[toolpush]

Rocdoc,

I suppose I didn't layout my reply out very well. I gave figure for 4 shale plays but did not define which were oil and gas and which were many gas with a bit of NGL.
Bakken = oil and associated gas
Eagle Ford = Oil and associated gas
Marcellus = Dry gas + wet gas, NGL by product
Utica=Dry gas + wet gas, NGL by product

So my point was that the gas plays, Marcellus and Utica have added 4.1bcf/d at a current price of $1/mcf. While the two main oil shale plays have added 1.65 bcf/d, with $3 /mcf for Eagle Ford and heavy regulation driving the Bakken.
To me it is a stand out that the Marcellus/Utica is driving the gas price,and as the pipeline build out and reversal program expands the prices equalize. Of course the unknown is, when do these gas plays hit the wall? I believe we will have to wait and see for that answer, but if the high yield junk bonds, starts to play a big part in the drilling market, it maybe earlier than some people expect.

[toolpush]

http://phx.corporate-ir.net/External.Fi ... U9MQ==&t=1

Baker Hughes rig count
US down 74, mainly Texas down 44

[ROCKMAN]

Who better to estimate future drilling activity then one of the largest players. Here's just the immediate response of Schlumberger to the price collapse. In addition to Halliburton already announcing thousands of layoffs there are many thousands of small oil patch you've never heard of (and never will) cutting back or shutting their doors completely.

"We believe that upstream capex cuts of 20% and above are likely. Schlumberger has been taking a number of actions to restructure and resize the company to better face the downturn. The company noted that it will reduce its overall headcount by around 9,000 to better align with anticipated activity levels for 2015. Additionally, the company has taken a record number of charges during the quarter including a $199 million pre-tax charge related to the write-down in the value of a production management project in the Eagle Ford Shale, an $806 million charge relating to the restructuring of its marine seismic operations, and a $296 million charge relating to the headcount reductions. The company will also be reducing its capital expenditures."

And these are just the dirt steps. If prices stay low throughout the year imagine what will happen during the second half of 2015.

[toolpush]

Hello Rockman,

Have not seen you around much lately, busy buying up those distressed companies I guess, lol.
I see the Eagle Ford is down 12 rigs this week. Is this related to what Schlum are talking about in their write offs, or that this is just the beginning.

"Additionally, the company has taken a record number of charges during the quarter including a $199 million pre-tax charge related to the write-down in the value of a production management project in the Eagle Ford Shale,"

[shallow sand]

Toolpush. I'd say Rock is pretty busy on something. I'd also bet that if WTI stays below $50 for several months, lots more cuts will come. I think most are hoping on a summer driving season turn around combined with US and Canadian production hitting a plateau. Maybe throw in an OPEC cut at their June meeting. We can only dream.

[toolpush]

Shallow,

Yes I am sure he is busy, sharpening pencils, no doubt. It is very interesting time we are all living in. I have seen where you explained your current circumstances. My circumstances are also shaky, not knowing what is going to happen day to day.
It would be nice to US shale production start to fall, and the oil price start to recover, as it surely has to, unless the world is coming to an end as a lot around here believe.

[ROCKMAN]

Don't use pencils anymore...smart enough after 40 years to go straight to a pen. LOL. Been doing perf jobs and running cbl's. I spent 1,200 miles on the road just last week. I actually need to be spending more time on the computer looking for those buying opportunities.

The layoffs now were planned months ago. The service companies were being told by operators since last spring to expect a slow up in 2015. The only unknown was how bad it would be. And we're stilling waiting to find out. Though the numbers might sound big they're just a small % of the Big Boy workforce. But for every one of those hands cut loose there are many times that number cut loose from the small contractors. Folks outside the oil patch don't realize that for every Schlumberger there are tens of thousands of small oil patch companies they never heard of. In fact, I might bet lunch that Shallow and the pusher can't name one company that does lease brokering. For those that don't know even when a biggie like ExxonMobil wants to lease 10,000 acres from 300 different landowners their land dept will contract with a lease brokerage to put their boots on the ground to get those leases negotiated. You won't see it in the MSM but hundreds of independent landmen have been put on notice: the end is here. It takes a while to slow down drilling activity. But leasing drilling rights? A $20 million leasing budget can be immediately cut to $zero in a one hour meeting. I've seen such many times in the last 4 decades.

[Subjectivist]

For those that don't know even when a biggie like ExxonMobil wants to lease 10,000 acres from 300 different landowners their land dept will contract with a lease brokerage to put their boots on the ground to get those leases negotiated. You won't see it in the MSM but hundreds of independent landmen have been put on notice: the end is here. It takes a while to slow down drilling activity. But leasing drilling rights? A $20 million leasing budget can be immediately cut to $zero in a one hour meeting. I've seen such many times in the last 4 decades.

There was a blurb on the news a few weeks ago here in Ohio, some big leasing company was laying off all of their contractors and part of their staff because they hold all the leases they expect to be able to sell for the foreseeable future. Is that the kind of effect you are talking about here ROCKMAN?

[ROCKMAN]

sub - Exactly. In the hierarchy of the "expendables" the lease acquisition bodies go first. Then the salesmen for the service companies. Then the in house consultants. Then the service company boots on the found. Then the energy company exploration staffs. Then exploration management. And then, if matters stay bad enough long enough: most of the energy company staff. The best survivors will be the production geologists/engineers who know how to squeeze a nickel hard enough to make the buffalo sh*t.

The Rockman is an expert at making buffs poop. LOL. Hopefully that will be good enough. We had already cut our two exploration hands loose a year ago. As I've said before this ain't my first rodeo. The future was predictable. The only question was when that other boot would start dropping on peoples' neck.

[rockdoc123]

I hope that this time around the larger oil companies are a bit smarter about who they layoff. Back in the eighties crash a lot of them just took the view that anyone over the age of 50 was cannon fodder. This backfired considerably in the ensuing years given that it was the older chaps who were mentoring and training all of the youth. At the time I remember a study done that showed the age distribution of oil company professionals had two peaks separated by about 20 years. With no old hands left in the larger companies they ended up repeating mistakes and the young chaps had to basically train themselves. Probably lost 5 - 10 years of effort because of a lack of understanding as to how it all works.

ON a lighter note on my bookshelf in my home office I have a bumper sticker I acquired back in the eighties crash. It says " Please God, let there be another Oil Boom, I promise not to piss it all away this time". Truer words never spoken and I don't know one person who actually didn't do their best to piss it all away the next time!

[shallow sand]

We didn't pee it away. Paid off all debt and stockpiled cash. Trying to decide whether to shut money losers down. Can always crank back up if price comes back and also if royalty folks start to complain.

Biggest concerns are world economy and Iraq. If world economy is going to require less oil, could be big trouble. If Iraq continues to ramp up production, could keep prices low.

We saw price drop coming in the summer, but didn't think we would go this far down. I thought $60s. Now wishing we could get to that. Would be easier at 60 than 40 by far here. Read where both Shell and ConocoPhillips chiefs also quoted surprise at how far dropped. Guess in good company. LOL.

[toolpush]

BHP is dropping 10 rigs out of southern Texas.

http://www.cnbc.com/id/102353443

BHP Billiton slashes shale drilling amid oil crash
BHP said it would pare the number of drilling rigs it is using to 16 from 26 by June 2015 and would update the market on its revised shale drilling budget, originally set at $4 billion for this financial year, in February.

It plans to focus on drilling in the liquids-rich Black Hawk basin, while cutting back in the Permian and Hawkville acreage.

"BHP's announcement to cut the rig count by 10 down to 16 is roughly in line with general expectations given the precipitous fall in oil and natgas prices as well,"

Some other news that you will not read about any where. The little company that i work for, with 3 rigs, one on contract, two warm stacked, has just about to lose its working contract, due to "Low Oil Prices" after they finish the two completions they are currently working on. As I understand it, all three are going to be cold stacked.
So at the moment, I am not sure if I am going back to work for most likely to be my last or not. That is the oilfield.

A point of interest. I consider the Thanksgiving day price drop as pivot point. I checked my Linkedin page, where i had bean receiving a constant flow job offers and invitation requests from recruiting agencies. My last job offer was on the 2nd Dec and last invitation was 16th Dec. It is amazing how quickly the industry can swing.

[shallow sand]

Sorry to hear that Toolpush. Hopefully this thing won't last very long. It seems strange to me the price is this low.

[toolpush]

Thanks Shallow,

I don't think too many in the oilfield will be left unaffected by this little down turn. I am just hoping that it is going to be short and sharp. In a way, I hoping for the price to drop further, as the more the oil price falls the faster everybody should wake up to themselves how unsustainable the current price is for consistent oil production.
I realize you are also not in a good position, so we are in this together.

[ROCKMAN]

Pusher - Sorry to hear. Not that you'll look forward to it but any opportunity to slide down the pyramid? For you other folks: when the bust comes a hand like our pusher who gained that title by years of hard work sometimes are offered a position that normally had been reporting to him. This way a drilling contractor can hang on to experience for hen the tide turns. Of course the money won't be the same.

What will happen if this but last too long many of us gray hairs won't be around when the tide does turn. One of my lesser responsibilities in my new auxiliary gig will be training some young ones. Unfortunately you can only teach so much at a theoretical level: it's no substitute for the real thing. That's especially true at the pusher's end. You can read all you can about pushing dumb iron around but you only really learn on the drill floor like the pusher did. No computer is ever going to match his abilities.

[shallow sand]

The boom and bust really hurts when it comes to trying to maintain a solid workforce. 1986-1998 pretty much screwed up things in that regard, and events like the present do not do that issue any favors either.

Toolpush, I have thought the same as you regarding having the price drop into the 30s or 20s on WTI. However, I think if everyone onshore lower 48 is honest with themselves, the current price does not work for much, and definitely not for a high majority of the LTO wells in EFS, Permian and Bakken. Also, hedges are going to draw this thing out a little longer, IMO. That and the fact that a lot of LTO debt principal is not due until 2020 and beyond.

Hoping for 2008-2009 and not 1986-1998.

[toolpush]

Shallow,

As for the shales not working at these prices, have you read today's RBN.
I marvel at their calculators. They seem magical to me, but it won't be too long before we see who is swimming naked.
https://rbnenergy.com/rig-cuts-deep-out ... on-in-2015

[shallow sand]

They apparently have not drilled their best locations yet and are now going to do so with prices 60% off of the 6/14 highs. Makes a lot of sense (sarcasm).

[dashster]

Does anyone understand this post regarding fracking, rigs and pad drilling.

http://petroleumtruthreport.blogspot.co.uk/

It says the average rig on a "pad" drills three wells on average and says that means that each rig going away means you lose 3 wells, not one. But the rig can't be drilling all 3 at the same time can it? Whether they drill 3 wells from a single location or 3 locations, don't they all have to happen sequentially? I don't get it.

[Tanada]

http://phx.corporate-ir.net/External.File?item=UGFyZW50SUQ9NTY2NzA4fENoaWxkSUQ9MjY3MDU0fFR5cGU9MQ==&t=1

Baker Hughes rig count
US down 74, mainly Texas down 44

http://phx.corporate-ir.net/External.Fi ... U9MQ==&t=1

Down another 43 in the USA putting us 144 down from a year ago this week.

Texas is down 13
North Dakota down 9
Oklahoma down 8