Enercom360 Magazine Feb 2018

February 2018 • Vol. 1 • Issue 1

The Oil & Gas Experts – An EnerCom Inc. Publication

Women in Energy CFO Laura Fulton is on a Mission to Put Hi-Crush at the Pinnacle of the U.S. Proppant Chain

World Energy News The Future of Demand: China and India will Drive Global Energy Growth through 2040

25 YEARS MAKING IN THE

TECH CORNER Core Lab is testing a groundbreaking technology - EOR for unconventionals: will it be a game changer for shale?

P/18

CANADA ON THE HORIZON Market disconnect: why do some Canadian E&Ps trade at a discount to their U.S. peers?

Basin Focus

Booming like No Place Else in North America: The Thought Leadership Coming Out of the Permian Basin

TRENDS TO WATCH IN 2018 P/6

The price of oil, shale’s new tech, effective rig count, equity markets are open: now what?

P/20

GROWTH CAPITAL FOR THE ENERGY INDUSTRY

[ SAMPLE AD ] BUILDING PARTNERSHIPS TOGETHER

RONGER TOGETHER

Innovators in white sand technology JASON DOWNIE Managing Partner

214.269.1183 Email: info@tailwatercapital.com www.tailwatercapital.com

EDWARD HERRING Managing Partner

CONTENTS BASIN FOCUS The DOE predicts that U.S. oil production will break a 48-year record by the end of 2018, largely because of new oil coming out of the phenomenal Permian Basin.

4

CANADA ON THE HORIZON Some Canadian E&Ps deliver stronger performance metrics than their U.S. peers, but they trade at a discount. EnerCom found some Canadian producers whose numbers suggest opportunities for appreciation.

6

WOMEN IN ENERGY In 2017, Hi-Crush Partners’ CFO Laura Fulton was named

by Institutional Investor Magazine as one of the top oil service CFOs in the world. A chat with the veteran logistics executive showed us why she’s at the top of her profession.

ENERCOM ANALYSIS Permian oil producers continue to tout enviable half-cycle metrics, but what does the complete picture show?

12

TECH CORNER Core Lab has developed a method of EOR for unconventional rock that, in testing, shows it can boost recovery from 9% up to 14%.

TRENDS TO WATCH IN 2018 Oil & Gas 360® looks for trends that could affect executive decisions now, next year and a decade out. What should you be watching in 2018?

WORLD ENERGY NEWS The IEA forecasts China will overtake the United States as the largest oil consumer in 12 short years, and that China’s net imports will hit 13 million barrels per day in 2040.

Thank you for reading the inaugural issue of EnerCom 360 – The Magazine.

Inside these pages, reporters, editors and analysts from EnerCom and Oil & Gas 360® have served up a taste of news, deals, trends, executive interviews and analysis inspired by our ongoing daily coverage of the oil and gas industry.

Whether you own and operate one water hauling truck in Midland, Texas, or you’re the CEO of ExxonMobil, the simple truth is that the fortunes of almost every oil and gas company—along with the oilfield service and technology companies helping them find and extract hydrocarbons—are tightly tethered to the price that a barrel of oil will fetch in a global marketplace that’s constantly fighting for stability.

14

Trying to help understand the variables that determine which exploration and production companies are going to thrive and which are going to stumble is a key goal of Oil & Gas 360® and EnerCom.

16

EnerCom 360 will take you on a quick journey through an exciting world of corporate finance, energy banking, property acquisitions and divestitures, corporate mergers and spinoffs, advanced oilfield technologies like robotics, and artificial intelligence, plus high-stakes politics pitting the Middle East versus North American shale.

ENERCOM – 25 Years in the Making EnerCom has grown into a multi-faceted management consultancy providing oil and gas companies a full suite of investor relations services, graphic and web design, a daily publishing platform and robust digital marketing services.

LETTER FROM THE EDITOR

18 20 22

Thanks again for joining us. For more details and to dig deeper into the oil and gas industry, please visit OilandGas360.com and become an annual member.

We’re thrilled to have you onboard.

Bevo Beaven Editor in Chief

The Editor of Oil & Gas 360® is Bevo Beaven. Bevo brings a journalism degree from the University of Alabama along with 30 years of business communications experience including stints as VP of corporate communications for a mining company and SVP/GM of an integrated communications agency working for publicly traded oil and gas, mining and vehicle manufacturing companies. Bevo joined Oil & Gas 360® as editor in 2014.

BASIN FOCUS The Permian Basin is changing the global energy equation

A

sk anyone who follows oil and gas—or any resident of Texas—

within it—drilling new wells, tweaking completion schemes and growing

and they will tell you that in 2017, the most talked about oil

production kept the West Texas-focused E&Ps busy during 2017. For

producing basin in North America was the Permian basin.

Matter of fact, if you read the Southwest Airlines inflight

magazine, the November 2017 issue, one of the oilfield service providers placed a full-page ad for its sand delivery technology smack in the middle of the steak houses and expensive whiskey ads.

good reason: many operators report breakeven levels for the Permian between $40 and $50 per barrel.

“We are particularly excited by our achievements in the Permian basin,” Occidental Petroleum CEO Vicki Hollub said after Oxy brought in several record wells in the basin. “Our

Industry estimates say the potential volume of oil that is awaiting developers in the Permian basin is

teams delivered basin leading well results across multiple development areas and benches in the Permian.”

on par with the world’s largest field. Industry

In Q3 2017, Oxy reported multiple

analysts have assigned a resource potential

company records coming from its

of more than 75 billion barrels oil equivalent

Permian operations. Five 3rd Bone

to the Spraberry/Wolfcamp shales alone.

Spring wells had an average 30-day

Pioneer Natural Resources said its data

IP of 3,780 BOEPD, and one 2nd

ranks the Spraberry/Wolfcamp as

Bone Spring well had a 30-day IP of 4,500

the largest U.S. oil field, and as the

BOEPD. Each of these is well above the

second-largest oil field in the world.

But there are many other pay zones

“OUR TEAMS DELIVERED BASIN-LEADING WELL RESULTS ACROSS MULTIPLE DEVELOPMENT AREAS AND BENCHES IN THE PERMIAN.”

in the Permian.

The Permian basin has produced oil for about a century as a conventional play, and now that the shale phenomenon

has revealed so many

Vicki Hollub, CEO, Occidental Petroleum

prospective oil producing benches under the

2016 average, and according to Oxy three of

same acreage, experts

the wells are among the top 15 IP30s in the

say the Permian rivals

entire basin. Oxy is currently running five

Saudi Arabia’s legendary Ghawar field for remaining recoverable resources.

rigs in the Greater Sand Dunes area in New Mexico, and expects to increase that count to six or seven in 2018.

The multi-layers of pay available

Concho Resources CEO Tim Leach

in the basin have driven leasing

described how he sees the shale business

through the roof in the Delaware

now moving into a new phase.

basin—with some acreage

“I think that the business is entering a third

deals going as high as

phase. We were in the resource capture

$35,000 or more per

and then we’ve been through the phase of

acre. Acquisition of

identifying all the zones. And I think it’s in the

large acreage tracts

development phase and the development

has slowed some in the

phase will go on for several decades. We

Delaware portion of the

can generate free cash flow and grow and

Permian, but acreage

we can do that for a very long period of

swaps are becoming common.

Throughout the Permian— including the Delaware and Midland basins

4

ENERCOM360 M A G A Z I N E

time. So, I think that’s the business model Multi-pay: Delaware basin cutaway from Centennial Resource Development

that the industry is trying to define over the next several years, is what is the best answer for

In Brief CORE LABORATORIES

OXY

APACHE

CHEVRON

CONOCOPHILLIPS

2,500,000 4,003

3,100,000 3,381

2,000,000 1,183

1,000,000 734

PIONEER

ExxonMobil

EOG

ENERGEN

402,000 1,872

795,000 824

147,428 1,647

800,000 3,110

Permian Basin | Acreage Holdings

Permian Basin | Drilling Permits Approved 2012-Present

the shareholders. And I think it includes some

Oil & Gas 360® reported that the top five

sort of return of capital, it includes some kind

acreage holders operating in the Permian

of growth and, of course it’s going to include

basin hold more that 9.4 million acres in the

generating lots of free cash flow,” Leach said.

basin, and a total of 566 companies hold acreage there.

Pioneer Natural Resources CEO Tim Dove talked about his company’s growth profile in the company’s

"IT'S GOING TO LEAD THE UNITED STATES INTO A VERY STRONG POSITION FROM THE STANDPOINT OF OIL EXPORTS AND THEIR IMPORTANCE IN TERMS OF THE GLOBAL ENERGY PICTURE.”

Q3 conference call. “Internally,

Tim Dove, CEO, Pioneer Natural Resources

we show up to

But researching the issued drilling permits tells a different story—the story of who is currently drilling their Permian acreage.

ConocoPhillips (ticker: COP), for

35,000 locations depending upon price. ... You

example, owns about 1 million acres in the

have to decide at what point you want to limit

Permian region, an undoubtedly large position.

the number of rigs you want to put to work

However, the company has not developed its

when it becomes really a very large number

acreage as extensively as some others, and

operationally and from an efficiency standpoint.

has only received 734 drilling permits from

... You may have an overall plateauing from the

the Texas Railroad Commission in the past six

Permian Basin at that point simply because

years.

others might not be in that situation.”

Birmingham, Ala.-based Energen Corporation

“Now that said, Permian Basin production at

(ticker: EGN), by contrast, currently owns just

that time will be multiples of what it is today. It’s

under 150,000 acres, but has received more

going to lead the United States in a very strong

than double the amount of permits Conoco

position from the standpoint of oil exports and

has received.

their importance in terms of the global energy picture,” Dove said on the company’s Q3 conference call.

For the latest, in-depth coverage of all things Oil & Gas, visit www.oilandgas360.com.

is an 80-yearold technology driven company that is acutely focused on helping petroleum and natural gas producers boost shareholder returns by offering major improvements in two key areas: reservoir description and production enhancement.

WHITING PETROLEUM has led the industry for years as one of the top two oil producers in the prolific Bakken/ Three Forks light oil play in North Dakota. Whiting announced in Q3 that it planned for 10% production growth in Q4 2017, with the goal of increasing production to an average 126,000 BOEPD in the quarter.

YUMA ENERGY is a U.S.-based oil and gas company formed in 1983 with a growing position in a relatively unpublicized play within the Permian basin—the San Andres oil play. Yuma's Permian basin acreage position has increased to 3,068 acres (2,685 net acres) in Yoakum County, Texas to horizontally develop the San Andres oil play.

WPX ENERGY has reshaped its holdings through more than $5 billion of transactions and posted double-digit oil volume growth in each of the past four years.

WPX is one of the newest players in the oil-rich Permian Basin since it completed a company-defining acquisition in summer 2015.

ENERCOM360 M A G A Z I N E

5

CANADA ON THE

Running the numbers: Canadian E&Ps are beating their U.S. peers

CANADA ON THE HORIZON

MARKET DISCONNECT CREATES OPPORTUNITIES FOR APPRECIATION Investors are often hunting for a value disconnect with the companies in which they invest. If they believe a company has value the market has not yet recognized, they can invest for less and wait for the value of the shares to grow as the company begins realizing a multiple more in line with what the market is giving their peers.

One of the larger disconnects EnerCom has seen in the markets recently is taking place with Canadian companies.

The average cash EBITDA margin for Canadian E&P companies is 59% compared to 46% for their U.S. peers while the average debt to market cap for Canadian and U.S. companies is 79% and 200%, respectively.

The stronger margins and lower debt are also backed up by good strategy.

Feedback that EnerCom has received from investors indicates that the investment community is looking for capital discipline from the oil and gas sector, even as oil prices improve. Canadian companies have stronger metrics with a net debt to trailing-twelve-month EBITDA of 2.4x compared to a U.S. average of 4.5x.

STRONGER MARGINS, LOWER DEBT Look north of the border.

Research conducted by EnerCom Analytics also found that a large

Looking at the 62 U.S. and 35 Canadian E&P companies tracked in

projected capital expenditures and production growth.

EnerCom Analytics’ database, the average price to cash flow for a U.S. company is 5.3x. The same metric for their Canadian peers is 4.5x, and that comes despite having stronger operational metrics in many cases.

6

ENERCOM360 M A G A Z I N E

portion of Canadian E&P companies are increasing their capital efficiency in 2018 more than those operating in the Permian, based on

“Our North American E&P database is made up approximately of twothirds U.S. companies and one-third Canadian, but our analysis found

Join us in Denver, CO.

AUGUST 19 – 22, 2018

that a disproportionately large number of Canadian companies fall into the group of higherefficiency producers. These are producers which are lowering CapEx while increasing production year-over-year,” said EnerCom Managing Director Aaron Vandeford.

“Despite Canadian E&P companies making up just one-third of our total E&P database, 48% of all the companies lowering their CapEx and increasing production in 2018 are Canadian.”

As energy investors look for smart investment opportunities, EnerCom believes that Canada will become an increasingly important part of the conversation. Highlighted on the following pages are Canadian names which illustrate what efficient and innovative Canadian companies offer investors.

REGISTER NOW THEOILANDGASCONFERENCE.COM ENERCOM360 M A G A Z I N E

7

CANADA ON THE HORIZON

TAMARACK VALLEY ENERGY EXCEEDS EXPECTATIONS ON PRODUCTION AND OIL CONTENT

O

il has proved to be a more resilient hydrocarbon than natural gas in terms of

Canadian companies producing a similar level of liquids

pricing since the commodity crash. Oil prices have slowly recovered from the

have an average cash flow multiple of 4.8x. This is despite

mid-$20 range, and trudged past increasingly encouraging benchmarks, with

the Canadian peer group having stronger balance sheets on

WTI holding above $60 in the first few weeks of the year.

Tamarack Valley Energy’s management saw the writing on the wall and made a conscious effort to shift production toward oil throughout the course of 2017, Tamarack Vice President of Finance and CFO Ron Hozjan said.

“At the 2017 EnerCom conference in Denver, we were very concerned about natural gas prices heading into 2018 and were already talking about redirecting capital away from the gassier oil wells to the oilier oil wells,” explained Hozjan. “We redirected capital to the Cardium at Wilson Creek and the Viking at Veteran, resulting in a higher oilweighting in Q4 2017 and stronger netbacks.”

In the company’s year-end and fourth quarter update, Tamarack reported that its field estimates for December 2017 production indicated the company exceeded guidance and reached 22.6 MBOEPD (56% oil, 62% liquids overall).

Tamarack had been guiding to 20 MBOEPD (52% oil) prior to the release, and with the stronger than expected oil production TVE is now guiding to a 12% to 17% increase in oil weighting for 2018 with operating netbacks expected to increase 12% to 15% compared to 2017.

There is a disparity between oil-weighted Canadian producers and their U.S. cousins, as well. Operators in the United States which produce 60% or more liquids have an average price to cash flow multiple of 6.1x, according to information from EnerCom Analytics.

average as well, with Canadian companies at an average debt to market cap of 96% compared to 109% for the U.S. peer group.

The company is planning ahead to handle this increased production and liquids content as well, with Tamarack announcing it is undertaking a second expansion of its Veteran oil battery to increase capacity to 10 to 12 MBOPD from its current 5 MBOPD capacity.

“This expansion means we have enough capacity to fuel growth for the remainder of 2018 and 2019,” said Hozjan. The battery will also allow the company to reduce operating costs at the corporate level 3% to 5% in 2018 by eliminating trucking costs, and “by controlling facilities in the area we will become the low-cost producer which will enable us to continue to be the consolidator in the area.”

Given current strip pricing and the company’s focus on per-share growth, Hozjan said Tamarack could complete $30 to $40 million of tuck-in acquisitions and still exit 2018 at 1.0x debt-to-cash flow.

Tamarack remains focused on drilling wells which are expected to payout in 1.5 years or less, with a current inventory which could last the company more than seven years. And while oil remains the primary goal, the company is still looking for ways to optimize proceeds from natural gas as well. The company announced it had been selling more of its gas production into markets which have historically outperformed the traditional AECO market.

“Natural gas is a by-product of our oil production for the most part,” explained Hozjan. “Thirtyfour percent of our production come from gas production, but it makes up less than nine percent of our total revenue. Having said that, the initiative to improve netbacks does not stop at reducing costs. We were able to mitigate against gas price weakness and reduce Tamarack’s exposure to pricing at AECO starting in November 2017, and as of April 1, 2018, approximately 40% of Tamarack’s natural gas production will receive pricing from various markets that have historically outperformed AECO pricing.”

8

ENERCOM360 M A G A Z I N E

SURGE ENERGY PURSUES A RETURNS-BASED PROGRAM, WITH SOME ADDED “SIZZLE”

M

any of the companies operating in Canada today are developing unconventional

The majority of the net oil in place across Surge’s assets is

resources, but some are still making a compelling case for conventional rock.

located in the Shaunavon and Sparky plays. These two plays

Surge Energy has operations focused in three key areas: the Valhalla Doig,

Shaunavon, and Sparky resource plays. All three target conventional oil reservoirs with higher permeability than a traditional horizontal unconventional play.

Between the three, Surge averages 82% oil and NGLs on approximately 1.7 billion barrels of net resource in place. Of that net resource, Surge has booked 11.3% recoverable reserves through primary production, and an additional 10-20% can be recovered through waterflood and development. The costs to drill and complete on Surge’s acreage is also significantly lower than for its peers, with well costs ranging from CAD$1.1 to CAD$1.4 million in Sparky and Shaunavon, and CAD$4.0 million in Valhalla.

“Most large companies migrated to unconventional resources as they were looking for scale to support overall larger growth volumes, which has led to opportunities in the conventional space,” said Surge Energy CEO Paul Colborne. “The advantage of unconventional resources are large blocks of relatively more ubiquitous reservoirs. The

offer more than 465 MMBO and more than 500 MMBO of OOIP, respectively. The two plays are similar to each other from an operational standpoint with both producing medium gravity oil (20-29 degrees API), and similar production methods being implemented in both plays.

“The Sparky is shallower than Shaunavon (750m vs 1500m), but we employ monobore horizontal, multi-frac drilling techniques in both fields which reduces rig time and drilling costs,” said Colborne. “And they are close enough that we have operated one rig between the two plays. Surge has also implemented successful waterfloods in both areas.

The Valhalla “provides the sizzle for Surge,” though with 200 MMBO OOIP, explained Colborne.

advantages of conventional reservoirs are much better porosity and permeability, which

“Doig wells are often ranked at the top of the highest

allows for enhanced horizontal oil recovery projects. This also typically leads to overall lower

productive oil wells in Alberta. It is not uncommon for a

development costs, and lower decline rates, higher production efficiencies, and higher profit

Doig oil well to IP above 2,000 BOEPD, with sustainable

to investment ratios (PIR). We believe all of this supports a much more sustainable business

production in the 500 to 700 BOEPD range. With well costs

model,” he said.

in the range of $4.0 million, these wells are among the most

“We are focused on original oil in place (OOIP), porosity, and recovery factors,” explained

capital efficient in all of North America.”

Colborne. “For our company, an ideal acquisition candidate would have 8-plus million barrels

With the company’s unique low-risk conventional resources,

of OOIP per section, excellent porosity, single digit recovery factors, and waterflood upside.

Surge is able to apply unconventional technology to a play

“These types of assets underpin our overall business model at Surge. Our growth rate is largely governed by managing our corporate decline rate below 25 percent. In today’s

which was previously seen as uneconomic and create a returns-based business model.

commodity price and service cost environment, Surge can consistently deliver five to

The company believes it can return 4%-5% dividend yield,

eight percent growth, four to five percent dividend yield, and three to four percent free

3%-4% free cash flow yield, and 5%-7% production growth

cash flow yield.”

annually. Assuming an average 78% risked IRR at US$55

The company maintained a balance between growth through acquisitions and the drill bit since mid-2016 with roughly 52% of the 3.4 MBOEPD of production growth coming from three acquisitions. The company aims to replace its drilling inventory each year, said Colborne, and “as long as Surge can make accretive, large OOIP acquisitions in core areas, then we will remain acquisitive. However, we do retain the ability to grow five to eight percent

WTI and US$3 Henry Hub natural gas pricing, Surge believes it has a ten-year drilling inventory before including potential upside from waterflood, offering investors a unique opportunity through the unconventional exploitation of a conventional resource.

organically on an annual basis as well.”

ENERCOM360 M A G A Z I N E

9

CANADA ON THE HORIZON

RAZOR ENERGY: THE LARGEST MARKET DISCONNECT IN THE ENERCOM DATABASE The most apparent disconnect for a Canadian

The majority of the company’s current produc-

The Canadian junior continues to consolidate

company in EnerCom’s database is with Razor

tion comes from Swan Hills region of Alberta,

its interest in the Kaybob area, announcing it

Energy Corporation. It is one of the smallest

Canada, which has seen a number of trans-

purchased certain non-operated working inter-

Canadian companies in EnerCom’s coverage

actions over the last several years. The most

est positions in two releases, one in December

universe, but no matter how you look at the

recent of those deals, which was announced in

and the other in January, to consolidate its

valuation, and the company’s share price

September 2017, was Pengrowth Energy’s pur-

existing Kaybob Triassic Units 1 and 2 from a

comes up significantly undervalued compared

chase of ExxonMobil Canada Energy’s average

private company. Razor paid $9.5 million from

to its peers.

89% working interest in properties in the Carson

cash on hand in total to increase it’s working

Creek area. That deal went for $29,644 per

interest in both units which are characterized

flowing BOE or $4.84 per BOE of 2P reserves.

by low-decline, light oil focused production

Razor Energy is a light oil-weighted company with 396 gross (227 net) sections of land in its

and abundant infrastructure that directly

Swan Hills/Kaybob core region. The company

Of the five deals that took place in the region

reported 2017 exit production of 4.7 MBOEPD

since July 2015, the average deal metrics is

in January (89% light oil and NGLs) which the

$49,857 per flowing BOE and $9.78 per BOE

company has achieved through a program of

of 2P reserves. Applying those metrics to Ra-

Following the deals, Razor now holds 93.5%

reactivations in the area.

zor’s assets, the company’s implied valuation is

working interest in the Kaybob Triassic Unit #1

$12.96 per share on a flowing BOE basis and

and 100% working interest in Kaybob Triassic

$9.78 per share per BOE of 2P reserves.

Unit #2. Prior to the pair of announcements,

Public companies typically trade at a multiple greater than the PV-10 value of their total proved reserves. Razor, which is backed by

As of December 11, 2017, Razor was trading at

Alberta’s $100 billion AIMCO pension fund,

a $6,168 per flowing BOE and $1.70 per BOE

shares are trading 4.2x below the Proved De-

of 2P reserves, 88% and 83% below average

veloped Producing (PDP) assets, which equate

metrics in the area, respectively.

to $106.7 million or $6.77 per share. Stepping that analysis out further to encompass upside from PUD locations and 2P reserves less the company’s $27.3 million in net debt, the valua-

Looking at Razor Energy’s Canadian peers in the EnerCom database, the valuation disconnect is even wider. By applying a multiple of

tion gap grows even wider.

the average dollar-per-BOE realized by Ca-

On a PV-10 basis, Razor Energy’s shares have

company’s implied share price is $14.36 while

an implied value of $8.01 per share, or 5.0x

applying a similar analysis based on average

greater than where they trade today. This valu-

dollar-per-BOE of 2P reserves implies a value

ation target makes no assumptions of changes

of $10.10 per share. The company’s current

in Razor’s operations or greater market trends.

stock price of $1.80 per share is 5.6x and

Simply by applying a PV-10 value to the com-

7.3x below the implied valuation from applying

pany’s current production and reserves a major

the average multiple achieved by Canadian

disconnect is apparent.

companies on their 2P reserves and flowing

nadian companies to Razor’s production, the

production, respectively.

10 ENERCOM360 M A G A Z I N E

complements Razor’s existing asset portfolio, according to the company.

the company help 52.9% and 43.3% working interest in units one and two, respectively.

U.S. INVESTORS LOOK NORTH IN 2018 As U.S. investors continue to look for companies that offer them strong returns, EnerCom believes that some of the most compelling options will be found north of our international border.

Canadian companies, on average, have stronger production margins, lower debt, and forward-looking plans that match investors’ expectations. Despite that, they continue to be valued at a discount to their U.S. peers.

In Brief

Canada RAZOR ENERGY

Razor Energy is a Calgary-based E&P focused on acquiring and enhancing producing oil and gas properties in Alberta with a portfolio of predominantly light oil assets and abundant low risk operations.

MANITOK ENERGY, LLC is a Canadian oil producer focusing on conventional oil and gas reservoirs in the Canadian Foothills along with crude oil in Southeast Alberta.

THE NEXT GENERATION OF INVESTMENT INTELLIGENCE ADVANCED ANALYTICS AND DATA SCIENCE THAT LET YOU MAKE TRUSTED DECISIONS, IN SECONDS

Hear RSEG present macro-intelligence on February 22 during the EnerCom opening session.

CELEBRATING

BLACKBIRD ENERGY is an emerging Canadian exploration and production company working in the highly prospective Montney play in Alberta. Blackbird is gearing up for development of the natural gas and natural gas liquids from its Pipestone/Elmworth project, where it has 100% working interest in 99.9 sections of highly prospective Montney resource.

TAMARACK VALLEY ENERGY is a Canadian oil company with an asset portfolio that is focused in the Cardium and Viking light oil plays in Alberta and Saskatchewan. The company has assembled an extensive low-risk drilling inventory which offers paybacks of less than 1.5 years and can achieve sustainable growth under low commodity price scenarios.

ENERCOM360 M A G A Z I N E 11

I think a lot of the women coming into the industry now are coming as part of a generational shift.

Women IN

ENERGY Meet Laura Fulton, CFO, from Hi-Crush Partners

T

he energy industry is constantly being driven forward by innovation, and the power behind that innovation is the human element of this business. As E&P companies increase the length and intensity of the fractures to improve their recoveries, it takes well-managed companies to optimize the logistics of the sand going into each well.

In its 2017 edition, Institutional Investor Magazine listed Laura as one of the top-ranked CFOs in the oil-service industry, putting Hi-Crush alongside some of the largest names in the business.

Laura said the announcement came as a surprise to her, but those who work with her say she’s done a great deal to build a corporate culture of openness and accessibility.

Hi-Crush is leading the charge among sand companies helping to improve efficiencies in the oil and gas proppant supply chain, and one of the key leaders developing their innovative business is Laura Fulton.

“Laura is a rare combination of extremely detail-oriented and forward thinking,” Hi-Crush CEO Bob Rasmus said in connection to her award.

“Those two attributes are what make her such a valuable contributor to both Hi-Crush and the oil and gas industry. The award from Institutional Investor just confirmed that the investing public holds her in similar regard.”

Laura’s career took her through a number of companies over the years, including Lyondell Chemical, which offered her the chance to learn a great deal about logistics management, and to gain an understanding of the cyclicality of the energy industry and how companies adapt, she said. The experiences she had working with Lyondell helped prepare Laura for her position at Hi-Crush, and to become a CFO recognized industry-wide for her skills.

12 ENERCOM360 M A G A Z I N E

“We spend a lot of time talking to stakeholders,” explained Laura.

“We’ve established ourselves as a credible spokesperson for the industry, not just for Hi-Crush.

“Investors will call me asking about announcements from our competitors to get my take on it, and I think that speaks to the level of trust we’ve built inside the investment community.”

The effects of the corporate culture being built under Laura extend further than to investors, however. Hi-Crush is routinely in the news as an active participant in the communities where it operates. In 2017, the company’s initiatives included donations to provide a new police dog in Independence, Wisconsin, sand to help keep roads safe in Trempealeau County, Wisconsin, $10,000 to the Kermit, Texas, Independent School District to support the use of technology in classroom instruction and a food drive to raise money and collect canned goods for every community where the company works, among other initiatives.

“We provide a lot of jobs, infrastructure, and capital in the communities where we work,” said Laura. “That also leads to industries such as restaurants and others growing up around us, and we recognized early on that we had a responsibility not just to be there, but to really be an active part of those communities. We work hard to listen to community leaders and think through how best we can serve them. We take that responsibility very seriously.”

This industry is challenging, it’s “ exciting, and it offers the opportunity

to make a real difference in the economy of the United States and the world economy as well.”

In 2018, the goal for the company is execution, said Laura. The company recently opened the first Permian in-basin sand mine to supply the well completion activity in the region, and Hi-Crush expects demand to continue growing.

“There has been fear of too much supply coming online, particularly in the Permian, but we’re seeing the opposite,” she explained. “Demand continues to pull more sand into the market, and pricing remains strong. The logistics of this business are going to get more complex, so we are focused on continuing to reliably serve our customers.”

With the company focused on execution in meeting the growing demands in the industry, Laura plans to continue providing Hi-Crush what it needs to reach that goal. “From my standpoint, that means making sure we have the right people, the right processes, the right systems, and the financial backing in place to make it possible for the company to succeed.”

As Hi-Crush and other industry leaders face new challenges in 2018, increasingly it will be women tackling the associated challenges. “This is a very team-oriented environment,” said Laura. “It takes a whole cast of people to run operations at a well site, and it’s usually a number of companies working together. This industry is challenging, it’s exciting, and it offers the opportunity to make a real difference in the economy of the United States and the world economy as well. It is an industry in which you can apply a lot of creativity, and women have the creativity and the collaborative mindset to be able to add value to their companies while also developing themselves professionally.

LAURA'S BIO Laura Fulton serves as Chief Financial Officer of Hi-Crush Partners LP (NYSE: HCLP). Hi-Crush is a leader in proppant and logistics services to the North American petroleum industry.

Fulton was previously CFO of AEI Services, LLC, an owner and operator of essential energy infrastructure assets in emerging markets. She spent 12 years with Lyondell Chemical Company serving as general auditor responsible for internal audit and the Sarbanes-Oxley certification process, and as assistant controller. Previously, Fulton worked for Deloitte & Touche in its audit and assurance practice for 11 years.

Fulton is a CPA who was graduated cum laude from Texas A&M University with a BBA in accounting. She is a member of the American Institute of Certified Public Accountants and serves on the Accounting Department Advisory Board at Texas A&M University. She is a member of the board of directors of Targa Resources Corp., a leading midstream company in the oil and gas industry, where she also serves on the audit committee and compensation committee.

“I think a lot of the women coming into the industry now are coming as part of a generational shift,” said Laura. “Fathers in this industry want their daughters to have just as much opportunity as their sons, and they’re the ones hiring women and encouraging their daughters to go into the sciences. There’s an attraction to this industry for anyone looking to apply the sciences in creative ways, and women have the right mindset for that work.

“When I go to conferences, I don’t see that many women in the audience, but I am starting to see more. I’m noticing more female analysts working for investment firms and the banks, and it’s just a matter of time until they move up the ladder to being the lead research analyst, or the portfolio manager at their respective companies. I’m also seeing more women on the science side of the industry, and I think it’s the attraction of the challenge this industry offers them.

“I also serve on a board, and while I’m the only woman there now, I am seeing more engagement by boards in looking for diversity in thought. There are more qualified women working in the industry now, and they will continue to take on an increasingly important role in oil and gas development. It will take time, but every year there are more women moving up the ladder, and that’s encouraging.”

ENERCOM360 M A G A Z I N E 13

ENERCOM ANALYSIS The Full Story of Returns in the Delaware Permian oil producers continue to tout enviable half-cycle metrics, but what does the complete picture show?

T

he mad dash of capital into the Permian’s Delaware sub-basin

Cash margins for the group (with realized hedges) average 66% based

over the last two years has been awe inspiring considering the

on the group’s second quarter results. These are impressive results, and

backdrop of oil prices careening down to half their 2014 highs,

investors have been willing to pay for them, but half-cycle results (those

with $50 oil turning into a new normal in 2017.

that exclude F&D) only tell half the story.

Oil and gas companies throughout the country scaled back and put a heavy emphasis on efficiency to survive the downturn, but that didn’t stop an influx of capital into the Delaware that has sent land prices through the roof along with the price-to-cash flow multiples of the companies operating in the region.

Investors continued to look for strong returns in the low-oil price environment, and the stacked pay and impressive well results in the Delaware are prime to deliver on those expectations.

Companies continue to tout EURs in excess of 1 MMBOE and margins for which investors are willing to pay a premium. Looking at a peer group of Delaware players, it becomes clear why operators are willing to spend so much to get a foothold in the country’s hottest basin.

Investors are increasingly focused on the total cost of development, not just the rosy half-cycle picture During EnerCom's August conference, we began to hear an increasing number of investors voice concern that, while impressive, the half-cycle returns reported by companies were not giving them an accurate picture of the companies’ operations. Demand for Permian assets has sent acreage costs sharply higher, and without including the entry cost for their position, companies are not giving the full picture of the cost of each barrel they produce.

Cash Margin %

Cash Margin/BOE

(with realized hedges)

Interest Expense/BOE G&A/BOE OPEX/BOE

Source: Company filings, EnerCom Inc.

14 ENERCOM360 M A G A Z I N E

Delaware wells deliver IRRs greater than 20% even at $40 oil

Adding in F&D costs for the same peer group, the average cash

the region. Those wells have an average estimated ultimate recovery of

margin per BOE produced drops to just 15%. Centennial Resource

approximately 1.2 MMBOE, most of which (average 73%) is liquids. With

Development’s margin disappears altogether, but the company is

those metrics, an $8 million well returns 22% IRRs at $40 WTI, giving

projecting rapid production increase with year-end output at 5.8

credence to the economics that operators in the region report.

MBOEPD and guidance to 60 MBOEPD by the end of the decade.

Also supporting E&P companies’ claims that the region remains one of the most desirable in the country is the fact that future development costs

Cash margins drop from 66% to 15% with the inclusion of F&D costs

are expected to fall considerably as operators focus capital on drilling wells as opposed to buying acreage. Current F&D costs for the Delaware peer group examined by EnerCom was $21.03 per BOE, but future development costs for the group is $9.72 per BOE. The 54% decrease in F&D costs will go a long way in improving full-cycle margins for Delaware

The high price of entry has taken a bite out of companies’ margins,

players, but based on conversations EnerCom has had with the buy-side,

and investors are beginning to look to companies to honestly display

investors are increasingly focused on the total cost of development, and

the costs associated with operations in the Delaware. Half-cycle results

not just the rosy half-cycle picture.

paint a pretty picture, but adding in F&D makes operations in the area appear a little less rosy.

Even though the addition of finding and development costs paints a picture operators are less keen to present to markets, their assets do

For the latest, in-depth coverage of all things Oil & Gas, visit www.oilandgas360.com.

continue to show impressive results. Wells in the Delaware average approximately $7.3 million based on presentations from companies in

ENERCOM360 M A G A Z I N E 15

25 YEARS MAKING IN THE

E

nerCom, Inc. was built with a vision of being a trusted advisor to the global oil and gas industry and its target markets, and a conduit between the upstream and the buyside investment

AN INDUSTRY BUILT ON LONG-TERM RELATIONSHIPS Glen Parrott, Chief Executive Officer of EnerCom, talked about the firm’s

community.

25-year direct connection to the oil and gas industry.

That vision remains as true today as the day EnerCom was founded.

“We are passionate about the energy industry and our clients, and we

Since opening the doors in 1994, the experts at EnerCom have served

work to generate that same excitement in all of the communications

more than 500 clients across the energy space by:

we create for our clients’ targeted markets—whether it’s a new

•

Hosting more than 30,000 institutional investors at 45 oil and gas investment conferences;

website, subsurface illustrations, oilfield services digital

Long term relationships are the heart of the oil and gas industry

•

Designing/writing/publishing more than 100 oil and gas industry annual reports;

•

Designing/hosting more than 85 oil and gas company websites;

portfolio manager or analyst at a targeted financial institution. Our

•

Securing CEO media coverage on CNBC, Fox Business, the Wall Street Journal, other top-tier financial publications, local and regional television, Oil & Gas Investor, and all the trades;

the unique challenges and opportunities of the industry and we know

•

•

Writing and publishing more than 8,000 articles, reports, company investor profiles, and exclusive executive interviews with oil and gas industry leaders on our digital platform – www.OilandGas360.com; Arranging more than 2,000 meetings for management teams with institutional investors in just the past 24 months.

16 ENERCOM360 M A G A Z I N E

marketing, or engaging with a experienced team speaks the language of oil and gas. We understand the equity markets.

“EnerCom is proud to help companies at all stages of growth—from a startup's marketing materials, to an E&P that’s ready to navigate the equity markets with an IPO, to an established national oil company.

Many of EnerCom’s first clients, including Unit Corporation and Core Laboratories, are still actively engaged with the firm today.”

THE ‘HOLY GRAIL’ OF MARKETING: MEASURING THE ROI Being able to measure a return on investment (ROI) is key to marketing

Our high-caliber art department helps clients create branding and visuals that tell their stories in an incredibly impactful way

success. EnerCom works with its clients to measure the capital being invested to reach a company’s target market—whether your key audience is on the investor relations side—buyside investors, portfolio managers and analysts, or if it’s a marketing program that convinces

VISUALS ARE KEY “Visuals play a key role in any story,” said Parrott. “The most compelling

products and services.

message can fall on deaf ears if the graphics packaging around it is unappealing or doesn’t resonate. Our high-caliber art department helps

EMBRACING THE LATEST TECHNOLOGY

visuals that tell their stories in a credible and impactful way."

When the firm started in 1994, EnerCom used what was then cutting-

IT ALL STARTED WITH ONE CONFERENCE IN DENVER

E&P decision makers to choose your company’s drilling and completion

clients create branding, technical illustrations, presentation slides and

edge technology – Investor Kits on CD-ROM – to help clients reach their target markets. Today, the firm employs all available tools including

Over its 25-year history, EnerCom has hosted more than 45 oil and

social media and sophisticated digital marketing to help clients achieve

gas investment conferences and arranged tens of thousands investor

their communications and sales goals.

meetings across the United States and Europe. EnerCom hosted its first investment conference 22 years ago in Denver, after listening to clients

SERVING CLIENTS AS A CONDUIT TO THE DECISION MAKER

say they wanted a better platform to tell their stories.

EnerCom utilizes its proprietary channels to help clients meaningfully

OILFIELD TECHNOLOGY CONFERENCES

execute on target marketing objectives: •

Each year, the firm hosts two industry-leading investment conferences – in Denver and Dallas.

•

EnerCom recognized a need for oilfield service and technology companies to have a differentiated platform. In August 2017, EnerCom hosted its first Oilfield Tech & Innovation Conference with leaders like

EnerCom communicates daily industry news to an audience of

IBM, Flotek, Liberty Oilfield Services and the technology venture groups

40,000+ industry and investment professionals through its online

of Shell, BP and Saudi Aramco.

industry news portal, Oil & Gas 360®.

•

Every day we communicate directly with key oil and gas and financial industry leaders with our popular end-of-day “Closing Bell” report, the weekly oil and natural gas inventory reports, the daily earnings calendar and client-sponsored direct email marketing.

25 YEARS AND GROWING With 25 years in the books, EnerCom stands at the leading edge of communications in the oil and gas industry. We have one goal: to

connect our clients with the people who can most impact their success.

RIENDS MILY & F A F W E NERCOM'S NE

ENERCOM360 M A G A Z I N E 17

Where companies have been producing 8% to10% of the resource in place – we have been able to get that to 13% to 15% of the oil in place.

CORNER

- Larry Bruno President, Core Laboratories

CORE LABORATORIES: Embracing UNCONVENTIONAL EOR with Engineered Gases

D

rilling and completion work is a tremendous feat of engineering, particularly when you consider that it happens beneath our feet where it is impossible to see equipment and processes at work with the naked eye.

Despite evolving completion formulas and operators improving mechanical techniques for extracting hydrocarbons from tight shale rocks, the fact of the matter is shale operators are still only producing a fraction of the resource in place through today’s primary recovery methods.

To help operating companies get more hydrocarbons out of their reservoirs, Core Laboratories has developed a number of technologies to help their clients get the most accurate understanding of the subsurface landscape. One of Core Lab’s newest technologies is an enhanced oil recovery (EOR) technique for unconventional resources.

“The ultimate goal behind traditional EOR programs in conventional reservoirs is to push hydrocarbons from an injector well into a producer well,” said Core Laboratories President Larry Bruno. “When we tried that in the laboratory with samples of unconventional reservoir rock we were unsuccessful because the rock is too tight.”

WITH OUR NEW APPROACH, WE ARE NOT TRYING TO DISPLACE LIQUIDS THROUGH THE PORE STRUCTURE. “We found out that if we looked closely at the fluid properties of a particular reservoir we could come up with certain recipes of engineered gas that could strip components of the oil and put them into the gas.

The key difference here is we are not trying to drive oil droplets,” explained Bruno. “We are trying to strip components out of the oil, entrain it in the gas, produce that enriched gas, drop the pressure, and catch the liquids that fall out.”

18 ENERCOM360 M A G A Z I N E

WE ARE TRYING TO STRIP COMPONENTS OUT OF THE OIL, ENTRAIN IT IN THE GAS, PRODUCE THAT ENRICHED GAS, DROP THE PRESSURE, AND CATCH THE LIQUIDS THAT FALL OUT. This technology has worked in many, but not all, tight resource plays where Core Lab’s clients have asked the company to investigate the feasibility of using unconventional EOR. “A good rule of thumb is – where companies have been producing eight to ten percent of the resource in place – we have been able to get that to thirteen to fifteen percent of the oil in place,” said Bruno.

Once Core has helped the operator determine the right engineered gas for the well or specific target zone, at the wellhead, operators will need a compressor system to inject the gas and a separator at the surface to catch the produced liquids.

DOESN’T TRANSFORM THE ROCK As impressive as the laboratory results can be for a client, unconventional EOR is not magic, cautioned Bruno.

"CORE LAB IS NOW LOOKING AT MICRO-PROPPANTS IN THE 200 TO 400 MESH RANGE WHICH CAN PROP OPEN SECONDARY AND TERTIARY FRACTURES, ALLOWING FOR MAXIMUM AVAILABLE SURFACE AREA, AND THUS ENGINEERED GAS-TO-OIL CONTACT.” – Larry Bruno, President Core Lab “There simply may not be enough stimulated rock volume. You have to get fractures opened up and propped, get the right engineered gas into the fractures and get the injected gas in contact with as much surface area as possible. That leads to what size proppant to use, so Core Lab is now looking at micro-proppants in the 200 to 400 mesh range which can prop open secondary and tertiary fractures, allowing for maximum available surface area, and thus engineered gas-to-oil contact.”

SHALE OPERATORS NEED TO PLAN FRACS AND COMPLETIONS IN ADVANCE TO MAXIMIZE ENGINEERED GAS EOR A number of other factors in the completions process need to be taken into consideration as well, explained Bruno. The ways in which the wells are fractured need to be considered to optimize the EOR process, and the unconventional EOR process also brings up new time considerations for operators.

“There are a number of time aspects to this process that clients need to consider,” said Bruno. “Most traditional EOR programs in conventional reservoirs start late in the life of the resource, but some of the work we are doing suggests that may not be the case here. “It may be advantageous to start that process earlier. Ultimately, operators are going to look at their decline curves with our consultation and ask at what point in the well’s production makes the most sense to start the engineered gas cycling. And, finally, each time you inject engineered gas and strip out some of the oil, you change the composition of what’s left in the ground a little bit. At some point, there are diminishing returns.

So there’s an economic question as to how many times you can do this process efficiently.

“When do you start the process? How long do you let the engineered gas sit? How many times can you cycle the engineered gas. Those are three time elements that have to be addressed for unconventional EOR, and one answer will not fit all zones or resources,” Bruno said.

CORE LAB RECREATES THE SPECIFIC RESERVOIR CHARACTERISTICS AND CONDITIONS IN THE LABORATORY To help their clients understand the potential uplift they could see in their resource from the use of unconventional EOR, Core Lab recreates the client’s specific reservoir characteristics and conditions in their laboratories and conducts fluid and rock tests to find the optimal engineered gas. Taking Core Lab’s research back into the field is not a direct translation, however, with some factors changing in the field.

“In the laboratory, the process is under very controlled conditions.

We take the rock sample, we put it in specially-designed core holder, we injected the gas and we have total containment of where that gas is going. The subsurface is much more complicated. There are natural and induced fractures, faults, and other potential leaks in the

reservoir. In order for unconventional EOR to work, the operator needs the engineered gas to go into the target zone, then the gas must reside in that zone of interest for some period of time, and, finally, the enriched gas must be available to be produced back to the wellbore and eventually to the surface. Containment has to be addressed and considered,” said Bruno.

DIAGNOSTIC TRACERS “One of the other places Core Lab is working with its clients is in using its diagnostic tracer business, which does completions diagnostics.

By putting diagnostic tracers into the injected engineered gas prior to injecting it into the subsurface the operators can see if it is leaking into other wellbores or stratigraphic horizons. That’s where we are bringing our Reservoir Description and Production Enhancement businesses together to help our clients better understand how to deploy an effective unconventional EOR program in the field. “These formation-scale leaks are not scalable to a plug in the laboratory,” Bruno explained. Core continues to work with clients to understand how this new technology can be refined, and larger-scale questions will be answered in practice.

“In unconventional EOR programs the field will eventually become a laboratory itself,” said Bruno.

JOIN US IN DENVER. AUGUST 23, 2018

TO REGISTER PLEASE VISIT

OTICDENVER.COM

ENERCOM360 M A G A Z I N E

19

TRENDS TO WATCH Oil & Gas 360® keeps a close eye on developing trends that affect the industry, and 2018 is poised to be a year of tremendous impact. Some of the ongoing storylines we’re watching are highlighted below.

THE PRICE OF OIL

Check in at www.oilandgas360.com for updates on these and other trends via our daily industry coverage.

Last year saw oil prices creep upward from the bottom barrel decline that started in

Use of advanced technologies, equipment and

2014, where oil in the $20s and $30s earmarked a period of wild price volatility. In 2017

big data will continue to boost efficiency in drilling and

prices finally reached levels above $50 per barrel. Reports that the OPEC/non-OPEC

completions, adding to overall production from the

producer group would continue their production cuts and agencies predicting a bleed-off

U.S. shale basins in 2018.

of the global oversupply resulted in a steady climb in oil futures in the second half of 2017 that elevated oil to the high $50s.

EFFECTIVE RIG COUNT: A new

Then the news got better. After the new year the rally kept going, with WTI trading above

context, using production efficiency gains.

measure of activity that puts rig count in

$62 and Brent above $68 per barrel in early January.

In this environment of new efficiency, how relevant is the Read more about movements in the price of oil on Oil & Gas 360®.

simple rig count—the traditional benchmark of activity

DRILLING FASTER, SMARTER, MORE EFFICIENTLY:

that the industry has used for a century?

Shale operators turn new technology into higher production per well.

During the oil price downturn that began in 2014, the shale industry mostly hunkered down, with most companies slashing drilling activity in 2015 and 2016. There’s no doubt a 50% drop in the price of oil caused a tough two years, but the low commodity prices also created records as to high-efficiency in operations throughout the industry.

The shale industry proved it could survive, even make money, with oil in the high $40s and $50s. New extraction technologies came to market throughout the downturn helping operators create higher production from the wells they drilled. Longer laterals, more sand, use of advanced chemistries and employing big data at the well site all impacted the industry in 2017. High efficiency drilling chopped drill times from weeks to days. All of a sudden shale operators were producing considerably more oil and gas from fewer wells.

20 ENERCOM360 M A G A Z I N E

In 2017, EnerCom saw what was happening to productivity reported by shale operators. Our analysts looked at the traditional rig count provided by Baker Hughes for decades, but we wanted to know how much oil is being produced as a result of the drilling activity. What came from the analysis was the EnerCom Effective Rig Count (EERC).

Different from simply adding and subtracting rigs from various plays on a weekly basis—which is still a primary indicator of industry activity—the EERC also factors in the production from the primary U.S. shale basins.

From

®

OIL & GAS 360 The EERC accounts for the effects of new efficiencies in drilling and completions by bringing barrels of oil produced into the equation. The EERC uses Jan. 2014 as its baseline, before the OPEC price crash and before high-efficiencies had become the driver of success for shale operations.

Once a month, the EERC converts the U.S. rig count to “2014 efficiency standards” by comparing production per rig then and now.

From the vantage point of 2014’s drilling technology, 2017’s mid-December U.S. rig count was 930. In terms of 2014 drilling productivity, the number of rigs required to achieve today’s production would be approximately 2,300.

Read more about ENERCOM’S

EFFECTIVE RIG COUNT HERE.

EQUITY MARKETS FINALLY OPEN UP During 2016 and the first half of 2017, energy IPOs were being canceled. Alternative debt financing had become common place as a source of capital for the energy industry. Equity offerings for the oil and gas space seemed to be a thing of the past.

But when Q4 2017 rolled around and oil found a less volatile range between $55 and $58, new

public offerings began to emerge. By late in 2017, the price of oil held steady in the upper $50s from early November through December. That level supplied the magic sauce that restarted the flow of public energy capital into oil once again.

WILL OIL COMPANY PROFITABILITY CONTINUE? Not only had North American shale operators learned how to survive in lean, uber-efficient drilling mode at $50 WTI, some producers had figured out how to make money. By the time 2017’s third quarter earnings season rolled around, shale producers were reporting profits, an uncommon event since the price downturn.

2017: THE YEAR OF THE PERMIAN If you are going to drill and produce oil from a shale basin, the Permian basin is the place to be— the basin contains up to 20 billion barrels recoverable in the Wolfcamp shale, according to the

USGS. Recent estimates say the Permian rivals Saudi Arabia’s legendary Ghawar field for remaining recoverable resources.

With its multiple oil-heavy benches, proximity to crews and equipment, even quantities of readily available in-basin frac sand, the Permian basin quickly became the darling of the industry and those who invest in it.

There are 566 companies holding acreage in the Permian basin. For December, the EIA puts Permian production at a projected 2.7 million barrels of oil per day and 9.2 billion cubic feet per day of natural gas.

AWARD WINNING ANNUAL REPORTS www.enercominc.com

ENERCOM360 M A G A Z I N E 21

WORLD ENERGY NEWS OPEC EXTENDS COMMITMENT TO PRODUCTION CUTS

The field holds an estimated 20 Tcf of natural gas 120 miles offshore

OPEC’s 173rd regular meeting concluded with an announcement that the

350 MMcf/d, with production volumes on the $12 billion project

group, along with several non-OPEC members including Russia, would

expected to reach 2.7 Bcf/d by the end of 2019.

extend their production cut program until the end of 2018. Oil prices have

Egypt and could allow the country to switch from a net natural gas importer to an exporter. Test production levels for the project reached

with the production cut deal, and the group is bullish on 2018.

CANADIAN NATURAL GAS PRODUCTION CONTINUES TO GROW

Saudi Arabia, OPEC’s largest producer and de facto leader, is reportedly

Marketable natural gas production in Canada totaled 13.4 billion cubic

becoming more aggressive about increasing prices as it looks toward

meters in September, up 3.6% from the same month a year earlier,

continued to rally as OPEC and non-OPEC partners continue to comply

putting a portion of its national

Canada’s statistics bureau reported

oil company, Saudi Aramco, up

in December. Alberta alone delivered

for an initial public offering.

natural gas amounting to 136.9 million gigajoules in August. 95.3%

U.S. LNG CONTINUES TO EXPAND GLOBAL REACH

was delivered to the industrial sector and these deliveries accounted for 56.4% of the natural gas consumed in Canada. Natural gas exports by pipeline to the United States were

LNG projects came online in

down 2.8% year over year.

2017 as companies look to

CHINA AND INDIA ARE EXPECTED TO DRIVE GLOBAL ENERGY GROWTH MOVING FORWARD

provide a growing demand for fuel, particularly in growing economies such as China and India.

As year-end approached, cargo loadings at Cheniere Energy’s

Because of the size of their

Sabine Pass terminal were

populations, China and India play

building to roughly 15 million

instrumental roles in determining

tonnes. Russia’s Yamal LNG

worldwide energy consumption

project began loading cargoes

trends. According to the EIA, China

as well, with the first cargo

has been the most important country

loading aboard an ice-breaking

for growth in world energy demand

LNG transport vessel while Russian President Vladimir Putin joined in watching the first loading of

over the past several decades with the energy agency routinely revising up annual growth numbers.

the US$27 billion project. Chinese demand for LNG continued to grow with monthly imports at the end of 2017 running 25%+ above the levels

While India’s growth has historically been smaller than China’s it is still

seen in 2016.

expected to grow into a major global energy demand center. Higher economic growth in China and India benefits their trading partners,

ENI BRINGS 30 TCF ZOHR FIELD TO PRODUCTION AT LIGHTNING-FAST PACE

potentially leading to total world energy consumption of 755 quadrillion BTU in 2040.

Eni announced first gas from the Zohr field December 20, 2017, marking one of the fastest development processes of an offshore field in recent years.

22 ENERCOM360 M A G A Z I N E

For the latest, in-depth coverage of all things Oil & Gas, visit www.oilandgas360.com.

S IMPLIFY

Your Sand Supply

MINE.

MOVE.

MANAGE.

MINE…

High-quality sand at one of our five production facilities, four providing premium Northern White sand along with the Permian’s first in-basin sand facility at Kermit, Tx.

MOVE…

Sand from railcars to silos at our strategically located, owned and operated, in-basin terminal network.

MANAGE…

Transportation and delivery of sand the last mile into the blender at the well site, safely and efficiently, any way you need it with PropStream™ logistics service.

Hi-Crush can Simplify Your Sand Supply. Learn more at

HiCrush.com/propstream 23 ENERCOM360 M A G A Z I N E 23

24 ENERCOM360 M A G A Z I N E