Occidental Petroleum Reduced 2015 Capex by 33%

February 10, 2015 Elizabeth Alford

Occidental Petroleum Corporation reported during its earnings call in late January that the company sustained a fourth quarter loss of $3.4 billion.

In response to low oil prices, Occidental announced it will scale back its 2015 capital spending by 33 percent to $5.8 billion from $8.7 billion spent in 2014. In addition to the cuts, the company will also be reducing its activity in the Bakken.

This confirms the news we reported in October that the company was in the process of restructuring, and looking to sell off its Williston Basin assets. Read more here.

“Stephen Chazen, President and Chief Executive Officer confirmed that the company “minimized our development activities in the Williston Basin, domestic gas properties, Bahrain, and the Joslyn oil sands project, as these have subpar returns in this current product price environment. These efforts should result in a reduction in the cost of executing our capital program, as well as reducing our operating expenses”

Occidental may be moving out of the Bakken sooner than later. The Dickinson Press reported this week that the company had one rig finishing up in Dunn County and plans to move the equipment offsite within a week.

Other company highlights include a year-end 2014 cash balance of $7.8 billion, which exceeds their total debt of $6.8 billion. Additionally, the company projects that oil and gas production will grow 6 to 10 percent in 2015.

Learn more about Occidental's Bakken operation

Hess to Reduce Bakken Spending by 18%

February 4, 2015 Elizabeth Alford

Hess Corporation recently announced revisions to its 2015 capital and exploratory budget that includes a big cut in the Bakken. The company plans to reduce spending in the region by 18% from 2014 numbers, hoping to allow the company to remain flexible in the face of an extreme pricing environment.

The company has revised its budget several times in response to the sharp decline in crude prices throughout 2014. The company reduced 2014 capital expenditures below its planned capital budget of $5.8 billion and the capex budget for 2015 is is $4.7 billion.

“Greg Hill, President and COO, stated that “We are reducing our 2015 spending in the Bakken to $1.8 billion, compared with $2.2 billion in 2014. In 2015, we plan to operate an average of 9.5 rigs and bring approximately 210 new operated wells online, compared with 17 rigs and 238 operated wells brought online in 2014. Hess has some of the best acreage in the Bakken, and we will continue to drill in the core of the play which offers the most attractive returns. As oil prices recover we will increase activity and production accordingly.”

Overall, Hess reported an $8 million net loss for the fourth quarter of 2014 with oil and gas production increasing to 362,000 (boepd). This is an increase of 16% (55,000 boepd) from the fourth quarter of 2013. Bakken oil and gas production was up 50% from 2013 to 102,000 boepd. This increase was due to continued drilling activities and the completion of the Tioga gas plant expansion project.

Hess Corporation has been involved in the Bakken Shale Play since they first discovered oil in North Dakota in 1951. Today the company owns substantial acreage in the region and has operations in Tioga, Minot, Keene, Killdeer and Fryburg, making Hess one of the largest oil and gas producers in North Dakota.

Keystone Bill Hits Another Snag

January 27, 2015 Elizabeth Alford

Senator Heidi Heitkamp — Heitkamp votes on keystone

Republican senators attempted to wind down debate on the construction of the Keystone XL pipeline Monday, but the effort failed to receive the necessary support.

Republicans needed 60 votes in order to advance approval of the bill and end filibusters, but bad weather and absenteeism were blamed on the final tally of 53-39.

U.S. senator Heidi Heitkamp (ND), a long time advocate for the pipeline, authored five amendments to this piece of legislation last week. She believes the construction of Keystone is critical for the nation’s energy infrastructure. After yesterday’s vote Heitkamp expressed her extreme disappointment in the process

“In a press release, Heitkamp said, “For years I have said we need to approve the construction of the Keystone XL pipeline so that we can build our energy infrastructure, increase our energy independence, and move our country closer to a true all of-the-above energy strategy...I’m still disappointed in the process that got us to this point. Congress needs to work together, which includes robust debate, calling up amendments, and voting.”

In the following video, Senator Heitkamp speaks on the senate floor and urges colleagues to find common ground.

Read more at Senator Heitkamp’s website

photo credit: ruralhome cc

Energy Giants Announce Layoffs

January 16, 2015 Elizabeth Alford

Lower crude prices are a double edged sword. The average consumer may enjoy the benefits as cheap fuel reduces the costs of goods and services, but for those whose livelihood relies on the energy industry, the extra cash will be of little solice if they no longer have a job. It has taken some time for the reality of the low oil prices to finally trickle down, but after months of plummeting crude, the boom will become bust for the many who will soon face a pink slip.

Since November, one company after another announced massive reductions in their 2015 budgets as they have scrambled to cope with the dramatic 50% drop in crude prices since the summer. The next predictable step began last week as companies announced layoffs and prepare to scale back drilling operations.

Amidst the happy refrains from people who are enjoying lower gasoline prices, there is the occasional cynical comment that suggests the only ones who are hurt by low crude prices are the nameless, faceless, deep pockets of the energy companies. This represents a short-sighted and narrow view of the current reality facing workers, families and local economies.

Not only do layoffs affect workers directly, but a report authored by Dr. Robert W. “Bill” Gilmer for U.H.’s Bauer School of Business estimates that with each new energy job created/eliminated, there are three - four other jobs that are also create/eliminated.

“Discussing the impact on Houston, Gilmer predicts that “These cuts will be felt from Houston’s machine shops and factories to its office towers. The question becomes how this strange mix of good news and bad balances out to affect Houston’s economic prospects in 2015 and beyond.”

Since January 1st, a handful of companies have announced layoffs and it is only a matter of time before others follow. Some analysts predict things could get very ugly as the layoffs extend to local governments, small business and energy-supporting industries. Highlighted below are several giants who recently announced layoffs for early 2015.

Schlumberger: reported layoffs of a staggering 9000 workers more

Halliburton: recently laid off workers in Houston, but declined to give a specific number more

Apache: Also laid off an undisclosed number of workers worldwide more

U.S. Steel: Over 700 expected to be let go starting in march more

Supply Chain Initiative Launched for Bakken

January 14, 2015 Elizabeth Alford

Williston Economic Development (WED) has joined with DAWA Solutions Group to produce the 1st Annual Manufacturing and Logistics Conference (ManLog) to jumpstart its Enhanced Bakken Supply Chain Initiative. The event, scheduled for March 25-26, 2015 in Williston, ND is designed to connect the oil industry with other energy-related stakeholders in order to explore the opportunities they have in common.

“Shawn Wenko, Executive Director of Williston Economic Development said that, “One of our goals in 2015 is to help more of our regional manufacturing firms get connected to the oil and gas industry,” said Wenko. “Given the magnitude and expected duration of this $30 billion industry, now is the time to grow and diversify our economy throughout the region.”

“President of DAWA Solutions Group, Jeff Xarling explains further that “We need to start connecting those dots with regional manufacturers that can deliver more cost-effective products and services. The end result is a win-win with reduced costs for operators and economic development and diversification for companies and communities throughout the region.”