Tag Archives: #SWDWellsWanted

Saudi Arabia Oil Riches Decline Force Social Change

Saudi Arabia Amid Change- 95th Issue

Introduction…This blog has been documenting the shift in economic power from OPEC and its partners, to the frackers in the United States.  Even at a $50 per barrel price, plus or minus, U.S. producers have cut production cost nearly in half and billions of dollars are pouring into new production.

But, in Saudi Arabia, the low energy prices have forced painful change even in what may be the world’s most conservative.  Woman are joining the workforce and music can be found in the streets.  Even in what may be the world’s most conservative country. The government has stripped the notorious religious police of their power and the more than 3,000 guardians of morality, who terrorized women for wearing makeup and arrested unmarried couples for walking next to each other on the street, are a rare sight these days.

But what does it mean that Saudi King, the guardian of the holy cities of Mecca and Medina, has reined in the feared moral police?  And why have the fundamentalists gone silent rather than lament the loss of values?

Is the fairy tale ending?…The primary reason is the disappearance of Saudi Arabia’s fairy-tale riches. The kingdom is experiencing the deepest crisis since oil first produced in 1938.  The current low prices have led to a 50% drop in revenue.  In 2015, the government budget deficit ballooned to 90 million euros, and the country’s borrowing began.

In conclusion…Saudi Arabia was the pillar in the Middle Eastern order that no longer exists.  This order was destroyed by the Arab Spring, and the wars in Iraq, Syria, and Yemen (neighboring states.)  Now, Iran and Saudi Arabia are fighting over power in the region.  These events are threatening stability in the kingdom.

Source: Susanne Koelbl, “Tasting Freedom.  Saudi Arabia Experiments with Reform Amid Economic Downturn,” Spiegel Online International, 17 May 2017

Why Billions Are Pouring Into U.S. Shale

U.S. Shale Oil Boom

Introduction…Private equity funds raised $19.8 billion for oil ventures in the first quarter.  That is nearly three times the total raised the same period last year.

The accelerating pace of oil private equity, along with hedge funds and investment banks, arrives even as the recovery in oil prices from 8-year low has stalled at $50 per barrel due to stubborn oil glut.

Why the increase investment now?  The shale sector has become increasingly attractive to investors not because of rising oil prices, but rather because producers have achieved startling cost reductions – slashing up to half the cost of pumping a barrel in the past two years. Investors also believe the glut will dissipate as demand for oil steadily rises.

The financiers are confident that they can squeeze increasing returns from shale fields – without price gains – as technology continues to cut costs.  In addition, “Demand for oil has been more robust than anyone imagined three years ago,” said Mark Papa, chief executive of Centennial Resource Development Inc. (CDEV.O).

What now…This year’s drilling rush could be tested if global supplies grow too fast or if demand cools. The U.S. drilling rig count is rising at its fastest pace in six years and U.S. crude stockpile are close to 533 million barrels – near an all-time high and enough to supply the United States for 25 days.

In summary...”Shale funders look at the economics today and see a lot of projects that work in the $40 to $55 range” per barrel of oil, said Howard Newman, head of private equity fund Pine Brook Road Partners, which last month committed to invest $300 million in startup Admiral Permian Resources LLC to drill in West Texas.

Source: Earnest Scheyder, “Undaunted by oil bust, financiers pour billions into U.S. shale, Reuters, 17 April 2017

Dumping Billions In Canadian Assets For Premian Basin

Permian Basin Assets Replaced Canadian Assets

Introduction…Marathon Oil (NYSE: MRO) is selling its Canadian subsidiary, including the company’s 20 percent non-operated interest in the Athabasca Oil Sands Project, to Royal Dutch Shell PLC and Canadian Natural Resources Ltd. for around $2.5 billion in cash, according to a March 9 release.

Additionally, Marathon scooped up 70,000 acres in the Permian Basin from Midland, Texas-based BC Operating Inc. in a deal worth about $1.1 billion, per the release. That includes about 51,500 acres in the Northern Delaware Basin portion of the Permian.

According to the Wall Street Journal, Shell announced it’s selling all of its Canadian oil-sands projects for around $7.25 billion. Shell will keep a 10 percent interest in Athabasca with Canadian Natural (NYSE: CNQ). Meanwhile, Irving, Texas-based rival Exxon Mobil Corp. (NYSE: XOM) recently said production wasn’t profitable in the region and removed around 3.3 billion barrels of oil from its stated reserves, much of which was attributed to the oil sands, the WSJ reports.

In conclusion... Canadian oil sands are falling out of favor with majors due to its high production costs.  On the other hand, Permian Basin oil and gas production is highly favored due to its relatively low production cost and its well established iinfrastructure .

Permian Basin is also favored by our partners who are purchasing saltwater disposal wells due to increased production of water from the new oil production.

Why Saltwater Disposal Wells Attract Investors

Saltwater Disposal Wells

Introduction...Last October we discussed here The Surprising Discovery Of One Oil Executive.    Now we want to continue that discussion Why Saltwater Disposal Wells Attract Investors by enjoying the ATM of the oil patch as described by insiders.

  • Location – The proximity of the Saltwater Disposal Wells “CSWD” to producing fields is critical, as the cost of transporting produced water to a disposal facility is one of the larger recurring expenses that an operator incurs. Our next facility is one of three in this immediate area.  However, none of them will accept saltwater from outside truckers.  They use their wells for the water they produce only.  As a result, the truckers are driving by this property and driving as much as an additional 50 miles to dispose of their water.
  • Water Commitment – Our well currently under contract is being utilized for only 10% of its daily licensed disposal capacity.  With trucks driving past the property every day, it will be relatively easy to convert them to customers.  The good news is contract requires the grandson of the seller be allowed by dispose of his water which is the current 10% utilization.  By the way, this small utilization is profitable as is.
  • Commitment to the Customer – The management of our next facility also operates producing properties.  The management understands the other issues that concern an operator as it relates to choosing their disposal partner.  These Issues such include safety, ease and speed of off-loading.  Accurate and readily available reporting is important to the trucking company.

Conclusion: The steady cash flow that is not dependent on oil pricing or new discovery makes prime CSWD properties a valuable asset.  That is one reason these ATM’s of the oil patch rarely come up for sale.  However, we have found a seller who is retiring and wants to spend more time with his wife.  Does this intrigue you? Drop me an email if you desire additional information on this discovery.  We have a current property under contract that meets  these requirements.

This has been Bill Moist, MS, CPA reporting today Why Saltwater Disposal Wells Attract Investors.

Three Keys To Successful CSWD Facility

sw

CSWD Facility

Introduction...Last week we discussed here The Surprising Discovery Of One Oil Executive.    This week we want to continue that discussion by getting into the Three Keys To Successful Commercial Salt Water Disposal (CSWD) Facility.  The ATM of the oil patch as described by insiders.

  • Location – The proximity of the CSWD to producing fields is critical, as the cost of transporting produced water to a disposal facility is one of the larger recurring expenses that an operator incurs. Our next facility is located approximately three miles from one of the larger producing fields in area. This producer disposes of approximately 325,000  barrels of water per month in the county. A larger portion of this producer’s water is produced in close proximity to our next facility, as way of illustration.  This producer wiill commit a large portion of their produced water to us.
  • Water Commitment – The commitment of water directly from the operator / producer is important to the our next facility. This allows the management to contract the water either directly with our preferred trucking company. Our preferred trucking company will base a number of their trucks at the facility and haul all water they have access to within a 20-mile radius.
  • Commitment to the Customer – The management of our next facility also operates producing properties.  The management understands  the other issues that concern an operator as it relates to choosing their disposal partner.  These Issues such include safety, ease and speed of off-loading.  Accurate and readily available reporting is important to the trucking company.  The facility will aslo provide driver amenities such as clean restrooms, cold water, and snacks.

Conclusion: The steady cash flow that is not dependent on oil pricing or new discovery makes prime CSWD properties a valuable asset.  That is one reason these ATM’s of the oil patch rarely come up for sale.  However, we have found a seller that has good facilities that can be acquired.  Drop me an email if you desire additonal information on this discovery.

This has been Bill Moist, MS, CPA reporting today Three Keys To Susccessful CSWD facility.

Wanted: SWD Wells

swd3Salt Water Disposal

While salt water disposal isn’t a sexy part of the oil and gas industry, it is very necessary.  According to the Texas Railroad Commission, there are 7,500 active SWD wells in Texas as of 2013, the last year reported.

You probably remember the story of the 1849 California Gold Rush.  By 1852, 100,000 people had moved to California to find gold.  A total of $2 billion worth of precious metal was extracted from the area during the Gold Rush, which peaked in 1852.

But, very few actually found gold.  However, Levi Strauss found his gold mine that is still producing today.  Mr. Strauss sold what the 49ers needed.  Blue jeans to wear.  In 2014, Levi Strauss’s sales were $4.75 billion worldwide.

So, we have capital to purchase that oil and gas infrastructure called Salt Water Disposal Wells.  Send me a note if you have access to any that are for sale.