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Released October 12, 2021 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Rising commodity prices are creating a more comfortable situation for U.S. oil and gas developers to expand, but many of their investors remain worried about the long-term health of the industry. The total U.S. rig count climbed for the fifth straight week to its highest level since April 2020, and 98% above its level this time last year, according to the most recent weekly survey from Baker Hughes (Houston, Texas). Industrial Info is tracking more than $8.5 billion worth of onshore crude oil and natural gas exploration and production projects across the U.S., including more than $1.3 billion worth that are nearing or under construction.
Click on the image at right for a heat map of active, onshore U.S. Oil & Gas Production projects, from Industrial Info's Geolocator tool.
Diamondback Energy Incorporated (NASDAQ:FANG) (Midland, Texas), an independent exploration and production (E&P) company focused on the Permian Basin, is among those benefiting from the improving market. The company is drilling for crude oil and natural gas in its $97 million Spraberry development and $79 million Pecos Reeves Field development, which are expected to conclude their months-long drilling programs in late November and late December, respectively. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can learn more from detailed reports on the Spraberry and Pecos Reeves projects.
"Our capital efficiency improvement allows us to maintain an elevated base level of Permian oil production through 2022 by spending approximately $1.7 billion to $1.8 billion of total capital," said Travis Stice, the chief executive officer of Diamondback, in a recent quarterly earnings-related conference call. But Stice, like many other executives in oil E&P, stressed that his company is not pursuing dramatic growth, despite the increased production guidance. "I think we're comfortable raising our Permian guidance on oil to 218,000 to 222,000 [barrels per day], from 216,000 to 220,000. We're not in growth mode, but the wells this year have outperformed and we've cut more capital on the capex side, than we have raised the production side."
The circumspect attitude among oil E&P companies stems from skepticism among investors, who are wary of pricey expansions in exploration and increasingly downbeat about what the future may hold for fossil fuels in general.
Barron Petroleum (Graham, Texas), a privately held company also focused on the Permian, last year celebrated the largest oil and gas discovery in the company's history when one of the rigs in its Sahota Field program found an estimated 74.2 million barrels in Texas' Val Verde County. Sahota-based drilling projects underway include the $20 million Crockett and $24 million Crockett II leases, both of which are set to wrap up toward the end of the year. Subscribers can learn more from Industrial Info's reports on the Crockett and Crockett II projects.
Like Diamondback, Barron used restrained language when it announced last year's discovery, most likely to reassure its stakeholders it was not biting off more than it could chew. In a press release, the company quoted a petroleum engineer's evaluation that the Val Verde discovery "is now so low-risk that it more resembles that of a development project than an exploration venture."
Blackbeard Operating LLC (Midland), another privately held E&P company, focuses primarily on the Permian, with other holdings in Arkansas, Louisiana and Oklahoma. It is at work on several drilling projects in the Permian that are set to wrap up at the end of the year, including a $48 million program in the Waddell TR 3 Field and a $24 million program in the Waddell TR A Field. Subscribers can learn more from Industrial Info's reports on the TR 3 and TR A projects.
Despite their guarded words, privately held E&P companies like Barron and Blackbeard are in a better position to take advantage of rising oil prices; a recent analysis from Bloomberg indicates Permian production is expected to return to pre-pandemic highs within weeks, much of it coming from investments made by private companies. While these firms answer to their own stakeholders, they are less likely than publicly traded companies to face investor-driven hesitations surrounding expansions.
High Gas Prices Pressure Producers
Although most of the recently added rigs are for oil drilling, improving natural gas prices are expected to drive E&P in some of the most profitable U.S. shale plays. U.S. natural gas prices recently soared to their highest levels in nearly eight years, as demand for U.S. liquefied natural gas (LNG) skyrocketed amid gas shortages in Europe and some parts of Asia. "There is no doubt the market is giving strong signals for production to increase," said David Attwood, chairman of the Natural Gas Supply Association (NGSA), following the release of NGSA's Annual Winter Outlook. "That supply is there and will come and meet the demand."
Range Resources Corporation (NYSE:RRC) (Fort Worth, Texas), which is one of the biggest producers in the gas-rich Marcellus Shale, is drilling for natural gas with its $24 million Aloe Unit and $21 million Ferguson Unit, both in Canonsburg, Pennsylvania. Rising natural gas prices have nearly tripled Range Resources' stock price since the start of 2021; in a recent quarterly earnings-related conference call, Chief Operating Officer Dennis Degner said the initial production rate at three of Range Resources' newest wells placed them at the top of the company's Marcellus program history. Subscribers can learn more from Industrial Info's reports on the Aloe Unit and Ferguson Unit projects.
Subscribers to the GMI Project Database can click here for a full list of active, onshore U.S. Oil & Gas Production projects tracked by Industrial Info.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
Click on the image at right for a heat map of active, onshore U.S. Oil & Gas Production projects, from Industrial Info's Geolocator tool.Diamondback Energy Incorporated (NASDAQ:FANG) (Midland, Texas), an independent exploration and production (E&P) company focused on the Permian Basin, is among those benefiting from the improving market. The company is drilling for crude oil and natural gas in its $97 million Spraberry development and $79 million Pecos Reeves Field development, which are expected to conclude their months-long drilling programs in late November and late December, respectively. Subscribers to Industrial Info's Global Market Intelligence (GMI) Oil & Gas Production Project Database can learn more from detailed reports on the Spraberry and Pecos Reeves projects.
"Our capital efficiency improvement allows us to maintain an elevated base level of Permian oil production through 2022 by spending approximately $1.7 billion to $1.8 billion of total capital," said Travis Stice, the chief executive officer of Diamondback, in a recent quarterly earnings-related conference call. But Stice, like many other executives in oil E&P, stressed that his company is not pursuing dramatic growth, despite the increased production guidance. "I think we're comfortable raising our Permian guidance on oil to 218,000 to 222,000 [barrels per day], from 216,000 to 220,000. We're not in growth mode, but the wells this year have outperformed and we've cut more capital on the capex side, than we have raised the production side."
The circumspect attitude among oil E&P companies stems from skepticism among investors, who are wary of pricey expansions in exploration and increasingly downbeat about what the future may hold for fossil fuels in general.
Barron Petroleum (Graham, Texas), a privately held company also focused on the Permian, last year celebrated the largest oil and gas discovery in the company's history when one of the rigs in its Sahota Field program found an estimated 74.2 million barrels in Texas' Val Verde County. Sahota-based drilling projects underway include the $20 million Crockett and $24 million Crockett II leases, both of which are set to wrap up toward the end of the year. Subscribers can learn more from Industrial Info's reports on the Crockett and Crockett II projects.
Like Diamondback, Barron used restrained language when it announced last year's discovery, most likely to reassure its stakeholders it was not biting off more than it could chew. In a press release, the company quoted a petroleum engineer's evaluation that the Val Verde discovery "is now so low-risk that it more resembles that of a development project than an exploration venture."
Blackbeard Operating LLC (Midland), another privately held E&P company, focuses primarily on the Permian, with other holdings in Arkansas, Louisiana and Oklahoma. It is at work on several drilling projects in the Permian that are set to wrap up at the end of the year, including a $48 million program in the Waddell TR 3 Field and a $24 million program in the Waddell TR A Field. Subscribers can learn more from Industrial Info's reports on the TR 3 and TR A projects.
Despite their guarded words, privately held E&P companies like Barron and Blackbeard are in a better position to take advantage of rising oil prices; a recent analysis from Bloomberg indicates Permian production is expected to return to pre-pandemic highs within weeks, much of it coming from investments made by private companies. While these firms answer to their own stakeholders, they are less likely than publicly traded companies to face investor-driven hesitations surrounding expansions.
High Gas Prices Pressure Producers
Although most of the recently added rigs are for oil drilling, improving natural gas prices are expected to drive E&P in some of the most profitable U.S. shale plays. U.S. natural gas prices recently soared to their highest levels in nearly eight years, as demand for U.S. liquefied natural gas (LNG) skyrocketed amid gas shortages in Europe and some parts of Asia. "There is no doubt the market is giving strong signals for production to increase," said David Attwood, chairman of the Natural Gas Supply Association (NGSA), following the release of NGSA's Annual Winter Outlook. "That supply is there and will come and meet the demand."
Range Resources Corporation (NYSE:RRC) (Fort Worth, Texas), which is one of the biggest producers in the gas-rich Marcellus Shale, is drilling for natural gas with its $24 million Aloe Unit and $21 million Ferguson Unit, both in Canonsburg, Pennsylvania. Rising natural gas prices have nearly tripled Range Resources' stock price since the start of 2021; in a recent quarterly earnings-related conference call, Chief Operating Officer Dennis Degner said the initial production rate at three of Range Resources' newest wells placed them at the top of the company's Marcellus program history. Subscribers can learn more from Industrial Info's reports on the Aloe Unit and Ferguson Unit projects.
Subscribers to the GMI Project Database can click here for a full list of active, onshore U.S. Oil & Gas Production projects tracked by Industrial Info.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn.
