Monday, December 8, 2014

EOG To Divest Majority Of Canadian Interests -- December 8, 2014; TPLM's Conference Call -- 3Q15 Results

Press release here
EOG Resources, Inc. today announced the divestiture of all its assets in Manitoba and certain assets in Alberta in two separate transactions that closed on November 28 and December 1, 2014.
Approximate proceeds from the divestitures were US$ 410 million, net of customary transaction adjustments. As a result of these transactions, approximately US$ 150 million of restricted cash related to future abandonment liabilities was released. The proceeds and cash will be utilized for general corporate purposes.
Current forecast production from the divested assets is approximately 7,050 barrels of crude oil per day, 580 barrels of natural gas liquids (NGLs) per day and 43.5 million cubic feet of natural gas per day.
Net proved reserves divested are estimated to be 7.7 million barrels of oil, 0.8 million barrels of NGLs and 78.7 billion cubic feet of natural gas. EOG divested 1.3 million gross acres (1.1 million net), 97 percent of which were in Alberta. Of the approximate 5,800 producing wells sold, 5,255 were natural gas.
EOG has retained approximately 382,200 gross acres (282,100 net) in Alberta, British Columbia and Saskatchewan. EOG will maintain an operations office in Alberta.
"This decision is consistent with EOG's focus on its outstanding U.S. crude oil opportunities. We plan to reinvest some of the proceeds in these high return assets, while retaining our position in the Horn River Basin and other exploration areas," said EOG Chairman and CEO William R. "Bill" Thomas.
TPLM: 3Q15 Conference Call

Link here. Data points follow. In a long note like this, typographical and factual errors may occur. If this information is important to you, go to the linked article. Some numbers rounded.

  • 1.125 boe for third quarter; 12,230 boepd
  • TD drill times: 14 days; down from 18 days in previous quarter
  • several recent wells: 10 days to reach TD
  • cost per well: $9.5 million and some less than that
  • will manage 4Q15 activity in line with slump in oil prices
  • increased pipeline capacity tied in with Enbridge
  • freshwater pipelines will mitigate winter weather and road delays 
  • 101 of 113 wells connect to gas sales
  • more efficient: recent TF wells delived a 55% improvement in 90-day production compared to the company's first three TF wells
  • past quarter: 17 Triangle wells; 26 third-party wells; total wells completed are up 26% over previous quarter
  • initiated first significant third-party wireline work (two cased hole wireline trucks)
  • $174 million 
  • of that, Triangle USA contributed $80 million
  • of that, RockPile contributed $94 million
Credit facility:
  • raised to $1 billion (doubled)
  • for next four quarters (full year): 5,700 boepd hedged
  • "... we do expect activity levels to soften across the industry ... difficult to predict the magnitude and duration of this reduction or the effect it will have on our business. However, we believe that any significant drop in activity will be manageable and could result in a strong recovery."
CEO's primary talking points on the slump:
  • the duration of low oil prices will be short-lived
  • Triangle is managing its business as if it will last 12 to 18 months or longer for prices to recover
  • CAPEX program will be released in January/February 2014; stand-alone leverage will be the primary determinant of capital spend next year
  • we will spend significantly less in FY16; we have no acreage HBP or rig contract issues that would force us to drill more than we want or that is economically justified
  • 1 rig or 3 rig? we don't know; currently 4 rigs but it will be much reduced in FY16
  • goal: free cash flow across our enterprise of $70 WTI and free cash flow neutral or as clase to free cash flow neutral as possible at $60 WTI
  • cost structure for each well has been based on $100-oil; that cost structure will not persist in a $65-oil world
  • with RockPile and Caliber, even if our boepd falls 50% next year, which would be a draconian outcome, that still means our integrated model provides us with a huge advantage
  • our business can comfortably endure an entire year of $60 oil while still growing total produciton, reserves, and staying with our internal generated leverage ceilings
  • CEO makes a great comparison between global oil and global natural gas -- something I had written in a personal note to a reader earlier today (before seeing this article)
  • the longer prices stay low, the more the pendulum will swing towards higher prices on either side. What that means is the period to take advantage of the current situation may prove short-lived
  • most of our near-term activity will be in McKenzie and Williams counties
  • will perform their first slickwater frack in January
Oh, The Irony Of It All

A personal note from a reader; I've edited it for obvious reasons. The reader says he got this from a local policeman over the weekend:
Over the weekend, there was a protest in one of our larger US cities; mostly white protestors, some blacks. Many of the protestors were filming the police, including one white female. She was holding her amera in the air when a black male grabbed her phone and took off into the crowd.

The white female approached one of the policeman (race n/a) and asked for help. The policeman raised his arms and said, "Don't call the police."

The white female was quite distraught: "It's your job to protect me and my property."

The policeman replied: "You are protesting against us, asking us NOT to do our job."

She walked away crying.

Lessons taught and learned:
  • one policeman is not going to rush in an obviously hostile crowd;
  • the police had orders to keep the protestors on the sidewalk; their priority was not to apprehend phone snatchers; in a volatile situation like that, property crimes take a backseat to the overall picture; and,
  • hate the police ... until you need them.

Eric and Barry's legacy.

Global Warming To Bring Huge Cold, Snowy Storm To Northeast US

A second nor'easter in two weeks will slug the Interstate 95 corridor starting Tuesday, prompting winter storm watches and warnings in six states. The storm is expected to arrive Tuesday with strong winds and 2 inches of rain from Maine to New Jersey.
A second nor'easter in two weeks. Wow. 

No, Virginia, The California Drought Not Due To Global Warming

Being tweeted now, 1:50 p.m. CT, December 8, 2014:  NOAA report says California drought mostly due to natural causes, not global warming - @capitalweather

No, Virginia, Ebola Is Not Easy To Catch

Being tweeted now, 1:50 p.m. CT, December 8, 2014: Ebola death toll in Sierra Leone, Liberia and Guinea reaches 6,331, as the number of cases in Sierra Leone overtakes number of cases in Liberia, World Health Organization says - @Reuters

A reminder:
Ebola was first identified in 1976 in an area of Sudan and in Zaire. Through 2013, the World Health Organization reported a total of 1,716 cases in 24 outbreaks. The largest outbreak to date is the ongoing epidemic in West Africa, which is centered in Guinea, Sierra Leone and Liberia. As of 1 December 2014, this outbreak has 17,590 reported cases resulting in 6,556 deaths.
So, from 1976 to 2013, 24 outbreaks, with a total of 1,716 cases in those 24 outbreaks. In comparison, for a disease that is not easy to catch according to the Obama administration, in the current outbreak, less than two years old: 17,590 cases (more than 10x as many as in the previous 37 years. No one seems to be asking: what's the difference this time?


  1. EOG

    CA Spearfish sold, I suppose.

    Anon 1

    1. That would make sense. Also, I doubt this deal happened "overnight." Either EOG saw the slump in oil prices coming a long time ago and started putting the deal together; or, the deal was done independently of the current slump in prices, and simply executing their business plan (regardless of the price of oil).