1.476 Tcf.  The injection was 23 Bcf greater than last year (-8 Bcf) and 17 Bcf above the five year average (-2 Bcf).  The current storage level is now 78.9% (!!!) above last year (825 Bcf, a difference of 651 Bcf) but 10.5% below the five year average (1.649 Tcf, a difference of 173 Bcf).


Tuesday, April 7, 2015

Haynesville Shale Rig Count: -2 to 20

The Haynesville Shale rig count was down two last week to 20.  Louisiana was down one (Chesapeake) to 12, while Texas was down one (Anadarko) to eight.


Thursday, April 2, 2015

U.S. Rig Count: -20 to 1,028

The Baker Hughes U.S. rig count was down 20 this week to 1,028.  Oil rigs were down 11 to 802, gas rigs were down 11 to 222 and miscellaneous rigs were up two to four.  Just like last week, the gas rig count is the lowest recorded by BHI since it started publishing its rig count in 1987.


By type, horizontal rigs were down 13 to 799, vertical rigs were down eight to 136 and directional rigs were up one to 93.  Among gas rigs, horizontal rigs were down eight to 179, directional rigs were down two to 34 and vertical rigs were down one to nine.  

Think about that:  there are only nine vertical rigs targeting gas right now.  Four years ago this week, there were 133.

Updating LA Completions for Vine Oil & Gas

With the latest round of Louisiana completions, I have finally updated the Louisiana completion spreadsheets for the operators of a bunch of wells that shifted operators following Blackstone's purchase of Shell's interests last summer.  Many were shifted from Shell and Encana (Shell's former JV partner) to Vine Oil & Gas, LP, which is the name of Blackstone's entity.  Others were shifted from Shell to Encana.   The zombies (permanently shut in, plugged and abandoned) stayed with SWEPI.

EIA: Gas in Storage -18 Bcf to 1.461 Tcf

Reversing the previous week's injection, working gas in storage was down 18 Bcf last week to 1.461 Tcf.  The withdrawal was still 53 Bcf smaller than last year (-71 Bcf), but it was nearly in line with the five year average withdrawal of 22 Bcf.  The current storage level is now 75% higher than this week last year (833 Bcf, a difference of 628 Bcf) but remains 11.5% below the five year average (1.651 Tcf, a difference of 190 Bcf).


A Few New Louisiana Completions

  • Evans 4-14-15 H #1-ALT, Chesapeake Operating: 14.088 MMcf/day IP on 22/64 in. choke at 7,170 psi; Perfs: 12,030-16,601, length: 4,571 ft.; Bethany Longstreet Field, Caddo Parish, S4/T14/R15; res. A, serial #248017 
  • Evans 4-14-15 H #2-ALT, Chesapeake Operating: 14.064 MMcf/day IP on 22/64 in. choke at 7,165 psi; Perfs: 12,110-16,613, length: 4,503 ft.; Bethany Longstreet Field, Caddo Parish, S4/T14/R15; res. A, serial #248018 

Wednesday, April 1, 2015

Skies Continue to Darken for Sabine

Sabine Oil and Gas finally issued its delayed annual report yesterday and dropped this bombshell in its Risk Factors section:
"The report of our independent registered public accounting firm that accompanies our audited consolidated financial statements for the year ended December 31, 2014 contains an explanatory paragraph regarding the substantial doubt about our ability to continue as a going concern. As a result, we are in default under our New Revolving Credit Facility and Term Loan Facility."
Default:  the most frightening word for any CFO.

EXCO Outsources Turnaround

In a somewhat curious arrangement, EXCO Resources announced today that it has entered into a "Services and Investment" agreement with a subsidiary of Bluescape Resources Company, LLC to execute "a disciplined performance improvement plan focused on maximizing value for EXCO's shareholders."

Huh?

Upon closing of the agreement, Bluescape's Executive Chairman will join EXCO's board and become the company's Executive Chairman, and EXCO President and COO Hal Hickey will become EXCO's CEO.  Bluescape will buy $10 million of EXCO's common stock directly from the company and another $40 million in the open market within a year of closing.  Bluescape will be paid an undisclosed monthly fee and have additional incentive fees.  Additionally, it will get up to 80 million warrants for common stock, depending on the recovery of EXCO's stock price.

Monday, March 30, 2015

Haynesville Shale Rig Count: -1 to 22

Last week, the Haynesville Shale rig count was down one to 22.  Louisiana was up one to 13 (EP Energy up one, Chesapeake and Comstock both down one) and Texas was unchanged at nine.  Last week marked the return of EP Energy, formerly El Paso, to drilling the Haynesville Shale for the first time since March 2012.  EP was never a huge player, maxing out at six rigs, but they were a consistent four to six rig player in 2010 and 2011.

Recent Texas Permits

3/10/15 - 3/29/15:
  • Neal, Sallie J. Unit #81HH, Anadarko E&P; Carthage Field (Haynesville Shale), Panola Co., Survey: ANDERSON, W, A-4 
  • Neal, Sallie J. Unit #51HH, Anadarko E&P; Carthage Field (Haynesville Shale), Panola Co., Survey: ANDERSON, W, A-4 

Friday, March 27, 2015

U.S. Rig Count: -21 to 1,048

The Baker Hughes U.S. rig count is down 21 rigs this week to 1,048.  Oil rigs were down 12 to 813, gas rigs were down nine to 233 and miscellaneous rigs were unchanged at two.  The gas rig count is the lowest that Baker Hughes has ever reported since the inception of its rig count in July 1987.


By type, horizontal rigs were down 17 to 812, vertical rigs were down four to 144 and directional rigs were unchanged at 92.  Among gas rigs, horizontal rigs were down four to 187, directional rigs were down two to 36 and vertical rigs were down three to ten.

Thursday, March 26, 2015

Clearing a Four Month Backlog of Texas Completions...

11/20/14 - 3/25/15:
  • Batts GU #1H, Classic Operating: .215 MMcf/day IP, -/64" choke, 117 psi; Perfs: 10,500-15,175, length: 4,675 ft.; Carthage Field (Haynesville Shale), Shelby Co., Survey: SMITH, J, A-637 
  • Crenshaw SU #1H, Exco Operating: 10.033 MMcf/day IP, 18/64" choke, 7,042 psi; Perfs: 13,032-19,645, length: 6,613 ft.; Carthage Field (Haynesville Shale), San Augustine Co., Survey: BURGES, TJ, A-71