WTI Testing $49 -- February 26, 2020

Active rigs:

$49.07	2/26/2020	02/26/2019	02/26/2018	02/26/2017	02/26/2016
Active Rigs	49	66	57	40	38

Three wells coming off the confidential list:

Wednesday, February 26, 2020:

• 35423, SI/NC, MRO, Doris USA 21-15TFH, Reunion Bay, t--; cum --;
• 35422, SI/NC, MRO, Esther USA 21-15H, Reunion Bay, t--; cum 44K over 13 days extrapolates to 102K over 30 days; see this note;
• 35253, 532, Oasis, Kellogg Federal 5297 44-19 11B, Banks, t8/19; cum 86K 12/19;

From yesterday, Tuesday, February 26, 2020:

• 35830, 509, CLR, Imsland 5-31H1, Hamlet, t9/19; cum 51K 12/19;
• 35829, 538,  CLR, Imsland 4-31H, Hamlet, t9/19; cum 38K 12/19;
• 35421, drl, MRO, Beatrice USA 31-15TFH, Reunion Bay, produced 37K over 14 days, extrapolates to 80K over 30 days;
• 33424, drl,  Sinclair Oil, Crosby Creek 5-5H, Little Knife, no production data;

RBN Energy: School of Energy, announcement.

It’s almost Spring 2020 and energy markets are making another turn. Prices have been clobbered by a combination of low, weather-related demand and COVID-19. Tight capital markets have the E&P sector hunkered down and the pace of production growth is slowing. But at the same time, new pipelines out of the Permian and Bakken are under construction; some are already ramping up flows. Long-delayed LNG terminals and NGL-consuming petrochemical plants are coming online. Essentially all growth in crude and gas — plus most incremental NGL production — is being exported to global markets, and those markets are pushing back. All this has huge implications for commodity flows, infrastructure utilization and price relationships for oil, natural gas and NGLs. Which means that it’s time for RBN’s School of Energy, with all of our curriculum and models updated for the realities of today’s energy markets. Today — in a blatant advertorial — we’ll examine our upcoming School of Energy and explain why this time around we are concentrating even more than usual on NGLs.

What a difference a year makes. In February 2019, Henry Hub natural gas averaged $2.68/MMBtu and the forward curve anticipated a price of $3.09 for February 2020. LNG exports were expected to come on strong, lifting gas out of the doldrums. Oops. The average price of natural gas so far this month has been $1.86/MMBtu, down 30% from last year. A year ago, the WTI Cushing crude oil forward curve pegged February 2020 crude at $57.50/bbl, but here we sit at $49.90/bbl. Mont Belvieu propane at this time last year averaged 67 c/gal, while so far this year it has languished at 39 c/gal, down 42% over the past 12 months. Of course, it is no surprise that such a huge shift in prices should impact production and flows, and that’s just what has been happening. Production growth is slowing to a crawl. Pipelines that were counting on more volumes from producers are scrambling to attract flows to their systems. And exports, last year’s undisputed savior of U.S. markets, are now being threatened by a wild card right out of science fiction: the threat of a global pandemic.