Tag Archive for: oilandgas

Another good year for Texas oil companies boosted state coffers in 2023, yielding a record $26.3 billion in taxes and state royalties.

Texas made record-breaking $26.3B in off oil and gas tax revenue last year

Another good year for Texas oil companies boosted state coffers in 2023, the oil and gas tax revenue yielding a record $26.3 billion in taxes and state royalties that fueled the state’s schools and county governments, according to figures released Tuesday by the Texas Oil and Gas Association.
The industry trade group said state revenues from oil and gas activities increased 6% in 2023 compared with the previous $24.7 billion record set in 2022, when oil prices soared after the start of the Ukraine war.
Russia’s invasion of Ukraine sparked energy shortages that drove up prices and prompted oil and gas companies in Texas to increase production, helping to deliver a second consecutive record-breaking year for state revenues tied to the industry.

OIL AND GAS: Oil well plugging is haphazardly funded. This Houston oil exec aims to change that

Monthly production totals in 2023 set records, TXOGA President Todd Staples said Tuesday during a news conference. The Texas industry produced 5.6 million barrels per day of crude oil in October, the state’s highest-ever monthly oil production.

“American energy leadership starts in Texas,” he said during the conference call. “Our nation, economy and our world are better because of the tremendous gains happening in Texas oil and natural gas.”

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Source: Houston Chronicle

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Explore the world of ORRI investments: learn how they offer passive income in the energy sector. Discover advantages, risks, and strategies for success. Make informed decisions for a diversified portfolio.

Evaluating the risks and rewards of ORRI investments

DISCLAIMER: We are not financial advisors. The content on this website 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! 

Investing in Overriding Royalty Interests (ORRIs) has gained popularity as a way to diversify portfolios and generate passive income within the energy industry. ORRIs grant investors a share of the revenue generated from oil and gas production, without the financial responsibilities associated with drilling and operational costs. However, like any investment, ORRIs come with both risks and rewards. In this comprehensive guide, we will explore the world of ORRI investments, examining how they work, the advantages, potential pitfalls, the different types, strategies for success, and key considerations for potential investors. Understanding these nuances is crucial for making informed decisions when considering ORRI investments.

What Are Overriding Royalty Interests (ORRIs)?

Overriding Royalty Interests, commonly referred to as ORRIs, are a unique form of investment in the oil and gas industry. They provide investors with the right to a portion of the revenue generated from the production and sale of oil and gas. ORRIs are established through contractual agreements between investors and oil and gas operators.

How ORRIs Work

Investing in ORRIs means becoming a silent partner in oil and gas projects. Investors receive a predetermined percentage of the revenue generated from production, often based on the gross production value, which is calculated before operational expenses are deducted.

The specific terms of an ORRI agreement can vary; some may have fixed royalty rates, while others may include escalation clauses allowing for an increase in the royalty percentage as production grows. Understanding the details of the agreement is crucial before investing in ORRIs.

Advantages of ORRI Investments

Investing in ORRIs offers several compelling advantages:

Passive Income: ORRIs provide a source of passive income without requiring active involvement or day-to-day management.

Inflation Hedge: Royalty payments often increase with the production and sale of valuable commodities, making them an effective hedge against inflation.

Diversification: ORRIs offer diversification within a portfolio, as they are less correlated with traditional investments like stocks and bonds.

Limited Liability: Investors in ORRIs typically have no responsibility for operational costs or liabilities associated with drilling and exploration.

Potential Risks and Considerations

While ORRIs can be lucrative, there are important risks and considerations to keep in mind:

Market Volatility: The oil and gas industry can be subject to price fluctuations and market volatility, which can affect the value of royalty payments.

Geopolitical Factors: Global geopolitical events, such as supply disruptions or changes in government regulations, can impact the industry and your investments.

Resource Depletion: As reserves are depleted over time, royalty payments may decrease. Assessing the sustainability of the project is vital.

Contract Terms: The terms of ORRI agreements can vary, and some may be more favorable than others. It’s essential to review the contract carefully and seek legal advice if necessary.

Types of Overriding Royalty Interests

There are various types of ORRIs to consider, including:

Percentage ORRIs: Investors receive a set percentage of production revenue.

Cost-Free ORRIs: Investors are not responsible for operational costs, even if they exceed initial estimates.

Net ORRIs: Royalties are calculated based on net revenue, considering operational expenses.

Working Interest ORRIs: Investors take on a more active role in project management but share in both profits and losses.

The choice of ORRI type depends on your risk tolerance, financial goals, and desired level of involvement in the investment.

Strategies for Successful ORRI Investments

To maximize the potential of ORRI investments, consider the following strategies:

Thorough Research and Due Diligence: Before investing, extensively research the operator, the specific project, and the terms of the ORRI agreement.

Diversify: Spread your investments across various projects and operators to mitigate risk.

Regular Monitoring: Stay informed about market conditions and the performance of your investments to make timely decisions.

Consult Legal and Financial Professionals: Engage legal and financial professionals to ensure you fully understand the contract terms and potential legal implications.

Tax Implications

Understanding the tax implications of ORRIs is essential. Royalty income is generally subject to ordinary income tax rates, and the tax treatment may vary depending on your jurisdiction. Consult a tax advisor to develop a tax-efficient strategy for your ORRI investments.

Real-World Examples of ORRI Investments

To better understand the potential of ORRIs, consider these real-world examples:

Eagle Ford Shale: Investors in this Texas shale formation have earned substantial royalties due to the region’s prolific oil and gas production.

Bakken Formation: North Dakota’s Bakken Formation has been a hotspot for ORRI investments, offering significant returns to investors.

How to Begin Investing in Overriding Royalty Interests

If you’re interested in investing in ORRIs, follow these steps:

  • Education: Learn about the oil and gas industry, royalty interests, and the specific terms of ORRI agreements.
  • Identify Operators and Projects: Research and identify reputable operators and projects with strong potential.
  • Consult Professionals: Seek advice from financial advisors, lawyers, and industry experts to guide your investment decisions.
  • Negotiate Agreements: Engage in negotiations with operators to secure favorable terms and agree on a contract that suits your investment goals.

 

Investing in Overriding Royalty Interests presents a compelling opportunity for diversifying portfolios and generating passive income. However, it’s not without risks, and careful research, due diligence, and professional guidance are essential to make informed investment decisions.

Understanding the workings of ORRIs, assessing the advantages and risks, and implementing effective investment strategies can unlock the potential of this alternative investment option, allowing you to build a diversified and income-generating portfolio. Keep in mind that the oil and gas industry is dynamic, so staying informed and adaptable is key to successful ORRI investments.

 

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Operators in the Permian Basin continued leading the US both in growth and overall production of oil and gas.

2023 saw $103 billion in Permian Basin oil and gas mergers, report says

Continued Leading The U.S.

Operators in the Permian Basin oil and gas mergers continued leading the U.S. both in growth and overall production of oil and gas, with numbers expected to climb in February.

About 5,000 barrels of oil per day (bopd) were expected to be added in the basin in February, according to the Energy Information Administration (EIA), for a total of about 5.97 bopd.

January’s average was estimated at about 5.96 million bopd, the EIA reported.

The Permian Basin, located in West Texas and southeastern New Mexico, continues to solidify its position as a dominant force in the global energy market. The latest report on shale basin production has revealed an impressive forecast for the Permian Basin’s daily production next month. In fact, the projected output for this region exceeds the combined production of every other shale basin mentioned in the report.

The Most Prolific Shale Basin

This remarkable achievement further cements the Permian Basin’s status as the most prolific shale basin in the United States. With its vast reserves of oil and natural gas, coupled with advancements in drilling technology, the Permian Basin has experienced a rapid expansion of production capacity in recent years. This growth has not only contributed significantly to the domestic energy supply but has also positioned the United States as a key player in the global energy landscape. The Permian Basin’s consistently high production numbers have garnered attention from investors and industry experts, who recognize the region’s potential for continued growth and profitability.

Furthermore, the Permian Basin’s success can be ascribe to several factors. Firstly, the region boasts a favorable geology that facilitates the extraction of oil and gas resources. The basin’s multiple stacked shale formations, including the Wolfcamp and Spraberry formations, provide ample opportunities for drilling and production. Additionally, the Permian Basin benefits from a well-established infrastructure network, including pipelines, refineries, and storage facilities, which allows for efficient transportation and processing of the extracted resources.

Not limited To Its Impressive Production

Moreover, the Permian Basin’s success story is not tight to its impressive production numbers alone. The economic impact of this booming industry extends beyond job creation and tax revenue. The increased production has led to a surge in investment and development activities, driving economic growth in the surrounding communities. Local businesses, service providers, and educational institutions have all benefited from the influx of capital and job opportunities generated by the Permian Basin’s energy sector.

In conclusion, the Permian Basin’s forecasted daily production for next month surpasses the combined output of all other shale basins mentioned in the report. This achievement solidifies the Permian Basin’s position as the leading shale basin in the United States and underscores its significance in the global energy market. With its favorable geology, robust infrastructure, and positive economic impact, the Permian Basin continues to be a driving force in the energy sector, attracting investment and contributing to the nation’s energy security and economic growth.

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Source: Carlsbad Current Argus

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Merger and acquisition activity among exploration and production companies hit $144B in the fourth quarter alone and $190B for 2023.

The oil and gas industry is undergoing its biggest-ever consolidation

  • The oil and gas industry is undergoing its biggest-ever consolidation, according to Enverus.
  • Upstream merger and acquisition activity hit $144 billion in the fourth quarter alone. And $190 billion for 2023, both setting records.
  • Bids from Exxon Mobil, Chevron, and Occidental Petroleum were among the key deals fueling the record.

The upstream oil and gas sector is consolidating at a record pace. As companies race to secure longevity in the market.

Merger and acquisition activity among exploration and production companies hit $144 billion in the fourth quarter alone. And $190 billion for 2023, both setting records, according to analytics firm Enverus.

“Oil and gas is undergoing a historic consolidation wave comparable to what occurred in the late 1990s and early 2000s giving rise to the modern supermajors.” Senior Vice President Andrew Dittmar said in a press release. “After a decade of lowered investment in exploration and with the major US shale plays largely defined, M&A has become the preferred tool to replace declining reserves and secure longevity in these companies’ profitable upstream businesses.”

In the fourth quarter, bids from Exxon Mobil, Chevron, and Occidental Petroleum. Were among the key deals fueling the record-setting consolidation.

M&A activity was overwhelmingly focused on oil last year. Totaling $186 billion in deals, while $6 billion targeted gas, according to Enverus.

Interest in the latter will likely grow as the US industry is working on increasing its liquefied natural gas exports over the next three years.

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Source: yahoo!finance

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Explore the environmental impact of oil and gas leasing, from air pollution to habitat disruption. Learn about challenges, solutions, and the role of regulations in promoting sustainability.

Evaluating the environmental impact of oil and gas leasing

DISCLAIMER: We are not financial advisors. The content on this website 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!

Impact Of Oil And Gas Leasing

The oil and gas industry plays a pivotal role in meeting global energy demands. Yet, the environmental impact of oil and gas leasing has garnered significant attention and concern. As the world grapples with climate change and strives to reduce carbon emissions, it is essential to assess the environmental consequences of leasing land for oil and gas exploration and production. In this comprehensive guide, we will delve into the environmental impact of oil and gas leasing, covering the various aspects, challenges, and potential solutions. Understanding these impacts is crucial for making informed decisions and shaping the industry’s future with a focus on environmental sustainability.

Understanding Oil and Gas Leasing

Oil and gas leasing is the process of granting individuals or companies the right to explore, drill, and extract oil and natural gas resources from a specific tract of land. This involves contracts between landowners and energy companies, enabling the lessee to access the resources in exchange for royalties and lease payments.

The Environmental Impact of Oil and Gas Leasing

The environmental impact of oil and gas leasing is multi-faceted and affects various aspects of the environment. It is crucial to assess and address these impacts to promote sustainable practices within the industry.

Air Pollution and Greenhouse Gas Emissions

The exploration and production of oil and gas release significant quantities of air pollutants and greenhouse gases. These emissions include methane, a potent greenhouse gas, and volatile organic compounds (VOCs), which contribute to ground-level ozone formation. These pollutants have several environmental consequences, such as:

  • Climate Change: The release of greenhouse gases intensifies climate change, leading to rising temperatures, extreme weather events, and sea-level rise.
  • Air Quality: Air pollutants can degrade air quality, posing health risks to nearby communities, including respiratory and cardiovascular problems.

Water Contamination and Pollution

Oil and gas activities carry the risk of water contamination and pollution, particularly when hydraulic fracturing or fracking is involved. The potential consequences include:

  • Groundwater Contamination: Chemicals used in fracking fluids and the migration of methane can contaminate groundwater, rendering it unsafe for consumption.
  • Surface Water Pollution: Spills and runoff from drilling sites can pollute nearby rivers, streams, and other surface water bodies, harming aquatic life.

Land Disturbance and Habitat Disruption

The process of clearing land, drilling wells, and constructing infrastructure can result in significant land disturbance and habitat disruption:

  • Deforestation: Clearing land for drilling sites and infrastructure can lead to deforestation, which affects local ecosystems and wildlife.
  • Habitat Fragmentation: Drilling activities can fragment habitats, making it difficult for wildlife to migrate and access resources.

Mitigation and Environmental Regulations

Mitigating the environmental impact of oil and gas leasing requires a combination of effective regulations and industry best practices:

  • Regulations: Government agencies set rules and regulations to monitor and mitigate environmental impact. Examples include the Clean Air Act and Clean Water Act in the United States.
  • Best Practices: Energy companies can adopt industry best practices that reduce environmental impact, such as using advanced drilling technologies and optimizing resource recovery.

Emerging Technologies and Practices

The oil and gas industry is continually evolving, with the development of new technologies and practices aimed at reducing its environmental footprint:

  • Methane Capture: Advanced technologies enable the capture and utilization of methane emissions, reducing their release into the atmosphere.
  • Water Recycling: Innovations in water management allow for the recycling and reuse of water in drilling operations, minimizing freshwater consumption.

The Role of Public and Private Sectors

Both public and private sectors play a significant role in addressing the environmental impact of oil and gas leasing:

  • Government Action: Governments must enact and enforce environmental regulations and standards, while also encouraging sustainable practices.
  • Corporate Responsibility: Energy companies should adopt environmentally responsible practices and invest in research and development to reduce their impact.

Balancing Energy Demands and Environmental Responsibility

Balancing the need for energy resources with environmental responsibility is a complex challenge:

  • Transition to Cleaner Energy: Reducing dependence on fossil fuels and transitioning to cleaner energy sources, such as renewables, is a key strategy.
  • Regulatory and Fiscal Policies: Governments can implement policies that incentivize environmentally responsible practices and discourage pollution.

 

Evaluating the environmental impact of oil and gas leasing is an essential step in promoting sustainability and addressing the challenges posed by climate change. The industry must continue to adopt responsible practices, invest in technology and innovation, and work in tandem with governments and the public to minimize its environmental footprint. As the world grapples with the imperative to reduce carbon emissions and protect the environment, it is crucial to find a balance between meeting energy demands and environmental responsibility.

 


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The BLM WY State Office has opened a 30-day public scoping period to receive public input on 5 oil & gas parcels that may be included in a Sept. 2024 lease sale in WY

BLM seeks public comment for oil and gas lease sale in Wyoming

A 30-day Public Scoping Period

The Bureau of Land Management Wyoming State Office has opened a 30-day public scoping period. To receive public input on 5 oil and gas parcels totaling 239.38 acres. That can be incorporate in a September 2024 lease sale in Wyoming. The comment period ends February 15, 2024.

The parcels the BLM is analyzing, as well as maps and instructions on how to comment are available on the BLM’s ePlanning website at: https://eplanning.blm.gov/eplanning-ui/project/2030553/510.

A New Royalty Rate

oil & gas lease sale

As authorized under the Inflation Reduction Act. The Bureau of Land Management (BLM) is implementing a new royalty rate of 16.67 percent. For production on any new leases resulting from this sale. This move is focus at ensuring a fair and equitable collection of royalties on oil and gas extracted from federal lands.

The decision to implement this rate aligns with the BLM’s mandate to manage public lands in a responsible manner, striking a balance between promoting energy development and safeguarding the interests of taxpayers and the environment.

BLM’s online fact sheet

To gain a comprehensive understanding of the Inflation Reduction Act and its implications. Interested stakeholders are hearten to refer to the BLM’s online fact sheet. This fact sheet provides detailed information on the key provisions of the Act. Including its objectives, the rationale behind the royalty rate adjustment, and the expected impact on revenue distribution.

It serves as a valuable resource for industry professionals, state officials, and the public at large. Facilitating transparency and enabling informed decision-making regarding oil and gas leasing activities on federal lands. Notably, the generated revenues from these leases will be split between the respective state. Where the drilling occurs and the U.S. Treasury. Make certain that the financial benefits of energy production are shared among relevant stakeholders and contribute to the nation’s overall economic growth.

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Source: The Cheyenne Post

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In 2023, upstream oil and gas saw significant increases in hiring with the job count growing by 15,300 jobs for the year.

Oil & gas jobs in Texas continued strong growth to close out 2023

Data released by the Texas Workforce Commission indicates that upstream oil and gas employment in Texas continues to grow. With the sector adding 31,00 jobs in December. In 2023, upstream oil and gas jobs saw significant increases. In hiring with the job count growing by 15,300 jobs for the year.

“2023 was an incredibly solid year for upstream oil and gas job growth, despite global economic uncertainties that have held back strong price signals, and the year finished with a continued upward push on job expansion,” said Todd Staples, president of the Texas Oil & Gas Association. “These jobs, along with the associated activity in local communities that generates tremendous growth opportunities. Benefit every part of Texas and continue to be the cornerstone of the Texas economy.”

Since the COVID-low point in September of 2020. Months of increase in upstream oil and gas employment in Texas have outnumbered months of decrease by 33 to 6. In that time, industry has added 54,700 Texas upstream jobs, an average growth of 1,403 jobs a month.

These jobs pay among the highest wages in Texas. With employers in oil and natural gas paying an average salary of approximately $124,000 in 2023.

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Source: Texas Insider

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As the shale industry matures, the biggest oil and gas producers, with their efficiencies and lower cost of capital, are moving in.

Changing of the guard in the Permian

As the shale industry matures, the biggest oil and gas producers, with their efficiencies and lower cost of capital, are moving in.

 

When extraction of oil and gas from shale deposits took off a dozen years ago. It sparked a revolution that enabled the U.S. to become a global mega-producer of fossil fuels due to technological breakthroughs in hydraulic fracturing and horizontal drilling. Now, energy analysts say, the guard is changing as shale production matures and the capital requirements to maintain production intensify.

Changing of the guard in the Permian

Shale now accounts for 10% of worldwide crude oil and 32% of global natural gas that is currently recoverable, according to the U.S. Energy Information Administration. West Texas’s Permian Basin is the second largest oil field in the world, behind Saudi Arabia’s giant Ghawar field. That makes the Permian the dynamic center of oil and gas extraction in the U.S., and the place where this latest chapter of the energy saga is being written.

Sold Out To The Oil-And-Gas Majors

In a series of major deals last fall, some of the pioneers of shale production in the region sold out to the oil-and-gas majors, greatly consolidating the U.S. industry. Highlighting the trend were Exxon Mobil’s $60 billion purchase of Pioneer Natural Resources in October and Occidental Petroleum’s $10.8 billion deal to buy CrownRock in December. Oil and gas deals totaled more than $250 billion last year, the largest figure in nearly 10 years.

These deals are big, and expensive—Oxy is paying some $5 million per location for CrownRock’s assets, which Andrew Dittmar, a director at Enverus Intelligence Research, described a “nose-bleed territory”—but are unlikely to move the needle on global oil prices more than marginally. Their real importance, analysts say, is in what they signal about shale production in the Permian over the remainder of the decade.

 

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Source: Global Finance

 

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The Permian Basin produced nearly 6M barrels of oil a day in 2023. That’s more than Iraq, the UAE or Kuwait, according to Peter McNally.

Oil-rich Permian Basin attracts buyers with resources

2023 was a big year for the U.S. oil and natural gas business. The country, Oil-rich Permian Basin, remained the world’s largest oil producer for the sixth straight year, and a wave of consolidation swept through the industry. A good chunk of that merger and acquisition activity was concentrated in the Permian Basin of West Texas and New Mexico, which has been helping the U.S. hold on to the world’s top spot.

Oil-rich Permian BasinThe Permian Basin produced nearly 6 million barrels of oil a day in 2023. That’s more than Iraq, the United Arab Emirates or Kuwait, according to Peter McNally, analyst at Third Bridge.

“This year was another new high, you know, for the Permian. And that has attracted a lot of interest,” he said.

The Permian Basin has another thing going for it. “It’s almost like real estate: location, location, location,” said Robert McNally of consulting firm Rapidan Energy.

Industry-friendly regulation in Texas is part of that. There’s also less federal regulation when it comes to exporting the oil because it doesn’t have to cross state lines.

 

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Source: Marketplace

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Last year was big for Texas oil companies as they jockeyed for access to petroleum-rich plots of the Permian Basin and branched into new territories.

How a spree of oil and gas mergers are setting the stage for 2024

The Spree of Oil and Gas Topic. Last year was big for Texas oil companies as they jockeyed for access to petroleum-rich plots of the Permian Basin and branched into new territories.

Recent megadeals struck by Chevron and Exxon put pressure on others in the oil industry to catch the consolidation wave, potentially kicking off a new round of mergers and acquisitions that could have a profound impact on Houston for years to come. Additionally, milestone acquisitions made by Exxon and Occidental Petroleum in the carbon capture space also set the stage for Houston to be ground zero for the growing industry.

Exxon to buy Pioneer for $59.5 billion

Exxon said in October that it would buy Irving-based Pioneer Natural Resources for $59.5 billion in the oil giant’s largest deal since it merged with Mobil more than two decades ago. Expected to be settle in 2024, the deal would make Spring-based Exxon the largest operator in the Permian Basin of Texas and New Mexico and bring the company’s daily production to almost 4.5 million barrels of oil equivalent a day — 50% more than the next largest supermajor.

Source: Houston Chronicle

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