Wednesday, November 18, 2015

Active rigs:

	11/18/2015	11/18/2014	11/18/2013	11/18/2012	11/18/2011
Active Rigs	64	184	183	187	203

RBN Energy: update on oil sector upstream CAPEX.

Four companies in our universe have announced both capital spending and production guidance in 2016. These four companies (Cabot Oil & Gas, Devon Energy, Hess Corp and Concho Resources) are indicating a one-third reduction in capital spending from 2015. For the most part this represents continued reduction in the cost of drilling and completion that has been reported to date in 2015.

Consequently we are not expecting a serious change in activity levels in the industry. These companies are estimating a 1% decline in oil and gas production for 2016.

In summary, it does not appear that today’s punishingly low crude and gas prices has yet to materially discourage oil and gas production in the major shale plays.

Note: Yahoo!Finance/247 Wall Street also addresses this RBN Energy story.

Target reports earnings today, right in line at 86 cents. Traffic "increased" but not as much as previous quarter and shares dropped 5% on the news.

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Russia To Sell Its Last Large Oilfield in West Siberia

Reuters/Rigzone is reporting:

Russia will sell its last large oilfield in West Siberia early next year, a Natural Resources Ministry official said, in an auction that could fetch as much as $1 billion.

The sale of Erginskoye, with estimated reserves of 755 million barrels under Russian standards, had initially been planned back in the early 1990s.

However, it never took place because the state was mindful of the increasingly depleted oil deposit of West Siberia, where the country - one of the world's largest oil producers - extracts around 80 percent of its crude oil.

Analysts from UralSib said the field, located west of the major Priobskoye field, developed by Rosneft and Gazprom Neft, close to existing transportation infrastructure, would unlikely be eligible for tax breaks applicable to remote fields or hard-to-recover reserves.

The last large oilfield in West Siberia is estimated to have reserves of 755 million bbls.

To put that in perspective, back in 2010, the Parshall oil field in North Dakota had 211 sections, and at that time (2010) EOG announced plans to put 3 wells in each section. EURs back then would have been around 500,000 bbls but one can argue that 3 wells is a very, very conservative number, and 500,000 bbls is also quite conservative. At 211 sections x 3 well/section = 633 wells. With EURs of one million bbls and staying at 3 wells/section, or doubling the number of wells to 6 wells/section and staying with EURs of 500,000 bbls, one comes up with 633 million bbls. [It should be noted that much of the eastern Parshall may not be particularly productive. This little exercise is not meant to be an accurate representation of Parshall's potential, but to help me put the Russian oil field into perspective.]