Hilcorp Energy Acquisition
Well now, Jeffery Hildebrand (a Houston, TX native, I might add) just announced dat his company, Hilcorp Energy Co., is fixin' to buy up a whole mess of older Alaskan wells and pipelines from BP Plc for about 5.6 Billion dollars. BP held onto dem assets for more than 60 years, yessir. But as folks got more fired up about shale oil production down in the Permian Basin, they started lookin' away from dem older, “traditional” ways of pullin' oil. A mighty high decline rate in dem shale wells is what's got investors sweatin' the most. Some numbers show dese wells can lose up to 70% of their production in just the first year of runnin'. 'Cause of dat, folks gotta keep pourin' money in to find and drill new wells all the time. Now, you compare dat to conventional wells, and they say dem only lose about 5% a year.
Even though shale plays got a bit of a bad name, it looks like they've done a mighty fine job calmin' down the market volatility. I reckon dat oughta lead to more stable prices down the road. The chances of shale wells breakin' even (or even makin' a little money) in dat $50-$60/barrel range have gone up for a few reasons. Mainly, it's costin' less to drill new wells, and they can get 'em pumpin' online right quick, which sure helps keep the profits steady.
Relief Down In The Permian
Looks like dat long-awaited relief for the bottleneck in the Permian is finally in sight, I tell you what. A second pipeline out of the basin came online back in mid-August, and Moda Midstream over in Ingleside, Texas, is set to take dat crude from EPIC Midstream. Now, puttin' the supply picture aside, the biggest worry for keepin' prices steady movin' forward is gonna be what the whole world is demandin'. Folks frettin' over recessions in certain countries is gonna mess with the pricing. While retail sales and jobs here at home are still lookin' mighty good, some of dem economists are scared we might've already slipped into a manufacturing slowdown.
A Little Note About Hurricane Dorian
For y'all who live down in Florida, or know folks who do, Hurricane Dorian has gone and changed its path. They're reckonin' it's gonna make direct landfall in the sunshine state without a thing to slow it down, which means things could get mighty devastating. Y'all stay safe out there and take the right precautions, you hear!
Come find out more about what’s happenin' in the world of Oil & Gas with our other industry updates right here:
June – US/Iranian Conflict , September – Saudi Oil Attacks , November – Delays, Restriction, & Costs
