The Weekly US Oil & Gas Update: 05 November 2013

Rig Counts - select states with key plays

Oil & Gas Prices - Bloomberg/EIA

General News

Barclay's Investment bank expects more upside in oilfield services in the coming year

After reviewing capital plans for domestic E&P companies for the upcoming year, a Barclay's analyst called them "impressive". Additional analysts' comments included "The key takeaway is that spending in the U.S. oil plays is poised to increase significantly in 2014", and the stage has been set "for a prolific period of activity in the U.S. land basins," with the benefits accruing to the leading providers of services to the E&P companies. The analysts went on to point to the Permian Basin as the hub of these increased activities. Article here

Unconventional Oil & Gas News

Hess costs for a Bakken well dropped $1.8 million in the past year

Nearly every Bakken operator has claimed they were focusing on lowering their costs to drill wells in the pricey Bakken formation in North Dakota. Apparently Hess is having great results. They say most of these savings come from reduced cycle times, from 27 to 24 days to drill a well, along with reduced costs for completions. Other operators are likely seeing similar savings, although perhaps not quite so dramatic. Credit pad drilling and service providers lowering prices as competition continues to increase in the play. Article here

WPX hits a second monster gas well in its Niobrara acreage

The well is in WPX's Piceance basin field, far west of the core oil area in the DJ Basin, but the company's second well is producing at a rate of 16 MMcf/d with a flowing casing pressure of 7,300 pounds per square inch--massive by almost any measure. WPX's first Niobrara well in the Piceance, drilled 10 months ago has already produced a total of 2 bcf. The company will drill a third well close by, to delineate its results, and probably another 12 to 14 wells in 2014. Article here

Cabot's Marcellus acreage continues to increase its production rate

The company owns acreage in Pennsylvania's northeast, known as the "core of the core" in the Marcellus, and it continues to perfect its completion design by adding frac stages. The result: Cabot surprised the market by reporting a strong increase in its average EUR per well in the Marcellus to 14.1 Bcf, based on the results of its 2012 drilling program. As it continues to improve its results, the company expects these EUR's to increase. With an average well cost of $6.5 million, these are likely some of the most profitable natural gas wells being drilled, and profitable at almost any price. Economics like these are why we continue to see dramatic rises in production out of the Marcellus Shale, the most economically-attractive natural gas play in the county right now. Article here

Environment and Safety News

Black & Veatch's 2013 Natural Gas Industry report shows top management is optimistic, with safety their top concern

The annual survey included responses from 336 executives in the E&P, pipeline and utility sectors. 95% were optimistic about the future, with 85% believing power generation to be the leading driver of natural gas demand growth. When asked about their greatest concern, the number one answer for both the upstream and midstream executives was safety. Environmental regulation and economic growth rounded out the top three for both as well, altough in a different order for each.Article here

Mergers and Acquisitions News

This year's Q3 sees declining M&A volume; mostly companies divesting to high- grade their portfolios

Deal volume was down 9% from the previous quarter, as was deal value, which declined 46% from the previous quarter. Divestitures made up 84% of the total, as companies who had aggressively acquired leases over the last few years trimmed their portfolios. The most active acquirers for these properties were foreign buyers and private equity players. Article here