Message Board

stripper wells more important than opec?

max — Fri, 05 Dec 2008 02:17:02 GMT

US stripper wells will be the key to determining oil prices over the next couple of years rather than OPEC. Bernstein analysts Ben Dell and Neil McMahon made that argument in a presentation today. It is quite interesting that OPEC is turning into a largely irrelevant organization, McMahon said. From what we have seen of late he certainly has a point. OPEC has met three times this fall and is scheduled to confab once again on Dec. 17 in Algeria. It has announced 2 million barrels per day in cuts. Yet the price has now fallen more than 60% to the dreaded mid-$40s per barrel.

Instead, McMahon says the serious, market-impacting production cuts of the next couple of years are likely to come in North America, and especially from small stripper wells that produce only 15 barrels per day or so. Those amount to a hefty 85% of U.S. onshore wells and account for about 18% of such production. These wells require care and feeding and are the easiest to shut down when prices fall. Bernstein figures that as much as 1.3 million barrels per day could eventually come off the market.

The credit crunch is also hurting supply with smaller exploration and production companies struggling to finance drilling. OPEC sources also say that smaller refining companies are having trouble gaining accesss to credit to finance oil purchases.

Bernstein views the oil market as oscillating between the rising costs of producing the marginal barrel of oilnow perhaps $80 per barreland the cash cost of producing the oilnow around $40 per barrel. With demand dropping fast, oil is falling toward this cash cost and could overshoot. A Merrill Lynch analyst warned that $25 per barrel was possible. But when it costs more to produce oil than it brings in, production will be shut down. Thats especially true of small, marginal operations.

Bernsteins outlook is for prices in the $40 per barrel range early next year, followed by a recovery to the $70 zone toward the end. They think prices could average $80 per barrel in 2010. This scenario implies optimistic assumptions about a global economic recovery.

Forum: News From The Web

Gasoline Falls Below $1 a Gallon as Crude Oil Dips Under $44

curtis — Thur, 04 Dec 2008 19:26:02 GMT

Gasoline Falls Below $1 a Gallon as Crude Oil Dips Under $44

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By Barbara Powell and Aaron Clark

Dec. 4 (Bloomberg) -- Gasoline futures fell below $1 a gallon as crude oil dropped under $44 a barrel to the lowest in almost four years.

Gasoline dropped after a Merrill Lynch analyst said crude oil prices may dip below $25 a barrel if the worldwide recession spreads to China. Heating oil also fell as the Energy Department said today that natural gas stockpiles declined less last week than analysts had expected.

The overall trend is still down, and you cant really point to any constructive economic data that says otherwise, said Tom Knight, trading director at Truman Arnold Cos. in Texarkana, Texas.

Gasoline for January delivery fell 5.37 cents, or 5.2 percent, to 98.78 cents a gallon at 2:11 p.m. on the New York Mercantile Exchange. Prices touched 98.1 cents, the lowest since the contract began trading in October 2005.

Gasoline has lost 73 percent and heating oil 63 percent from summer highs as demand has slipped in the slowing U.S. economy.

Gasoline use last week slipped 3.6 percent to 8.93 million barrels a day from a year earlier. Inventories fell 0.8 percent last week to 198.9 million barrels, the department reported.

The profit margin, or crack spread, for turning crude oil into gasoline gained 28 cents to minus $2.77 a barrel. The spread touched a record low of minus $16.447 on Sept. 22 and has been negative 32 days in a row.

Heating oil fell as natural gas for January delivery traded as low as $5.961 per million British thermal units, the lowest since Sept. 24, 2007. A report from the Energy Department today showed supplies, which usually fall as winter deepens, declined 64 billion cubic feet. Analysts had expected a drop of 67 billion cubic feet.

A Little Bearish

Heating oil came off because of natural gas and natural gas came off because the inventory injection number was interpreted as a little on the bearish side, Knight said.

The crack spread for turning crude oil into heating oil gained 19 cents to $19.94 a barrel.

Heating oil for January delivery fell 5.29 cents, or 3.3 percent, to $1.5311 a gallon in New York. Futures touched $1.5165, the lowest since Jan. 23, 2007.

There are a lot of people wanting to be short of the energy complex, said Zachary Oxman, senior trader at Wisdom Financial Inc. in Newport Beach, California. Shorts are bets that prices will fall.

Forum: News From The Web

Rig Count Must Drop to Revive Gas Market, XTO Says

curtis — Thur, 04 Dec 2008 19:15:57 GMT

Rig Count Must Drop to Revive Gas Market, XTO Says

By Dan Lonkevich

Dec. 3 (Bloomberg) -- Natural-gas producers must shut down more drilling rigs to stem a decline in prices for the fuel, XTO Energy Inc. Chief Executive Officer Keith Hutton said.

There were 1,443 rigs drilling for gas as of Nov. 28, a drop of 10 percent from 1,606 on Sept. 12, according to data from Baker Hughes Inc., the worlds third-largest oilfield-services provider.

I think youll see it drop to 1,200 rigs, Hutton said in an interview today. Then you wont be able to grow production, and prices will have to rise.

Natural-gas futures traded in New York have fallen 54 percent since touching $13.694 per million British thermal units on July 2, the highest since December 2005. The January futures contract settled at $6.347 today on the New York Mercantile Exchange.

Gas prices will stay where they are through the first quarter said the 49-year-old Hutton, who succeeded founder Bob Simpson as CEO on Dec. 1. Simpson, 60, who engineered the companys $4.2 billion acquisition of Hunt Petroleum Corp. in September, remains as chairman.

Hutton, who previously was president of Fort Worth, Texas- based XTO, said he might increase his holdings in the company, which were pegged at 2.9 million shares in a Nov. 26 filing.

I believe in the company, and 90 percent of my wealth is tied up in it, he said.

XTO rose 13 cents to $35.74 in New York Stock Exchange composite trading. The stock has dropped 30 percent this year.

To contact the reporter on this story: Dan Lonkevich in New York at dlonkevich@bloomberg.net.

Forum: News From The Web

Natural Gas Drops to 14-Month Low After U.S. Inventory Report

curtis — Thur, 04 Dec 2008 19:09:43 GMT

Natural Gas Drops to 14-Month Low After U.S. Inventory Report

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By Reg Curren

Dec. 4 (Bloomberg) -- Natural gas futures in New York fell to the lowest in more than 14 months after a government report showed a smaller-than-forecast U.S. supply decline.

Stockpiles dropped 64 billion cubic feet in the week ended Nov. 28 to 3.358 trillion cubic feet, the U.S. Energy Department said. Analysts anticipated a drop of 67 billion cubic feet. Stockpiles of the heating fuel usually drop this time of year as the weather turns colder.

No one is willing to step into the market right now, said Michael Rose, a director of trading at Angus Jackson Inc. in Fort Lauderdale, Florida. When theres a miss on the number, people get out. The fear of losing money right now is a lot greater than the anticipation of making money, and thats especially true in energy.

Natural gas for January delivery fell 34.6 cents, or 5.4 percent, to $6.001 per million British thermal units at 12:27 p.m. on the New York Mercantile Exchange. The heating and industrial fuel touched $5.961, the lowest since prices reached $5.916 per million Btu on Sept. 24, 2007.

As soon as the number came out I knew it would be seen as bearish because there were a lot of people gunned up on a withdrawal in the high 70s and 80s, said Martin King, an analyst at FirstEnergy Capital Corp. in Calgary.

Industrial production in such areas as steel is slumping as the U.S. economy sags. Supplies of gas last week were 69 billion cubic feet, or 2.1 percent, above the five-year average, according to the Energy Department.

Industrial and commercial users account for about 42 percent of natural gas consumption in the U.S. The number of Americans collecting jobless benefits is the highest in 26 years, a government report today showed.

The market is disappointed with the economic numbers, Phil Flynn, senior trader at Alaron Trading Corp. in Chicago, said before the stockpile report was released. The weather is cold, but were going to have to go into a mini-ice age to get people excited.

To contact the reporter on this story: Reg Curren in Calgary at rcurren@bloomberg.net

Last Updated: December 4, 2008 12:39 EST

Forum: News From The Web

Barnett Shale drilling at 2-year low

curtis — Thur, 04 Dec 2008 18:32:29 GMT

Barnett Shale drilling at 2-year low

By JIM FUQUAY
jfuquay@star-telegram.com

Correction: An earlier version of this story incorrectly reported the number of rigs drilling for gas in the United States as of Nov. 28. The correct number is 1,443.

The number of drilling rigs working in the Barnett Shale has fallen to its lowest level in about two years as energy companies pull back in the face of lower natural gas prices.

As of Nov. 21, the latest count available, there were 186 active rigs in 15 North Texas counties, according to RigData. The count has been nearly always above 200 since May 2007, according to past RigData reports.

Producers have warned that they would be cutting back their Barnett drilling schedules since about September, when Chesapeake Energy said it would scale back its drilling companywide. A number of operators have trimmed their 2009 spending plans, and XTO Chief Executive Keith Hutton said Wednesday that the number of rigs needs to fall further before natural gas prices can turn around.

Hutton told Bloomberg News that the number of rigs drilling for natural gas, 1,443 as of Nov. 28, could fall to 1,200, which would be enough to dampen production. Natural gas prices have fallen more than 50 percent since July, with futures prices settling Wednesday at $6.35 on the New York Mercantile Exchange.

Driven by rising petroleum prices, the number of rigs at work in the United States has risen steadily since early 2003, according to Baker Hughes of Houston. In mid-September it hit 2,031, the highest level since 1985.

In the same period, the Texas rig count has gone from about 400 to a high of 958 in late August. The state hadnt seen numbers like that since it averaged 990 rigs in 1982, according to the Texas Railroad Commission.

The Barnett Shale had barely been discovered in the early 1980s, and the technology to extract its gas wasnt developed until much later. But drilling steadily rose during the past decade, hitting a high in October. Since then, the number of rigs in the field is down 28, or 13 percent.

According to RigData, the biggest decline has come from Chesapeake, which has taken its rig count from more than 40 to 32. Devon Energy is at 42 rigs, about its recent average, while XTO has also held steady at 19 rigs.

"Its slowing down. But as of now, everything Ive got is still working," said Dustin Davis, who works in the Barnett Shale operations of Trinidad Drilling. He said that, like many drillers, he works on long-term contracts, and that tends to moderate the slowdowns impact.

Baker Hughes Gary Flaharty said that although its clear that drilling is slowing down, there are some seasonal adjustments that exaggerated the latest figures. Nationally, the rig count fell by 75 in the past week, Baker Hughes reported, which represents an unusually large week-to-week change.

But Flaharty said that 42 of those idle rigs were in the Appalachians, where deer-hunting season began, prompting drillers to put off spudding new wells.

"They should come back next week," Flaharty said.

Flaharty also said that although the Barnett Shale will likely slow, other developing shale plays, like Louisianas Haynesville and the Appalachians Marcellus, "have held up pretty well."

Helmerich & Payne, one of the nations largest drilling contractors, told investors during its most recent earnings call two weeks ago that it had 30 rigs in the Barnett, which Executive Vice President John Lindsay described as experiencing "a little bit of softness." But those rigs are suitable for other developing natural gas plays, Lindsay said, "so if theres demand in the Haynesville, we can take those rigs over there."

President Hands Helmerich offered a more sobering view, saying the business is in "a sudden and dramatic reversal of fortune" from the previous quarter. A month earlier, he said, "we would have predicted that 2009 would be softer" and perhaps see about 400 rigs idled.

But he reminded investors that another model for 2009 could be 2002, when "nearly 50 percent of the industrys U.S. rigs were idle."

Drilling slows
Here are the numbers of active drilling rigs working nationwide, in Texas and in the Barnett Shale during 2008. Figures are for the first week of each month, except for the latest, which is the last week in November.

Month	U.S.	Texas	Barnett Shale
January	1,774	869	202
February	1,763	859	205
March	1,802	884	199
April	1,830	904	204
May	1,839	882	208
June	1,886	931	209
July	1,921	923	202
August	1,951	920	206
September	2,013	938	213
October	1,979	932	214
November	1,992	922	202
Latest	1,866	890	186

Sources: RigData, Baker Hughes Rig Count

JIM FUQUAY, 817-390-7552

Forum: News From The Web

What a mess

IamVince — Wed, 03 Dec 2008 22:53:55 GMT

A buddy of mine push's on a rig in Texas sent me this note( sorry no pics )

Had a bad rig wreck... we were doing good, had 250 ft to go to TD the well... we were 2 days faster than the fastest well which would have been a big bonus...

I was just about to go to sleep a little after midnite then ... Crash,,, CRASH... boom... BOOM.!!!.. boom ... crash ...crash... crash etc...
some Freak idiot Freak SOB driller, stupid son of a bitch... let a Freak worm hand who could barely work floors make a connection... lucky no one got killed... we'll probably be fishing after we get the rig back togather... I haven't been this mad at anyone in a long time ...

the kelly was bent out over the V door and the blocks were still hanging upside down on them... drilling line in a pile all over... drum clutches shot... all sorts of damage on draw works... it sucks... we'll probably lose our contract after this well... already got two riggs stacking out at the company I work for... Lariet is only running 8 rigs (out of 79)... I was doing good not worried about losing work but now it's a different story...

Wish I'd had my camera... I left it at home so my wife would have it on Thanksgiving...

Forum: Train Wrecks

Hockey Fans

PDS — Wed, 03 Dec 2008 16:36:45 GMT

Any one? Any one?

Forum: Off Topic Posts

Hey Monito

JBRD102 — Wed, 03 Dec 2008 12:50:19 GMT

I heard fishing is really good this year. Me and my dad were coming but stopped due to front. Maybe next days off. So much for the pic of me and a big red in Snow Lake....

Forum: Off Topic Posts

Help finding work in california...need it really bad

Sheeves19 — Wed, 03 Dec 2008 06:01:51 GMT

Right now I am working for staples, making 8.75 an hour. Does anyone know where I can find a site that has california oilfield jobs? I need something really bad!

Any help at all is greatly appreciated!

Thanks

Forum: So You Want To Be A Roughneck?

Have you seen....

JBRD102 — Tue, 02 Dec 2008 13:18:36 GMT

Texas is try'n to vote in an "open carry" law? In the state where you can go NOWHERE with out seeing somebody in something camo (I've seen pink camo bikinis @ Wallyworld), just where can a guy wear his quick draw rig out in public? Pearl grips with the Cowboy's star, holsters that color combo your tie/shoes or, better yet, your body piercings.....

Hear now, I grew up in a time where the first things you did to your truck was duals with burnt out glass packs, aluminum valve covers, and a gun rack that you carried something w/enuff firepower that would take down any deer, snake, bunny, wild rabid dog, cougar, or charging bull elephant that crossed your path. If you were really cool, you had 2 in there so your copilot could have one too (riding "shotgun meant something THEN). Now, with gang wars, road rage, $100/gram weed, Arlington changing street names to Saigon, Chavez, etc..., is this a good idea?

Maybe we ought to get ready for this change.

This brings up another question concerning my favorite movie.....

Have they released "Mad Max" on Blu-ray yet?????

Forum: Off Topic Posts

chain tongs

max — Tue, 02 Dec 2008 06:27:22 GMT

chain tongs can make a normal person go insane. you cant say its like a whiskey bottle if your holding chain tongs. chain tongs and propain have one thing in common there both left handed depending on which hand you use to pick them up with. theres only 1 left speaking so that leaves no one swivel. i have seen grown men cry over left handed threads and chain tongs it was not a pretty sight

Forum: Members Posts

GO UTES!!

lilbrawler — Tue, 02 Dec 2008 04:24:08 GMT

Y'all Texans and OKIES prolly hate me for this...but GO UTES!!!! im having a good day with them in the BCS and im proud cuz thats my home turf gettin some respect...and I hope they get the chance to play EITHER ONE OF YOU!!!

Forum: Off Topic Posts

The Price of Your Oil for Dec

PipelineControl — Tue, 02 Dec 2008 03:34:29 GMT

http://www.paalp.com/_filelib/FileCabinet/Crude%20Oil%20Price%20Bulletins/Daily/2008/2008-223_December_01_2008.pdf?FileName=2008-223_December_01_2008.pdf

Forum: Members Posts

KENAI DRILLING INC RIG 7

rzadriller — Sun, 30 Nov 2008 08:19:49 GMT

here is a video of KENAI rig 7 rigging up to drill it's first well
KENAI rig 7 is a new build based in Bakersfield Ca

http://www.badongo.com/vid/726990

Forum: Videos

Pennsylvania

JBRD102 — Fri, 28 Nov 2008 23:46:55 GMT

Now, just where is Ches's Pennsylvania leases?........

Forum: Members Posts

Message Board

stripper wells more important than opec?

Gasoline Falls Below $1 a Gallon as Crude Oil Dips Under $44

Rig Count Must Drop to Revive Gas Market, XTO Says

Natural Gas Drops to 14-Month Low After U.S. Inventory Report

Barnett Shale drilling at 2-year low

Barnett Shale drilling at 2-year low

By JIM FUQUAYjfuquay@star-telegram.com

What a mess

Hockey Fans

Hey Monito

Help finding work in california...need it really bad

Have you seen....

chain tongs

GO UTES!!

The Price of Your Oil for Dec

KENAI DRILLING INC RIG 7

Pennsylvania

By JIM FUQUAY
jfuquay@star-telegram.com