The Weekly US Oil & Gas Update: 14 March 2014

Rig Counts - select states with key plays

Oil & Gas Prices - Bloomberg/EIA

General News

According to the API, approving LNG exports would have a huge impact on the Marcellus play

So far, six permits to build Liquefied Natural Gas (LNG) export terminals have been approved. These are very capital intensive, complex facilities, and the first one is not slated to be online until some time in 2015. "We would expect there to be a huge impact on states within the Marcellus," said Eric Milito, director of upstream and industry operations for the American Petroleum Institute, and Milito expects additional permits to generate up to 60,000 new jobs. The Marcellus looks to be the primary beneficiary for this new demand or two reasons: (1) it's natural gas reserves are among the largest in the country, and (2) they are also among the lowest cost per BTU to produce in the US. Article here

Shell cuts US oil spending on bad results in shale plays

After losing $900 million in North and South American operations last year, Shell announced plans to cut its onshore US operations spending by 20%, eliminating 400 positions. It will also sell off assets, including its recently announced sale of its Colorado Niobrara acreage, and its plans to sell a 100,000 acre ranch it leased in the Eagle Ford play in Texas. Article here

Unconventional Oil & Gas News

Halcon moving into the Tuscaloosa Marine Shale

The company's recent acquisition of 95% of Encana's acreage for $400 million makes Halcon a leader in the emergying play, with acreage in Mississippi and Louisiana. The deal was probably a good move for Encana, who was likely unable to support enough drilling activity on its estimated 300,000 acres to hold the leases. Halcon already has a substantial holding in the play, so the deal represents a further commitment to the nascent shale play for the company. Article here

Environment and Safety News

Recent survey shows energy industry executives more worried about environmental legislation than tax reform

Ernst & Young LLP's recent study of accounting, tax and finance professionals in the energy industry shows that the threat of further environmental legislation is their most pressing fear. Of the study's participants, 88 percent said efforts by the Environmental Protection Agency to regulate hydraulic fracturing will impact natural gas development, and 93 percent of oil and gas respondents said the EPA will slow or even stall domestic production. "One of the major takeaways from this survey is that these major energy sectors - oil and gas, power and utilities and mining and metals - are united in a belief that the US needs comprehensive energy and environmental legislation that defines a clear path for the future," said Deborah Byers, the Oil & Gas Leader for Ernst & Young LLP in the US. "A common theme we hear is that it is difficult for companies to plan and invest for the long-term without regulatory and tax certainty."Article here

Mergers and Acquisitions News

Fidelity E&P buys oil acreage in Wyoming for $183 million

The purchase consists primarily of 24,500 net non-operated acres in Wyoming's Converse County, with exploration potential targeting the Frontier play. The property currently produces 1,100 barrels of oil equivalent per day, 80% oil. With this acquisition, Fidelity has raised its 2014 capex estimate to $1.189 billion and plans to run two rigs in the new play. Article here

Schlumberger acquires Saxon Energy Services

The $592 million deal gives Schlumberger control over Saxon's 87 rigs, which includes 70 drilling rigs and 17 workover rigs operating across 10 countries, as well as Saxon's rig-support services business. The Calgary-based Saxon employs 3,700 people, with $242 million in annual revenues. Article here