Tag Archive for: oilandgas

Oil Driller Increases '24 Production Target on Permian Success

Another Driller Increases ’24 Production Target on Permian Success

Ovintiv Inc., one of the leading oil driller companies in the shale drilling sector, has recently updated its production forecast for 2024, marking itself as the second oil and gas company to make such an adjustment this year. The firm now projects a production range of between 570,000 and 580,000 barrels of crude oil per day, a notable increase from its previous estimate, which ranged from 545,000 to 575,000 barrels. This revision, calculated from the midpoint of the newly established range, indicates a 2.7% increase in anticipated production levels. Furthermore, Ovintiv has also raised its target for the oil and condensate segment, adjusting it upward by approximately 1%, with a goal of reaching around 208,000 barrels per day. This strategic adjustment reflects the company’s confidence in its operational capabilities and the overall market conditions.

Ovintiv’s decision to enhance its production outlook follows a similar move by Matador Resources Co., highlighting a trend among U.S. drillers who are cautiously navigating the current energy landscape. While many companies are focusing on maintaining stable or modest growth in output, this shift in forecast underscores Ovintiv’s strategic emphasis on maximizing production efficiency while balancing capital allocation to shareholders. As the industry gradually transitions towards a more disciplined approach to growth, Ovintiv’s proactive stance may position it favorably for future opportunities, enabling the company to strengthen its drilling assets and enhance shareholder returns in a competitive market environment.

Oil Driller Performance

The performance of oil wells in the prominent Permian Basin, which extends across Texas and New Mexico, has consistently surpassed industry expectations, presenting a complex challenge for the Organization of the Petroleum Exporting Countries (OPEC) and its allies. These countries have been actively engaged in a strategic effort to gradually unwind coordinated production restrictions that were initially implemented to support and stabilize crude oil prices in response to volatile market conditions. However, the unexpected surge in output from the Permian Basin may complicate these efforts, as increased production can lead to an oversupply in the market, potentially undermining the pricing strategies that OPEC and its allied nations have meticulously crafted. This development raises questions about the sustainability of current pricing levels and may prompt OPEC to reconsider its production policies in light of the new dynamics introduced by the Permian’s robust performance.

Production Comprises Oil and Condensate

In the context of this evolving market landscape, Ovintiv, a prominent player in the region, has strategically positioned its production portfolio to capitalize on the diverse hydrocarbon resources available in the Permian Basin. Currently, approximately one-third of Ovintiv’s production comprises oil and condensate, while the remaining two-thirds consists of natural gas and natural gas liquids. This balanced approach not only allows the company to mitigate risks associated with fluctuations in oil prices but also aligns with the growing demand for natural gas as a cleaner energy alternative. By maintaining a diversified portfolio, Ovintiv is well-positioned to navigate the complexities of the current market environment, adapting to changes in consumer preferences and regulatory landscapes while contributing to the ongoing discourse around energy production and sustainability in the context of the larger global energy transition.

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Source: World Oil

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Oil and gas mergers

Oil and gas mergers total $250 billion in just 12 months

Are you updated with the latest Oil and gas mergers? We have been in the habit of somewhat cavalierly discussing things like the federal budget or U.S. debt in terms of trillions of dollars. In recent years, numbers are so enormous that they defy the human mind’s ability to comprehend them. One number jumps off the page of the latest quarterly review of oil and gas upstream mergers and acquisition activity from energy data and analysis firm Enverus Intelligence Research (EIR).

EIR finds that over the past 12 months, upstream consolidation deals have totaled to an unprecedented $250 billion. This equates to a quarter of a trillion. So, we haven’t reached $1 trillion, but the very fact this number can be reasonably expressed as a meaningful fraction of that level is somewhat astonishing. It shows just how intense this latest rush to consolidate and grow larger in America’s shale patch has been.

have you heard the $22.5 billion merger between oil giants ConocoPhillips and Marathon Oil? it is the most current quarter of April through June saw more than $30 billion in new deals transacted. Andrew Dittmar. The principal analyst at EIR, notes that upstream M&A activity has reached that level in just three previous quarters since EIR began tracking this information.

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Source: Forbes

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oil rig count

Oil rig count jumps as drilling activity picks up

The oil rig count of active drilling rigs for oil and gas in the United States rose this week, according to new data that Baker Hughes published on Friday.

The total rig count rose by 3 to 589 this week, compared to 664 rigs this same time last year.
The number of oil rigs rose by 5 this week, after falling by a single rig in the week prior. Oil rigs now stand at 482—down by 47 compared to this time last year. The number of gas rigs fell by 2 this week to 101, a loss of 27 active gas rigs from this time last year. Miscellaneous rigs stayed the same at 6.

Crude Oil Production

Meanwhile, U.S. crude oil production stayed the same for the week ending July 19. Current weekly oil production in the United States, according to the EIA, is now on par with the all-time high of 13.3 million bpd.

Primary Vision’s Frac Spread Count, an estimate of the number of crews completing wells that are unfinished, fell sharply in the week ending July 19, from 238 to 228—the lowest levels since June 2021.

Drilling activity in the Permian fell by 1 this week at 304, a figure that is 30 fewer than this same time last year. The count in the Eagle Ford rose by 1 this week, rising to 49 after climbing by 1 rig in the week prior. Rigs in the Eagle Ford are now 5 below where they were this time last year.
Oil prices were down sharply on Friday. At 1:00 p.m. ET, the WTI benchmark was trading down $1.19 (-1.52%) on the day at $77.09. The Brent benchmark was trading down $1.29 (-1.57%) on the day at $81.08.

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Source: Oil Price

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US oil and gas

US oil and gas drilling activity sees rebound

The total number of active drilling rigs for oil and gas in the United States rose this week. This is according to new data that Baker Hughes published on Friday.

The total rig count rose by 2 to 586 this week, compared to 669 rigs this same time last year.

The number of oil rigs fell by 1 this week, falling by a single rig in the week prior. Oil rigs now stand at 477—down by 53 compared to this time last year. The number of gas rigs rose by 3 this week to 103, a loss of 28 active gas rigs from this time last year. Miscellaneous rigs stayed the same at 6.

Meanwhile, U.S. crude oil production rose 1 million bpd to 13.3 million bpd for for the week ending July 12. Current weekly oil production in the United States, according to the EIA, is now on par with the all-time high of 13.3 million bpd.

Primary Vision’s Frac Spread Count

Primary Vision’s Frac Spread Count an estimate of the number of crews. It is completing wells that are unfinished, fell in the week ending July 12, from 242 to 238.

Drilling activity in the Permian stayed the same this week at 305. This is a figure that is 28 fewer than this same time last year. The count in the Eagle Ford rose by 1 this week, rising to 49 after falling by 1 rig in the week prior. Rigs in the Eagle Ford are now 8 below where they were this time last year.Oil prices were down sharply on Friday. At 1:10 p.m. ET, the WTI benchmark was trading down $2.13 (-2.57%) on the day at $80.69. The Brent benchmark was trading down $1.99 (-2.34%) on the day at $83.12.

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Source: Oil Price

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The Permian basin is projected to produce around $350B in gross product and provide around 1.2M jobs for the nation’s economy by 2050.

Permian basin contributes over $100 billion, 800,000 jobs on leading US oil and gas production

The Permian basin continues to grow rapidly. It reflects the region’s importance as an economic powerhouse for Texas, New Mexico, and the country.

This year’s Economic Report from the Permian Strategic Partnership (PSP) highlights the region’s essential role in supporting critical government functions. These include road improvements, public schools and teachers, police and fire departments, community hospitals, and universities.

The report also emphasizes the area’s status as the second lowest producer of CO2 emissions per barrel of oil. This is equivalent among the major onshore producing basins worldwide.

As a world leader in oil production, the Permian basin is projected to produce around $350 billion in gross product. It provide around 1,200,000 jobs for the nation’s economy by 2050.

“The Permian basin provides indispensable resources to energy security, making significant contributions to our nation’s robust economy every year,” said Don Evans, Permian Strategic Partnership Chairman.

“As the world’s largest secure energy supply, our region is fundamental to our national, economic, and energy security. Texas and New Mexico can promote further growth and support the American economy in collaboration with the energy industry through investment and expansion of our region’s infrastructure.”

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Source: Oil & Gas 360

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Unlock the secrets of oil and gas investment success with comprehensive financial modeling techniques. Navigate risks, optimize returns, and make informed decisions.

Financial modeling for oil and gas investments

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DISCLAIMER: We are not financial advisors. The content on this website related to Financial modeling is for educational purposes only and merely cites our own personal opinions. In order to make the best financial decision that suits your own needs, you must conduct your own research and seek the advice of a licensed financial advisor if necessary. Know that all investments involve some form of risk and there is no guarantee that you will be successful in making, saving, or investing money; nor is there any guarantee that you won’t experience any loss when investing. Always remember to make smart decisions and do your own research!

Financial modeling plays a pivotal role in assessing the feasibility and profitability of oil and gas investments. Whether you’re a seasoned investor or a newcomer to the industry, understanding the intricacies of financial modeling is essential for making informed decisions and maximizing returns. This comprehensive guide delves into the fundamentals of financial modeling for oil and gas investments, providing insights, techniques, and best practices to help you navigate this complex landscape.

Financial modeling for oil and gas investments involves analyzing various factors, including commodity prices, production costs, reserves estimation, and regulatory considerations. By constructing accurate and robust financial models, investors can evaluate the potential risks and rewards associated with different projects and optimize their investment portfolios accordingly.

Commodity Price Forecasting | Financial modeling

Commodity prices, particularly crude oil and natural gas, are critical drivers of revenue and profitability in the oil and gas industry. Effective financial modeling requires robust forecasting techniques to anticipate future price movements accurately. From historical data analysis to econometric modeling, investors employ a range of methods to forecast commodity prices and incorporate these projections into their financial models.

Production Cost Analysis

Analyzing production costs is another essential aspect of financial modeling for oil and gas investments. Production costs encompass expenses related to drilling, extraction, transportation, and operations, and can significantly impact project economics. Financial models should account for various cost drivers and factors such as technological advancements, labor expenses, and regulatory compliance to provide accurate cost estimates and assess project viability.

Reserves Estimation

Estimating reserves is a critical component of oil and gas financial modeling, as it directly influences project valuation and investment decision-making. Reserves estimation involves assessing the quantity and quality of recoverable hydrocarbons in a given reservoir, taking into account geological data, reservoir characteristics, and production history. Sophisticated reserve estimation techniques, such as probabilistic methods and decline curve analysis, help investors quantify reserves uncertainty and optimize investment strategies.

Risk Analysis and Sensitivity Modeling

Oil and gas investments are inherently exposed to various risks, including geological, operational, financial, and market risks. Financial modeling enables investors to conduct comprehensive risk analysis and assess the potential impact of risk factors on project economics. Sensitivity analysis, scenario modeling, and Monte Carlo simulation are powerful tools used to quantify risk exposures, evaluate risk-return trade-offs, and make informed investment decisions in volatile market environments.

Regulatory and Tax Considerations

Navigating regulatory and tax considerations is essential in oil and gas financial modeling, as regulatory frameworks and tax regimes vary significantly across jurisdictions. Financial models should incorporate relevant regulatory requirements, such as permitting processes, environmental regulations, and taxation policies, to accurately assess project economics and compliance obligations. Understanding the legal and regulatory landscape is critical for mitigating regulatory risks and optimizing tax efficiency in oil and gas investments.

Capital Structuring and Financing

Capital structuring and financing decisions play a crucial role in oil and gas investment projects, influencing funding sources, capital allocation, and project economics. Financial modeling helps investors evaluate different financing options, such as equity, debt, and project finance, and optimize capital structures to maximize returns and minimize financing costs. By assessing cash flow projections, debt service coverage ratios, and return metrics, investors can structure financing arrangements that align with their investment objectives and risk preferences.

 

Financial modeling is a powerful tool for evaluating the feasibility and profitability of oil and gas investments, enabling investors to assess risks, optimize returns, and make informed decisions in a dynamic and complex industry landscape. By incorporating accurate commodity price forecasts, production cost estimates, reserves assessments, risk analysis, and regulatory considerations into their models, investors can navigate uncertainties, capitalize on opportunities, and achieve success in oil and gas investing.

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BP's latest energy outlook forecasts oil demand to peak in 2025, but the decline will be gradual, with consumption remaining high in 2035.

Oil and gas Stays and Are here to stay

The energy transition is showing signs of losing momentum over the past few months. EV sales are slowing, wind and solar capacity additions are not expanding fast enough, and electricity is getting more instead of less expensive. But experts still believe that Oil and gas Stays!

With those signs, others have been flashing red, too. Despite the push against oil and gas, these are here to stay for the long haul—and demand won’t even decline that much after peaking, according to the latest energy outlook of BP.

The supermajor, which used to compile the Statistical Review of World Energy, now does its own review. And according to its latest edition, oil demand will peak next year. And it’s not the first time it’s called the peak for oil demand.

Statistical Review

The last time its statistical review said that demand growth had peaked—in 2019—it turned out to be very wrong. In reality, oil demand soared after the end of the pandemic lockdowns to reach new all-time highs.

Now, BP has noted that over the past five years, oil demand has been growing at an average of half a million barrels daily since 2019, but that is about to end, with demand on the decline over the next couple of decades. But here’s the thing. Before, BP forecast that this decline would be quite substantial. Now, it expects that in 2035, the world will still consume 97.8 million barrels of oil per day in 2035, which would be a relatively minor decline from the current rate of consumption, which is about 100 million barrels daily, which may rise above that this year if demand strengthens in the second half.

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Source: Oil Price

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Quantum Capital to acquire Caerus Oil and Gas in $1.8bn deal

Quantum Capital to acquire Caerus Oil and Gas in $1.8bn deal

US-based private equity firm Quantum Capital Group has recently finalized an acquisition deal. It is with Caerus Oil and Gas, a prominent energy company. They are operating in the Rocky Mountain region. The agreement, valued at $1.8 billion, marks a significant move in the energy sector. It underscores Quantum Capital’s strategic expansion plans. According to reports from Bloomberg, sources have confirmed the successful acquisition. It involves Quantum Capital purchasing Caerus from its existing investors. Moreover, it includes Oaktree Capital Management, Anschutz Investment Company, and Old Ironsides Energy.

The transaction has garnered attention in the industry, and representatives from Quantum Capital and Caerus have refrained from offering official comments on the matter. The news has sparked curiosity and speculation among industry experts and stakeholders. This is as the acquisition signals a potential shift in ownership dynamics within the energy market. Despite requests for clarification, parties involved in the deal, including Oaktree Capital Management, Anschutz Investment Company, and Old Ironsides Energy, have chosen to remain tight-lipped, leaving room for anticipation and analysis within the investment community.

Caerus currently operates more than 7,400 wells across the Piceance Basin in Colorado and Uinta Basin in Utah.

The company also has related infrastructure including more than 3,862km of gas and water pipelines, as well as numerous water treatment and storage facilities.

“Quantum Capital to acquire Caerus Oil and Gas in $1.8bn deal ” was originally created and published by Offshore Technology, a GlobalData owned brand.

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Source: yahoo!finance

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family oil companies

Family oil companies attract huge M&A attention

Since its initial exploration and development over a century ago, the Permian Basin continues to showcase its enduring value and potential. As the largest resource basin in America, the Permian Basin remains a sought-after location for operators looking to establish a strong foothold in the industry. Amidst this competitive landscape, many operators are now turning their attention to the long-standing families who have been integral to the Permian’s growth since its inception.

Today, family-owned oil and gas companies have emerged as particularly attractive prospects for mergers and acquisitions within the basin. This trend follows a historical pattern of consolidation in the industry, making these companies highly coveted assets for larger operators seeking to expand their presence in the Permian Basin. Despite the shifting dynamics of the industry, the legacy of these families and their enduring contributions to the development of the Permian Basin remain key factors in shaping its future trajectory.

Family Owned Oil and Gas Companies

In recent years, the Permian Basin has witnessed a notable surge in mergers and acquisitions involving family-owned oil and gas companies. This trend can be attributed to the strategic appeal of these entities as sought-after assets within the basin’s landscape. With a historical backdrop of industry consolidation, these family-owned companies have become prime targets for larger operators aiming to bolster their footprint and operational capabilities in the Permian Basin. The allure of these acquisitions lies not only in the potential for expanded production and market share but also in the opportunity to inherit the legacy and expertise that these families have cultivated over generations.

Despite the evolving dynamics of the oil and gas sector, the enduring contributions and legacies of these families continue to play a pivotal role in shaping the future trajectory of the Permian Basin. Their deep-rooted ties to the region, longstanding relationships with stakeholders, and wealth of industry knowledge have established them as integral components of the basin’s ecosystem. As such, the preservation and integration of these family-owned entities into larger corporate structures represent a delicate balance between honoring tradition and embracing innovation in the pursuit of sustainable growth and development in the Permian Basin. With each merger or acquisition, the industry landscape evolves, reflecting a blend of the old guard and the new players striving to navigate the complexities of the energy market.

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Source: HARTENERGY

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Explore state-specific oil and gas royalty laws in the US. Learn about regulations, rates, and compliance for fair compensation. Stay informed!

Oil and Gas Royalty Laws State-by-state Guide

DISCLAIMER: We are not financial advisors. The content on this website related to oil and gas royalty laws is for educational purposes only. We merely cite our personal opinions. Need the best financial decision that suits your own needs? You must conduct your own research and seek the advice of a licensed financial advisor if necessary. Know that all investments involve some form of risk. There is no guarantee that you will be successful in making, saving, or investing money. There no guarantee that you won’t experience any loss when investing. Always remember to make smart decisions and do your own research!

Understanding oil and gas royalty laws is paramount for landowners, investors, and industry professionals. Thos involved in the extraction of these valuable resources must read this. The oil and gas industry playing a pivotal role in the economy. It is navigating the intricate web of state-specific regulations governing royalty payments. Moreover it is essential for ensuring fair compensation and compliance with legal requirements.

Alabama:

In Alabama, oil and gas royalty laws are primarily governed by the Alabama Oil and Gas Board. The state follows the “rule of capture,” meaning that landowners have the right to extract oil and gas from their property, regardless of its impact on neighboring properties. Royalty rates typically range from 12.5% to 25%, with variations based on lease agreements and negotiations.

Alaska:

Alaska boasts significant oil and gas reserves, and its royalty laws reflect the state’s commitment to resource management and revenue generation. The Alaska Department of Natural Resources oversees royalty payments, which are calculated based on production volume and market prices. Landowners can negotiate royalty rates, with the state typically receiving a share of the revenue from oil and gas extraction.

Arizona:

While not traditionally known for its oil and gas production, Arizona has implemented regulations to govern royalty payments in the few areas where extraction occurs. The Arizona State Land Department manages leases and royalty agreements, ensuring that landowners receive fair compensation for the use of their resources. Royalty rates vary depending on factors such as production volume and market demand.

Arkansas:

Arkansas has seen increased oil and gas activity in recent years, prompting the state government to establish clear guidelines for royalty payments. The Arkansas Oil and Gas Commission oversees the industry, setting minimum royalty rates and enforcing compliance with lease agreements. Landowners are entitled to a percentage of the value of extracted resources, typically ranging from 12.5% to 25%.

California:

California’s oil and gas royalty laws are among the most complex in the nation, reflecting the state’s stringent environmental regulations and land use policies. The California Geologic Energy Management Division regulates the industry, imposing strict royalty rates and environmental standards on operators. Landowners receive royalties based on production volume, with rates subject to negotiation and legal requirements.

Colorado:

Colorado is a significant player in the oil and gas industry, with robust regulations governing royalty payments and resource extraction. The Colorado Oil and Gas Conservation Commission oversees operations, ensuring compliance with environmental laws and royalty agreements. Landowners typically receive royalties ranging from 12.5% to 20% of the value of extracted resources, with variations based on lease terms and market conditions.

Connecticut:

While Connecticut does not have significant oil and gas reserves, it has implemented regulations to address royalty payments in areas where extraction occurs. The Connecticut Department of Energy and Environmental Protection oversees the industry, enforcing lease agreements and royalty rates. Landowners are entitled to a share of the revenue from oil and gas production, with rates determined by market conditions and contractual agreements.

Delaware:

Delaware’s oil and gas industry is relatively small compared to other states, but royalty laws still play a crucial role in resource management and revenue generation. The Delaware Department of Natural Resources and Environmental Control regulates the industry, setting minimum royalty rates and monitoring compliance with lease agreements. Landowners typically receive royalties ranging from 12.5% to 20%, depending on production volume and market prices.

Florida:

Florida’s oil and gas reserves have limitation. However, the state has implemented regulations to govern royalty payments in areas where extraction occurs. The Florida Department of Environmental Protection oversees the industry, ensuring compliance with environmental laws and lease agreements. Landowners are int royalties that has production volume and market prices, with rates subject to negotiation and legal requirements.

Georgia:

Georgia’s oil and gas industry is nascent. The state has established regulations to address royalty payments in areas where extraction occurs. The Georgia Environmental Protection Division oversees the industry, enforcing lease agreements and royalty rates. Landowners typically receive royalties ranging from 12.5% to 20% of the value of extracted resources. It has variations based on market conditions and contractual agreements.

Navigating the complex landscape of oil and gas royalty laws across the United States requires a comprehensive understanding of state-specific regulations and industry practices. From Alabama to Wyoming, each state has its own set of laws governing royalty payments, reflecting the diverse interests and priorities of stakeholders involved in resource extraction. By staying informed and seeking legal guidance when necessary, landowners, investors, and industry professionals can ensure compliance with regulatory requirements and maximize the value of their oil and gas assets.

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