News From The Oil Patch 11/17/2014
Kansas Common Crude at NCRA dropped to its lowest price in five years last Thursday, to $64/bbl.
Within hours of a cluster of earthquakes in southern Kansas last week, including the strongest in the state in recent memory, Governor Sam Brownback announced procurement and funding for a new portable seismic monitoring network. The seismic monitoring devices were recommended by the Governor’s Task Force on Induced Seismicity in its final report last month. The state currently has no facility for monitoring earthquakes. The Kansas Geological Survey anticipates the monitoring stations will cost about $85,000 and will be operational in early 2015. The KGS continues to develop a permanent statewide seismic network in addition to the portable network that was partially funded during the last legislative session.
Independent Oil & Gas Service reported 114 drilling permits for new locations across Kansas last week, including four in Barton County, two in Ellis County, and one in Russell County. For the month of October there were 653 new drilling permits issued.
There were 129 new well completions reported last week. Independent Oil & Gas reported 18 dry holes among the 75 completions in western Kansas. There were 54 new well completions last week east of Wichita. For the month of October, there were 483 completions reported.
Baker Hughes reported 1,928 active oil and gas drilling rigs across the US last week, up three. There were 402 in Canada, down eight, and 27 in Kansas, down one. Independent Oil & Gas Service reported 122 active rigs across Kansas, 37 east of Wichita, down one, and 85 in western Kansas, down two from last week. There were 30 rigs listed as pending their next assignment.
Merger talks continued between Halliburton and Baker Hughes, two of the biggest oilfield services companies. This is just the latest in a series of consolidations in the O&G services industry, spurred by low prices.
Aubrey McClendon continues to make headlines with his new ventures after leaving Chesapeake Energy. Mr McClendon's American Energy Parners affiliate announced it has closed on the quarter-billion dollar purchase of non-operated working interests with approximately 1,800 barrels of net oil equivalent per day. The plays are located in southern and central Oklahoma.
There was a lot of commentary last week on the election in Denton, Texas in which the town endorsed an ordinance to ban hydraulic fracturing within the city limits. As it turns out, they city may not have the authority to ban fracking. Chairwoman Christi Craddick of the Texas Railroad Commission, which regulates the oil and gas industries, said she would not honor the ban. Craddic asserts she could override the ban because the city does not have authority over drilling activity in the state.
State budget officials in North Dakota are wrestling with the possibility that they'll have less money in state coffers because of declining oil prices. When the Office of Management and Budget's advisory committee convened last summer, it assumed the price of a barrel of North Dakota oil would be $90 at the start of the next two-year budget cycle. Late last month, when the committee met, it concluded that it would be safer to assume $74 per barrel. According to the Bismark Tribune, oil taxes, based on the value of oil, accounted for more than a quarter of taxes collected by the state in fiscal year 2014.
We've been following the divorce case of Harold Hamm, the head of Continental Resources in Oklahoma City. Hamm is currently number 33 on Forbes Magazine's list of wealthiest Americans. He and his ex-wife did not sign a prenuptial agreement. An Oklahoma judge ordered a settlement that could change the list. Oklahoma County District Judge Howard Haralson ordered Hamm to pay his ex-wife nearly one BILLION dollars in alimony, including $322 million by the end of this year. That would drop Mr Hamm down a few notches, and put Sue Ann Hamm on Forbes list of 100 wealthiest American women.' As it turns out, that's not enough for Sue Ann Hamm, the ex-wife. She plans an appeal on the grounds that the order "grossly undervalues" the marital wealth to which she's entitled. Under the ruling, Harold Hamm would be allowed to keep around 94% of the estimated $18 billion rise in his Continental shares during the couple's 26-year marriage. Hamm says the decision was "not equitable."