Category

Domestic Production

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February 7, 2025 Current Events Special Topics

The Uinta Basin Resurgence

The Uinta Basin is a geological formation located in northeastern Utah that extends into Western Colorado on its easternmost front where it is bound by the Piceance Basin. The Uinta Basin is rich in oil and gas reserves and is a stacked formation with pay zones ranging from around 1,300′ to 18,000′ in depth. Major oil discoveries led to the basin’s first significant development in the 1940s. With the rise of hydraulic fracturing (fracking) and horizontal drilling, the basin’s relevance has resurged, making it a hotspot for tight oil development and a significant contributor to U.S. oil and gas production. We explore the Uinta Basin’s resurgence in this week’s post.

January 31, 2025 Current Events Valuation Issues

The Latest in Natural Gas Valuations

Continued Optimism for Global Demand Buoys Multiples

Natural gas markets continue an optimistic trend towards greater demand to meet a U.S. supply glut. The incoming Trump Administration has promised to pull back regulatory restraints and unleash the industry to “drill baby drill.” However, when it comes to natural gas, there is already plenty of supply; the question is, can that supply become more portable to meet global (instead of regional) demands? We explore this question and a potential answer in this week’s post.

January 24, 2025 Mergers, Acquisitions, & Divestitures

Just Released: Q4 2024 Oil & Gas Industry Newsletter

Regional Focus: Bakken, DJ Basin, Woodford Shale, Uinta, and the SCOOP/STACK

As a supplement to our usual regional coverage, this quarter we take a closer look at the Bakken, DJ Basin, and Woodford Shale. On an oil equivalent basis, the DJ Basin ended the review period 2% below production levels from a year earlier, while the Bakken ended at nearly 5% lower. Only the Woodford Shale ended the review period at a level above its November 2023 production, though at a negligible 0.1% higher. While not nearly in the same league as the powerhouse Permian Basin, the Bakken Shale, DJ, and Woodford Shale play an important role in U.S. energy production.

January 17, 2025 Current Events

2025 U.S. Oil Outlook

Don’t Count On A "Drill Baby Drill" Mentality

The November election brought optimism to many oil producers who felt hamstrung by the Biden Administration’s policies. However, administrations can only do so much when it comes to global supply and demand dynamics. In fact, they can usually do little in the big picture; and the big picture is that there is probably going to be more supply coming online in 2025 than demand to meet it. Therefore, U.S. upstream producers are not planning on blowing their budget on aggressive drilling plans, no matter what Trump says, especially considering the lukewarm pricing environment that the market foresees. In addition, the U.S.’ shale dominance may be headed towards inevitable decline. We consider the 2025 U.S. oil and gas outlook in this week’s post.

January 10, 2025 Bakken Shale Special Topics

Examining Bakken, DJ Basin, and Woodford Shale Production and Activity

While not nearly in the same league as the powerhouse Permian Basin, the Bakken Shale, DJ, and Woodford Shale play an important role in U.S. energy production. While these basins mostly experience the same impacts that U.S. energy policy and geopolitical matters have on the primary U.S. basins, they each have unique characteristics that differentiate them from the larger basins and each other. In this post, we depart from our regular coverage and take a closer look at the Bakken, DJ Basin, and Woodford Shale.

January 3, 2025 Energy Valuation Insights Mergers, Acquisitions, & Divestitures Special Topics

Shining Some Light on Four Overshadowed Oil and Gas Plays

Uinta Basin, Bakken Shale, DJ Basin, and SCOOP/STACK

This week, the Mercer Capital Oil and Gas team highlights four popular, but less talked about oil and gas plays: the Uinta Basin, Bakken Shale, DJ Basin, and SCOOP/STACK. From the Uinta’s unique transportation challenges to the Bakken’s enduring output, the DJ’s infrastructure, and the SCOOP/STACK’s operational complexities, we explore their economic profiles and recent M&A activity.

November 21, 2024 Current Events

Themes from Q3 Earnings Calls

Upstream (E&P) and Oilfield Service (“OFS”) Companies

This week, we explore the Q3 2024 earnings calls of Upstream and OFS companies, noting a focus on technological efficiency, optimized capital allocation, and expectations for natural gas demand in the long term. We examine some notable quotes from recent earnings call transcripts to gain insights into how industry leaders are navigating current challenges and positioning themselves for the future in an evolving energy landscape.

October 18, 2024 Haynesville Shale Mergers, Acquisitions, & Divestitures

“Hayne” in There, Haynesville!

The Haynesville/Bossier Shale was discovered in 2008 in East Texas and Western Louisiana. As a play, it differs from other reserves in that it is saturated with smaller independent operators compared to plays like the Eagle Ford and the Permian over the last decade. Despite its challenges, the current market indicates brighter days ahead for the Haynesville. We explore the latest trends in the basin in this week’s post.

October 4, 2024 Valuation Issues

Should Appalachian Natural Gas Producers’ Stock Price Resiliency Be Surprising?

In a year where natural gas prices have spent most of the year under $3.00, the stock prices of publicly traded Appalachian gas producers have remained remarkably stable. This could come across as surprising. Appalachia has some disadvantages to other US gas producing basins, such as takeaway capacity, logistics, and longer distances to major LNG production facilities. However, since 2022 the stock market has held steady for these companies; of which this confidence has outlasted commodity price and earnings declines over the past two years.

September 20, 2024 Marcellus and Utica Shale

Navigating Challenges in Appalachian Production

The economics of oil & gas production vary by region. Mercer Capital focuses on trends in the Eagle Ford, Permian, Haynesville, and Marcellus and Utica plays. The cost of producing oil and gas depends on the geological makeup of the reserve, depth of the reserve, and cost to transport the raw crude to market. We can observe different costs in different regions depending on these factors. In this post, we take a closer look at the Marcellus and Utica shales, specifically the Appalachian basin.

August 23, 2024 Current Events

Themes from Q2 Earnings Calls

Upstream (E&P) and Oilfield Service (“OFS”) Companies

This week, we explore the Q2 2024 earnings calls of Upstream and OFS companies, highlighting the significance of this quarter’s themes across the entire sector. The main themes discussed on these calls include strong international demand for U.S. oil and gas, domestic challenges from natural gas prices, and technological advances in drilling and operational efficiency. We unpack these trends in this week’s post.

July 19, 2024

What’s “Play”-ing in the DJ Basin?

An Introduction to the Denver-Julesburg Basin

The Denver-Julesburg (“DJ”) Basin is a vast and geologically complex basin marked by sedimentary layering, tectonic shifts, and hydrocarbon generation. Encompassing an area of approximately 20,000 square miles, it stretches across regions of Colorado, Wyoming, Nebraska, and Kansas. From an economic standpoint, the DJ Basin has long contributed significantly to the U.S. energy sector. Data from the U.S. Energy Information Administration (“EIA”) reveals the DJ Basin was among the top five oil producers in 2023. In this week’s post we explore important production and players in the DJ Basin.

May 24, 2024 Current Events

Themes from Q1 Earnings Calls

Upstream (E&P) and Oilfield Service (“OFS”) Companies

In our prior earnings call post, Themes from Q4 2023 Earnings Calls, we touched on the global focus of both the Upstream and OFS segments and the persistent drive to optimize efficiency in well operations and services with technological advancements, durable inventory, and more. This week, we explore the Q1 2024 earnings calls of upstream and OFS companies, highlighting the appearance of this quarter’s themes across the entire sector: dividends and buybacks and a boost to the gas market.

May 3, 2024 Current Events Special Topics

The Inside “SCOOP”

The SCOOP/STACK is a significant oil and gas play found in the Anadarko Basin of Oklahoma. Historically, the Anadarko Basin has been a prolific area for oil and gas extraction. It spans approximately 70,000 square miles across Western Oklahoma, the Texas Panhandle, and parts of Southwestern Kansas and Southeastern Colorado. The basin’s geology features some of the thickest and highest-quality shale reservoirs in the United States, making it an attractive site for drilling and production. Given that fact pattern, it might surprise some to learn that activity in the SCOOP/STACK has been sluggish, to say the least, in recent times.

April 11, 2024 Special Topics

Oil & Gas Roadblocks: Prices, Production, and People Holding Sway

There are always going to be barriers to success in an industry. Barriers to entry, barriers to growth, barriers to profitability, and barriers to progress can lurk to name a few. The upstream industry has its share. For gas, its own oversupply and low prices are an issue. For oil, capital constraints are reining in investment. Both commodities also thirst for quality labor to fuel growth and longer-term underlying optimism, but that workforce does not exist right now and may take a while to develop. What does this mean for the future of the industry?

March 1, 2024 Mergers, Acquisitions, & Divestitures

Themes from Q4 2023 Earnings Calls

Upstream (E&P) and Oilfield Service (“OFS”) Companies

Our latest analysis of Q4 2023 earnings calls in the energy sector reveals a consistent focus on efficiency and the impact of global demand. Upstream companies are capitalizing on international demand for LNG and LPG, while oilfield service firms are benefiting from efforts to enhance energy security worldwide. The industry’s commitment to operational effectiveness is evident in investments in durable inventory, conversion efficiency, and the integration of advanced technologies, positioning companies for future success in a market increasingly driven by sustainable energy solutions.

February 23, 2024 Special Topics

Texas Statewide Rule 8 Overhaul

What's in Store for Texas Oilfield Waste Disposal Operators?

The Railroad Commission of Texas is overhauling its primary rule for water protection, Statewide Rule 8, to address environmental standards and oil and gas industry practices that have evolved significantly since the rule’s last major revision in 1984. The proposed changes aim to streamline regulations, update requirements for waste management, and enhance the Commission’s ability to track and collect data on oilfield waste transport. These modifications are expected to impact the economics of oil and gas drilling projects, particularly for smaller operators, and could lead to increased demand for oilfield waste disposal services. to understand more, read this week’s post.

February 9, 2024 Haynesville Shale Special Topics

Just Released | 4Q23 Exploration & Production Newsletter

REGIONAL FOCUS: HAYNESVILLE SHALE

The 4Q23 issue of Mercer Capital’s Exploration & Production newsletter focuses on the Haynesville Shale. Haynesville production held up reasonably well during the 2023 review period, particularly considering the sharp fall-off in the basin’s rig count. Despite the Henry Hub natural gas front month futures prices ending the year well below their starting point, the outlook for the Haynesville basin is favorable and anticipated to continue growing due to rising demand from LNG facilities and petrochemical plant development along the U.S. Gulf Coast.

In addition to our overview of the Haynesville, this newsletter also contains:

– Oil and Gas Commodity Price Update
– 2024 Outlook for the Industry
– Industry M&A Activity
– Public Company Performance
– Production Update
– Rig Counts

Download the newsletter to stay up to date on the industry.

January 25, 2024 Mergers, Acquisitions, & Divestitures Special Topics

2024 Oil and Gas Outlook

A Year Of Divergence

U.S. oil seems to be headed toward a period of upward price pressure. U.S. natural gas on the other hand, appears to be back in a somewhat oversupplied position.

January 12, 2024 Haynesville Shale

Haynesville DUCs Buoy Production Despite Rig Count Decline

The economics of oil & gas production vary by region.  Mercer Capital focuses on trends in the Eagle Ford, Permian, Haynesville, and Marcellus and Utica plays.  The cost of producing oil and gas depends on the geological makeup of the reserve, depth of reserve, and cost to transport the raw crude to market.  We can observe different costs in different regions depending on these factors.  This quarter, we take a closer look at the Haynesville shale.

January 5, 2024 Haynesville Shale

Initiating Coverage of the Haynesville Shale

In 2023, the Haynesville shale, a significant natural gas source in the U.S., experienced a downturn in drilling activity due to low natural gas prices (70% price drop from August 2022). This decline also affected rig counts and day rates, with a notable decrease in both. Despite the market volatility, some M&A activity occurred, including WhiteHawk Energy’s acquisition of mineral interests. Rumored activity included Chevron’s potential sale of its Haynesville assets, indicating a continued interest in this region’s natural gas potential.

October 6, 2023 Special Topics

Leading America Toward Energy Independence

Hart Energy LIVE’s America’s Natural Gas Conference 2023

The recent America’s Natural Gas conference shed light on crucial themes in the energy sector, highlighting an increasing demand for liquefied natural gas (LNG) amid challenges like insufficient pipeline and storage infrastructure, which poses a substantial hurdle to meeting the soaring need both domestically and internationally. Noteworthy initiatives, such as Mexico Pacific’s strategic LNG facility, aim to bridge infrastructural gaps by delivering responsibly sourced natural gas from the Permian Basin to Asian markets, while also focusing on a sustainable and strategic location to optimize shipping and pricing. The discourse at the conference also underscored the notable reduction of CO2 emissions with the rising market share of natural gas, as well as the pragmatic and logistical challenges faced by renewable energy endeavors, indicating that a balanced, multi-faceted approach to energy transition is imperative in ensuring reliability, sustainability, and affordability in global energy supply.

April 21, 2023 Mergers, Acquisitions, & Divestitures Special Topics

Earnings Stability and Geopolitical Volatility

Two Foes Are Battling Once More

In the mire of much of the chaotic goings on of the world energy markets and Ukraine over the past year, a lot of things have changed. Uncertainty has ruled the day. Commodity prices have now dropped significantly in the last six months. Yet, between the lines, there is optimism for the upstream industry as profitability and cash flows remain, and the possibility for acquisition premiums for target companies re-emerges in 2023.

August 5, 2022 Downstream Analysis

Talk To The Hand: Upstream Industry Eyeing Returns More Than Rigs

Producers have been holding the course towards returns and deleveraging, snubbing pressure from the Biden administration. It has been tempting for producers to ramp up production amid current oil and gas prices. However, with supply chain issues and labor shortages, the appeal has been dampened.