May 22nd, 2017
Independent Oil & Gas Service reported a 16% increase in the statewide rig count last week, noting 11 active drilling rigs in eastern Kansas, up three, and 25 in western Kansas, up two. Baker Hughes reported 901 active oil and gas drilling rigs on Friday, that’s an increase of eight rigs drilling for oil and an increase of eight rigs targeting natural gas. Canada reported 23 active drilling rigs, up three for the week.
Independent Oil & Gas Service reported 24 new well completions last week, bringing the year-to-date total to 545. There were ten new completions east of Wichita, and 14 in western Kansas, including one each in Ellis, Russell and Stafford counties.
There were 29 permits filed for drilling at new locations in Kansas last week. That’s 562 new drilling permits so far this year. There were 12 filed in eastern Kansas and 17 west of Wichita. Independent Oil & Gas reported four new permits in Ellis County, but none in Barton, Russell or Stafford counties.
The Oklahoma Legislature is scheduled to adjourn on Friday, May 26, but lawmakers are making little progress toward resolving its $878 million budget-deficit impasse. Last week the Oklahoma Independent Petroleum Association and the Oklahoma Oil and Gas Association held a press conference to announce their plan to prevent what other industry leaders called “draconian cuts.” They expressed willingness to raise what’s known as the Gross Production Tax — levied on new wells for 36 months — from two percent to three percent — and to slash the so-called “rebates on wells that are restarted after going dormant. GOP negotiators say they won’t go any higher than four percent, while Democrats are insisting on a five percent rate. The Governor is expected to call a special session to run concurrently with the orginary session, according to reporting over the weekend by the Daily Oklahoman.
As we’ve reported before, Russia may be fudging the numbers on it’s promised output cuts. George Friedman writes on the News Max Web site that Russia’s drop in production is a mirror image of the one last year at the same time, raising the question of whether this is just a monthly seasonal adjustment. Russia has technically met its obligation if the benchmark for the cuts is December 2016. But it has not met its obligations if the standard is a year-on-year comparison of cuts. Russia raised crude production in January and March of this year when compared with the previous year. The April 2017 decrease in production, when viewed year-on-year, is just over half of Russia’s commitment.
OPEC and other producers, including Russia, meet this week, and could extend their deal to cut supplies for another six or nine months. According to Reuters, the possibility of deepening the cuts was also being discussed ahead of the meeting May 25.
An official with the International Energy Agency said Tuesday that the international oil market has “essentially reached a balance,” and says that will continue to accelerate in the near term. According to reporting by CNBC, global oil markets are on course to reach a supply-demand balance this year and supply deficits are expected to pick up speed in the near term.
The bankruptcy of SemGroup nine years ago continues to make headlines. Last week the U.S. Supreme Court sided against the bankruptcy trustee. The justices refused to review a circuit court decision allowing Barclays to keep a $143 million fee the bank received for taking on SemGroup’s commodities positions at the New York Mercantile Exchange a week before its 2008 bankruptcy filing. The bankruptcy filing reverberated across the Kansas patch. Kansas producers had to settle about $130 million in SemGroup debts for about 40 cents on the dollar in a mediated settlement in 2009. Producers and lawyers also discovered that Kansas law did not, as intended, give oil producers a “secured interest,” with priority over banks and other creditors, in the event their customers declared bankruptcy.
Halliburton Co. said Wednesday that Jeff Miller, a board member and president of the oil-field-services company, will be its new chief executive officer.
A dispute in Colorado over whether regulators could and should put more weight on public health and the environment when they draw up rules for oil and gas could be decided by the state Supreme Court. The Attorney General says a lower court ruling rewrites state law and contradicts prior Supreme Court rulings. She is appealing on behalf of the regulators, which the governor says don’t have the authority to appeal. So, there are more than one legal issue for the high court to decide, although they’ve given no indication whether they’ll hear the case.