Friday Night Notes -- September 4, 2015

I admit to being inappropriately exuberant, but I just can't help but get excited when I see these stories. Oil & Gas Journal is reporting:

Formosa Petrochemical Corp., a member of Taiwan’s Formosa Group, is evaluating the possibility of building a $9.4-billion ethane cracking and petrochemical complex along on the west bank of the Mississippi River in St. James Parish, LA.

In addition to ethylene, the complex, which FPC would develop in two phases, would include downstream plants for production of polyethylene as well as customized outputs of low and high-density polyethylene, ethylene glycol, polypropylene, and other derivatives.

A $10 billion project seems to be something other than trivial.

Also in the news, the AP is reporting: Canadian energy and services company Emera says it will buy Teco Energy, an electric and gas utility that does business in Florida and New Mexico, for about $6.48 billion. They said Emera will continue Teco's efforts to sell its coal business and plans to complete that sale by the time its acquisition of Teco closes.

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Rig Count

Also note that on a day that Platts tweeeted that after 6 weeks of climbing, Baker Hughes' US rig counts down sharply even as oil prices recovered from 6-year lows, but that the number of rigs in North Dakota held steady.

Another tweet along that same line: Texas led states in rig count losses (-11) due to Eagle Ford (-4), Permian (-2) and  Granite Wash (-2). You will note that the Bakken was not mention. Hoo-ah! For EagleFord, its rig count of 93 is its lowest since BHI began tracking activity in major US basins in Feb 2011.

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Other News

Meanwhile, Platts is also tweeting that US July ethanol exports were up 19% on the month, and 30% on the year.

Meanwhile, in the Bakken, several years ago these wells would have made the headlines in North Dakota; today, these IPs are expected. All four producing wells that were reported as completed today, had huge IPS; one Enerplus well and three QEP wells.

From yesterday's WSJ: private equity firms are jumping back into oil and gas. 

Private-equity firms are doubling down on energy, despite heavy damage from their last adventure in the oil patch.

These firms’ stakes in a dozen publicly traded energy exploration-and-production companies have lost more than $18 billion in value since last summer, when oil prices began their slide from more than $100 a barrel.

Yet with U.S. crude prices down to about $46.75 a barrel at Thursday’s close, private-equity firms are looking for opportunities to spend the hundreds of billions of dollars they have amassed to make new energy investments. They are hoping the commodity-price crash will open up opportunities to pick up assets and entire companies on the cheap.

“This is a temporary situation, and investments that are made in this low-price environment are going to look pretty good two or three years out,” said Mark Papa, who joined energy-focused firm Riverstone Holdings LLC earlier this year after retiring as chief executive at EOG Resources Inc., one of the largest U.S. energy producers.

This is not rocket science. We are being set up for $200 oil.

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Simply For The Archives

Survival Mode

I'm posting this link simply for the archives.

Texas-based oil giant Carson Energy may have figured out a means to completely scoff at even the lowest of oil prices.

The industry can’t remove its gaze away from Carson. This week, the company released new analysis that shows rich Texas oil fields can be profitable at just $15 a barrel.

“Many investors feel you have to be getting over $60 per barrel for oil to be profitable, but that’s only on expensive shale plays,” Michael Johnson of Carson Energy stated in a press release. “Carson operates in rich Texas blanket sands where it’s possible to make money when prices are as low as just $15 a barrel.”

Investors are nervous at best with all the variables intruding on crude oil prices.

However, many oil industry experts say this is often the best time to invest in new exploration and development. Wells and production are then in place when prices go back up, that is if a company can hold out that long. Experienced energy investors refer to this situation as one ripe for “double dipping.” An investor can benefit from very cheap drilling costs, and then have oil in production just as energy prices spike again.

Such a payoff is inevitable. Demand, although sluggish, is increasing worldwide.

I've heard from one long-time oil worker: he hopes the slide in prices lasts long enough to weed out the weak players.