Oil, Gas M&A in Upstream Sector Climbs to $37 Billion in 4Q 2014 -- an opinion piece, which begins:
The total value of upstream oil and gas m&a deals, according to data from the Evaluate Energy M&A database, reached $37 billion in Q4 2014, a slight increase from the $35 billion total of Q3. However, the falling oil price would have resulted in a sharp decline in total deal value this quarter, had it not been for Repsol agreeing to acquire Talisman Energy for $13 billion at the beginning of December. This one deal represented a significant 35% of Q4’s total deal value and was the biggest E&P deal of the year.Kemp: Break-even and shut-in prices for oil wells.
There are no precise measures for wellhead prices. The Department of Mineral Resources estimates wellhead prices by averaging WTI futures (which is the very best operators could hope to receive ignoring all transport costs) and posted prices (the worst operators would receive for spot sales on their property).
On this average measure, the approximate wellhead price for North Dakota's oil producers was just $38 per barrel on Jan. 12, making production in all peripheral areas of the Bakken play uneconomic and only marginally profitable in three core counties (Dunn, McKenzie and Williams).
For the first time, wellhead prices were no longer high enough to support new drilling in Mountrail, one of the four counties at the heart of the Bakken play.
Breakeven prices are also relatively high in the Permian Basin in Texas as well as in more peripheral shale plays with difficult geology like the Anadarko Basin.
New drilling in many parts of the Bakken, Permian, Eagle Ford and Anadarko plays will therefore stop unless wellhead prices recover.EIA: US 2016 Oil Output Growth Seen Slowest In 5 Years
The U.S. government said on Tuesday it expects domestic oil output in 2016 to grow only 2.2 percent, the slowest pace in years, as the relentless rout in prices puts the brakes on the country's five-year shale boom.
In its first forecast for next year, the U.S. Energy Information Administration said domestic oil production will rise about 200,000 barrels a day to 9.5 million bpd in 2016.
That amount in barrels is the smallest increase since 2011. While this would be the second-highest annual average level of production in U.S. history, the slowdown in growth reflects the long-term impact of plunging prices on output as drillers curb higher-cost capacity in some shale formations.
"Many oil companies have cut back on their exploration drilling in response to falling crude prices and will concentrate their drilling activities in established areas that already have productive wells," EIA Administrator Adam Sieminski said in a statement.
The EIA held its estimate for 2015 at a rise of 720,000 bpd to around 9.3 million bpd. Output rose to 9.13 million bpd by the end of 2014, according to EIA data. Oil production in the Lower 48 states excluding the Gulf of Mexico is expected to expand during the first four months of 2015, data shows. Between April and May, production is expected to remain unchanged, then it will taper off until the end of the year.
Vikas Dwivedi, global oil and gas strategist for Macquarie, said the outlook is a "tale of two halves." He explained that 2015 forecasts show residual output growth from investments made before oil prices collapsed, while cuts in drill rigs already under way should feed through to production rates by the end of the year if prices remain around $50 per barrel.Petrobras 2014 Oil, Gas Reserves Grow Slowest in 6 Years
Oil and natural gas reserves at Brazil's state-run oil company Petroleo Brasileiro SA rose at the slowest pace in six years in 2014, ending the year little changed as new discoveries barely kept up with production.
The company had 13.13 billion barrels of proven reserves of oil and equivalent natural gas (boe) as of Dec. 31, using criteria set down by the U.S. Securities and Exchange Commission (SEC), said Petrobras, as the company is commonly known, in a statement on Tuesday.
That is an increase of only 0.1 percent over 2013. In 2014 reserves grew at their slowest since 2008, when they fell 4.39 percent. Growth in 2014 was also well below the 2.3 percent average annual growth rate for the past 14 years.
Be sure not to miss the two featured blogs today: Coyote Blog and ClimateDepot.
Coyote Blog: California Drought Update -- Not Even Close to Worst Drought Ever. The Coyote Blog is written by a very credible writer.
Climate Depot: MIT Climate Scientist Dr. Richard Lindzen on U.S. Senate climate vote: It’s ‘bizarre’ & ‘ludicrous’ – ‘An attempt to hijack science for political purposes’