Shale Update

FROM ISSUE 2
By North American Shale magazine staff | April 10, 2018

Permian
With operators planning massive capital budgets or selling non-basin assets, the year’s early storyline is clear: the Permian is the most popular U.S. shale play. Pioneer Natural Resources has started the process of asset divesture. After shedding properties and acreage in Texas and Colorado, the Dallas-based producer will be all-in on the Midland. QEP Resources, with less than 100,000 acres in the Permian, has also announced plans to sell assets in North Dakota and Colorado to focus on Texas. EOG said its best moment from the previous year came from the Delaware and Occidental Petroleum offered a similar perspective. WPX Energy has also sold non-Permian assets to focus on the Permian and Bakken.

ExxonMobil’s Delaware Basin acreage was originally thought to hold roughly 3.4 billion oil-equivalent barrels. But, one year after acquiring several acreage tracks, the technical team at ExxonMobil has determined that the oil major actually holds more than 5.4 billion oil-equivalent barrels. In total, there are 4,800 drilling locations that can average a lateral length of more than 12,000 feet, according to ExxonMobil.


Eagle Ford

Baytex Energy reports being happy with its operations in Texas. The Calgary-based exploration and production company recorded its strongest oil netbacks in the play since it first acquired assets there in 2014. At current crude prices, the company expects to generate significant free cash flow this year.

Sanchez Energy has provided a three-year plan for its Eagle Ford operations. This year the company will invest $445 million, roughly $100 million less than the previous year. But, the company believes its focus on drilled but uncompleted wells and new enhanced completion techniques, will help it grow production in the next three years.


Haynesville

With demands for shale gas in southwestern Louisiana expected to triple by 2025, Haynesville Global Access pipeline has proposed a pipeline linking the Haynesville shale play to the gulf. A subsidiary of Tellurian Inc., Haynesville Global Access Pipeline’s team wants to build a $1.4 billion pipeline that could be complete by 2023. The 200-mile pipeline would feature multiple receipt and delivery locations as part of a larger gas gathering system built by Tellurian that it believes would cost nearly $15 billion.


Bakken

ONEOK Inc. is once again coming to the aid of Bakken oil and gas producers. Following the completion of a $400 million natural gas liquids gathering pipeline and processing plant situated in the core of the Williston Basin, ONEOK will have more than 1.2 billion cubic feet per day of NGL gathering and capacity. The Demicks Lake plant will help producers meet flare capture targets, according to the company.

Hess Corp., one of the leading Bakken producers, has announced plans to undertake a share repurchase program up to $1 billion. Last year the company sold assets to fuel its Bakken production plans that include a six-rig drilling program this year. An oil discovery in offshore Guyana has also played a role in the share repurchase program, according to Hess.

A six-rig drilling program designed to drill 142 new wells will help Continental Resources generate roughly $800 million to $900 million in free cash flow this year. The cashflow generated will be used to pay down debt or be placed into some form of shareholder value creation vehicle. At $40/b oil, Continental believes it will remain cashflow neutral.


SCOOP/STACK
In Oklahoma, Continental will run 15 drilling rigs with more than half targeting the STACK’s Meramec and Woodford formations. Between four and five completion crews will be active for the year and by year’s end, 118 wells be in operation. Projected return on capital employed will range between 10 and 15 percent.

Calgary-based STEP Energy Services wanted in on the play. Through a $275 million acquisition of Tucker Energy Services, STEP will now have a presence in the SCOOP/STACK. Tucker currently has three working frack fleets with plans to bring a fourth online. In addition. Tucker operates two coiled tubing units and 15 wireline trucks. Tucker will continue to run its 400-person operation. STEP’s team believes its acquisition will help create new clients that already use STEP’s coiled tubing services.


Marcellus/Utica
The largest natural gas producer in the U.S. is spinning off its midstream team and assets. EQT Corp., based in Pittsburgh, will create a new publicly traded company that will own and operate midstream assets in the Appalachian Basin. EQT’s executive team believes the spin-off will give pure-play upstream or midstream investors a stronger and clearer investment thesis. Separate entities will give investors a better long-term option, the company also said.

The assets currently include takeaway capacity of shale gas from 246,000 acres in the Marcellus and another 166,000 acres in the core Ohio Utica. Over the next five years, the midstream assets are projected to generate $4.8 billion in organic growth capital.