• Community Blog Entries

    US - update through September 2018
    This interactive presentation contains the latest oil & gas production data from 97,332 horizontal wells in 10 US states, through September 2018. Cumulative oil and gas production from these wells reached 9.7 Gbo and 106 Tcf. West Virginia is deselected in most dashboards, as it has a greater reporting lag. September production data for New Mexico is rather incomplete, with over 100 thousand bo/d still missing. Visit ShaleProfile blog to explore the full interactive dashboards   After all revisions are in, oil production from these horizontal wells should come in well above 6 million bo/d for September. The ~8,000 wells that started in the first 9 months of 2018 will then already have contributed ~3 million bo/d in September. Never before in the history of US shale was so much new production capacity added in 9 months. As the total decline of older wells (<2018) was over 2 million bo/d (as shown by the top of the light blue area) in this period, the actual growth rate was a little below 1 million bo/d. If you switch to natural gas (using the ‘Product’ selection), you’ll see that gas production from the same wells never really experienced a drop, and grew by ~15 Bcf/d in the past 2 years to 55 Bcf/d (excluding WV) in September.   Initial well productivity grew steadily over the past 10 years (‘Well quality’ tab), but the rate of improvements appears to have slowed down recently.   You’ll find the status of the more than 100,000 horizontal wells that have been drilled in the ‘Well status’ tab. Only 1% of these wells have been plugged and abandoned so far.   The final dashboard gives an overview of the largest operators. EOG is well in the lead, with around 0.5 million bo/d of operated production capacity. Its September production numbers for New Mexico are highly incomplete, so the final drop should be ignored. The ‘Advanced Insights’ presentation is displayed below: This “Ultimate recovery” overview shows the relationship between production rates and cumulative production over time. The oil basins are preselected, and the wells are grouped by the year in which production started. The 4,300 wells that started production in 2011 (represented by the red curve) peaked at a rate of 273 bo/d, and they have now declined to 22 bo/d, recovering almost 150 thousand barrels of oil in the meantime (all average numbers). The 5,300 wells that started 5 years later (2016 – light brown curve), peaked at 517 bo/d, and they already recovered the same amount of oil within 22 months, on average. They are on a trajectory to do roughly another 100 thousand barrels of oil, before having declined to a similar production rate of ~20 bo/d. More granular and recent data will be visible after grouping these wells by the quarter or month in which they started production.   Next month we will be at the NAPE summit in Houston. Come visit our booth if you have the chance! Before the NAPE we plan to start offering the Basic version of our ShaleProfile Analytics service. For just a very small annual fee ($624 = $52/month) you can already enjoy all the benefits that this service offers beyond the free blog here, such as maps with the exact location of these wells, full-screen dashboards, and with always access to the latest data.   Early next week we will have a new post on North Dakota, which just released November production data. Production data is subject to revisions. For these presentations, I used data gathered from the sources listed below. FracFocus.org Colorado Oil & Gas Conservation Commission Louisiana Department of Natural Resources. Similar as in Texas, lease/unit production is allocated over wells in order to estimate their individual production histories. Montana Board of Oil and Gas New Mexico Oil Conservation Commission North Dakota Department of Natural Resources Ohio Department of Natural Resources Pennsylvania Department of Environmental Protection Texas Railroad Commission. Individual well production is estimated through the allocation of lease production data over the wells in a lease, and from pending lease production data. West Virginia Department of Environmental Protection West Virginia Geological & Economical Survey Wyoming Oil & Gas Conservation Commission   Visit our blog to read the full post and use the interactive dashboards to gain more insight http://bit.ly/2HgzW2F   Follow us on Social Media: Twitter: @ShaleProfile
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    Facebook: ShaleProfile

    shaleprofile

    shaleprofile

    Capital Markets... Dive in Now?
    The recent market volatility has left investors and capital seekers seeking he same consensus: where does it end and what's the upside?  The age old question continues to perplex both parties.  I'm taking the position from both sides.. first as a former exploration company President who had sought capital from the banks, from P/E firms, mezzanine debt and from the public markets and secondly as a capital provider.  We currently manage substantial amounts of capital that are looking to deploy into the energy sector, so being on both sides in a past and current life, I speak from experience. Oil and gas companies that seek us out for capital come in a number of flavors and sizes.  Typically, they are smaller entities, or juniors.  This is our financing niche.  Their needs are the usual: drill PUDs, re-work, acquire non-cores, get a leg up on OPEX and generally seek growth in fractious times.  In nearly every case, the banks are exhausted as much as the juniors are.  These companies are far too small for the P/E firms to get involved and the old 'Third for a quarter' deal won't cut it.  What to do? As a capital provider, we seek to obviously entreat the best companies we can to provide this dearly needed money.  Some have said that the smaller deals that come in to any facility seeking capital are the deals no one else will touch.  We disagree.  The old saying, "Oil and gas doesn't care who owns it,' serves a point.  Economies of scale are persistent relative to size.  Nearly all the companies we review are sitting on oil, and what better place to produce from than an existing field?  Have the production and a good development plan?  Are these good oil people with a solid history of exploration and exploitation?  We take these into account, among other things as we review and allocate due diligence resources to determine if the underpinnings are there and there's sufficient existing PDPs to support the capital raise over a term. A word about the raise.. it's non-recourse, not a loan, off balance sheet, no equity take out and there's no back-in after payout. Oil companies seek a better, more efficient way to utilize and pay back capital and there is a better way than the old tried and perhaps not so true way... In these times, we feel a floor has been reached and tested market wise.  Wise firms can access wise money now, versus looking for it when the recent 30% drop has been recovered and capital costs and service costs will likely erode portions of this gain. Companies can't afford to hand wring now... it's time to set up for the future and plan capex budgets now.         
    Mombasa Port a gateway to South Sudan for China
    Former Chinese Communist Party leader Deng Xiaoping presented his “Cat Theory” to introduce a capitalist market economy for Mainland China. As per the theory “It doesn’t matter if a cat is black or white;as long as it catches mice,it’s a good cat.” The “Cat Theory” which he put forth was to convince policy makers for the radical shift in economic policies. “Cat Theory” is also relevant if one looks at the way China is pursuing its geo-political interests using its economic clout. There is one more distinct quality about the cat which makes it a stealth killer. When the cat advances towards its prey it hides its claws.     Kenya is latest in a series of nations to feel the claws of Chinese debt. Latest report attributed to Auditor General suggests that strategic Mombasa Port could land up in the hands of Chinese Bank, EXIM Bank if Kenya fails to repay the loan amount. Though, the Audtior General Edward Ouko has issued a denial. But it does not mean that Mombasa port will not become Chinese one day as we have seen the example of how Sri Lanka handed over Hambantota port to China to pay off its debt. To sustain higher economic growth China needs unfettered access to raw materials for its factories and a market to export its finished goods. At a time when China is facing pressure from United States of America over trade,Africa offers tremendous opportunities for Chinese economy. Infrastructure investment in Africa reflects China’s decades-old strategy of using soft power. More recent investments in Kenya and Ethiopia represent an extension of the Chinese President Xi Jinping’s Belt and Road Initiative (BRI). BRI is a trillion-dollar investment strategy which focusses on developing transportation sector and infrastructure, particularly in Eurasia region but also in East Africa. The amount of Chinese loans to Kenya has grown tenfold in the five years since China unveiled its Belt and Road Initiative. In May 2014, Kenya and China inked Sh 327 billion railway line agreement. According to the terms of the agreement,China had to finance 85 per cent of the total cost through Export and Import (EXIM) Bank while Kenya had to bear the remaining 15 per cent of the projects’ cost. The rail line pened in May-2017. China financed Nairobi-Mombasa Railway link is touted as the biggest infrastructure project in the history of independent Kenya and is a part of Kenya Railways Corporation’s new Standard gauge railway (SGR) line. The Mombasa-Nairobi rail connectivity will cut down travel time by half. It will benefit passengers and cargo transportation. The SGR project is expected to link Mombasa to Rwanda with a branch line to Juba in  South Sudan in future. This Mombasa-Nairobi railway line will give China access to South Sudan in near future. The oil production of South Sudan is dominated by Chinese oil majors. China National Petroloeum Corporation (CNPC) pumps nearly all of South Sudan’s oil production. After cessation in 2011,both Sudan and South-Sudan are now mutually dependent on oil revenues for their economic survival. South Sudan is landlocked and has 75 percent of the oil reserves. The oil from the fields of South Sudan is transported through 1600 kms pipeline to reach export terminals in Port Sudan and then it reaches to refiners in China. On August 30th 2018 South Sudanese President Salva Kiir Mayardit paid a visit to China National Petroleum Corporation Headquarters and had talks with Wang Yilin about further deepening oil and gas cooperation. A memorandum was also signed after talks to boost existing production and consider acquisitions of new acreage. The high profile visit signifies the closeness of South Sudan and China. Mombasa-Nairobi link when  it will be joined with Juba in South Sudan through branch line then it will open an alternate route for Chinese companies and South-Sudan for trade and export of Oil. Moreover, cost is critical in the production of goods and to remain competitive in the globalized economy. Fuel is one such factor that has cascading effect on the entire supply chain right from manufacturing to retail. In September, 2018 Sudan Ministry of Petroleum signed an agreement with three oil companies operating in Sudan and South Sudan to pay a transit fees of $14 per barrel. One of the companies that signed the agreement is China National Petroleum Corporation. In addition to it, if oil is shipped through Sudan, Chinese companies will also have to pay fees for marine terminal usage. Therefore, opening up of an alternate supply route using Mombasa port and railway link will give an edge to China. Therefore, Mombasa is a strategically important port for China as it will be a gateway to South Sudan.  

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