Devon Energy Corp., the energy producer that’s targeted $3 billion of asset sales to fund drilling and lower debt, agreed to sell fields in Texas and Oklahoma and a royalty interest in the northern Midland Basin for almost $1 billion to undisclosed buyers. The largest transaction was for reserves in East Texas for $525 million, the Oklahoma City-based oil and natural gas producer said in a statement Monday. The company also agreed to sell its position in the Anadarko Basin’s Granite Wash area for $310 million. The transactions are expected to close in the third quarter. While energy prices have rebounded somewhat in 2016, Chief Executive Officer Dave Hager said last month it’s still not enough for Devon to grow production again. “We expect the market to react positively to this news as there was some concern that the sale program would not be executed successfully.”

The number of rigs currently searching for Barnett Shale natural gas has plummeted to zero. We can’t remember when no rigs have been working in the Barnett.
The days of $13.00 per MMBtu natural gas have been over since 2008. With current gas prices near $2.00 per MMBtu, it may be a long time before the industry sees a return to prolific natural gas shale drilling.

Effective immediately, Anderson’s Drilling Reports is pleased to announce that each of our permitted well sites and rig locations in Texas, New Mexico & Oklahoma have GPS coordinates (lat/long) included in their descriptions. Subscribers can copy/paste these GPS coordinates into mapping software of their own choice or can simply click on the provided GPS coordinate and our software will take you to the identified well site in our system using Google Maps. A subscriber can then plot driving directions from their personal location to each requested well site or rig location.

Good news for energy producers across the United States, the 40-year-old ban on crude oil exports has been lifted. It was all part of a spending bill signed by President Obama. It’s a big win for political conservatives and the oil industry who have been fighting to lift the ban for nearly two years. The ban was put in place after the Arab oil embargo in the early 1970s, after congress became concerned about US dependence on imported oil. Supporters of lifting the ban say it will increase US oil security and give the country and it’s allies an alternative source of crude. Drillers say it’s an important victory at a time when oil production is facing uncertainty.

Don’t count the Delaware Basin out just yet. Tulsa-based WPX has agreed to buy certain Permian Basin assets from Oklahoma City-based RKI Exploration & Production for $2.75 billion in cash, stock and debt. WPX executives said the company plans to keep RKI’s Oklahoma City and New Mexico offices and their employees. RKI has about 100 employees in Oklahoma City and 30 in Carlsbad, N.M. “RKI is highly attractive to WPX due to its core acreage, it’s substantial gas gathering water transfer infrastructure with excess capacity and a proven operational team that will remain in place,” WPX CEO Rick Muncrief said during a conference call Tuesday. “I simply can’t wait to get our hands on these assets.” The deal is expected to close in the third quarter. Most of RKI’s assets are in Loving County, Texas, and Eddy County, N.M, in the Permian Basin’s Delaware play. The assets produce 22,000 barrels of oil equivalent per day over 92,000 acres with more than 3,600 gross drilling locations. The production is about 53 percent oil, 16 percent natural gas liquids and 31 percent natural gas. “We weren’t looking for just any opportunity. We’ve been looking for the perfect fit,” Muncrief said. “We have charged our team with finding a new basin that could add the best returns to our portfolio, and everything pointed to the Permian, an incredibly hydrocarbon-rich environment characterized by stack play reservoirs, extensive production history, long lived reserves and high drilling success rates.” Under terms of the deal, WPX agreed to pay $2.35 billion in cash and stock and assume about $400 million of RKI debt. The deal comes at a time when much of the oil industry has been stalled by oil prices that are about half of what they were one year ago. “I said in last quarter’s conference call that opportunities will abound for well maintained, financially strong companies with a clear and compelling business strategy,” Muncrief said. “All the progress we’ve made focusing our business and strengthening our balance sheet has allowed us to be opportunistic. “Today, we’re a company out front. As with any business, the time to buy is when prices are down. When oil prices are strong again, we probably won’t be buying, we’ll be drilling.” RKI’s top three executives, including founder and CEO Ronnie K. Irani, will stay on as consultants during the transition, WPX said.

AUSTIN – Commissioner David Porter was unanimously elected Chairman of the Texas Railroad Commission today at the Commission’s open meeting. “As Railroad Commissioners, it is our job to make sure industry produces efficiently and economically, and does so in the safest, most responsible manner possible,” Porter said. “We meet our responsibilities at the Commission – we’ve been doing it for over a century – and I am honored to serve as Chairman during this important time for our State. “I also want to thank Chairman Craddick for her leadership. This Legislative Session was a success for the Commission, and her leadership at the Capitol helped secure the funding we need for staffing and for developing our IT programs,” Porter said. “I’d also like to thank Commissioner Sitton for being a strong new addition to the Commission and for being so engaged in his service here.”
Commissioner Christi Craddick said, “I am pleased to turn over the responsibilities of Chairman to my colleague Commissioner David Porter. After working alongside him for the past two and a half years, I know his knowledge, steady approach, and dedication to the agency will guide his leadership and keep the Commission on a path toward an even stronger future.”
“David Porter has been an outstanding leader on the Railroad Commission and I look forward to his continued leadership as Chairman,” said Ryan Sitton. “David’s thoughtful approach to very challenging issues facing the Commission should give Texans confidence that this agency will be proactive in keeping them safe while encouraging the responsible production of our natural resources.”
“Texas is blessed with an abundance of natural resources, but we aren’t the nation’s leading energy producer just because of our geology. Regulatory framework matters,” Porter said. “Unfortunately, our State and its regulatory framework are under attack from Washington, DC. Perhaps our greatest challenge comes from EPA regulations brought on by Obama’s war on fossil fuels. We must continue to challenge Federal overreach because Texans know how to oversee Texas oil and gas production better than Washington does.”

The first significant energy asset acquisition since the meltdown of crude oil prices, Noble Energy, Inc. (Noble Energy) (NYSE: NBL) of Houston and Rosetta Resources Inc. (Rosetta) (NASDAQ: ROSE) have announced a definitive merger agreement whereby Noble Energy will acquire all of the common stock of Rosetta in an all-stock transaction valued at $2.1 billion, plus the assumption of Rosetta’s net debt of $1.8 billion as of March 31, 2015. Dave Stover, Noble Energy’s Chairman, CEO, and President stated, “I am excited to announce this strategic transaction which adds two exceptional and material areas to our global portfolio. The Eagle Ford and the Permian are premier unconventional resource plays, two of the most economic plays in the U.S., which will expand our resource base and development inventory and further diversify our portfolio. The transaction will be immediately accretive to our per share production, reserves, earnings, and cash flow. Rosetta’s team has a strong culture and track record of safe and efficient operations, and we look forward to adding their talents and capabilities to our company. The strengths of the combined assets and people will drive significant value creation for our existing and new shareholders.” Jim Craddock, Rosetta’s Chairman, CEO and President, stated, “The combination with Noble Energy brings together two complementary companies with a deep and diverse portfolio of assets in key unconventional resource basins. The deal will accelerate value delivery from our strong asset base, and the all-stock nature of the transaction will allow our shareholders to continue to reap that value growth across commodity price cycles. I have long respected Noble Energy and its management team, which has a strong track record of delivering substantial value to shareholders, both from the U.S. onshore business as well as global offshore exploration and development. I am confident the combined team, strong balance sheet, and premier asset base is poised for further success and shareholder value creation.” Rosetta’s liquids-rich asset base includes approximately 50,000 net acres in the Eagle Ford Shale and 56,000 net acres in the Permian (46,000 acres in the Delaware Basin and 10,000 acres in the Midland Basin). Noble Energy has identified in excess of 1,800 gross horizontal drilling locations for development, providing net unrisked resource potential of approximately one billion barrels of oil equivalent. Rosetta’s assets produced 66 thousand barrels of oil equivalent per day in the first quarter of 2015, and year-end 2014 proved reserves were 282 million barrels of oil equivalent. More than 60 percent of Rosetta’s current production and proved reserves are liquids. Noble Energy anticipates a compounded annual production growth rate from these assets over the next several years of approximately 15 percent, generating positive free cash flow on an annual basis. Under the definitive agreement, Rosetta shareholders will receive 0.542 of a share of Noble Energy common stock for each share of Rosetta common stock held. Based on the Noble Energy closing price on May 8, 2015, the transaction has an implied value to Rosetta shareholders of $26.62 per share, representing a 28 percent premium to the average price of Rosetta stock over the last 30 trading days. Following the transaction, shareholders of Rosetta are expected to own 9.6 percent of the outstanding shares of Noble Energy. The boards of directors of both companies have unanimously approved the terms of the agreement, and Rosetta’s board has recommended that its shareholders approve the transaction. Completion of the transaction is subject to the approval of the Rosetta shareholders and certain regulatory approvals and customary conditions. The transaction is expected to close in the third quarter of 2015.

A new study indicates fracking doesn’t appear to be allowing methane to seriously contaminate drinking water in Pennsylvania, contrary to some earlier, much publicized research that suggested a stronger link. The new study of 11,309 drinking water wells in northeastern Pennsylvania concludes that background levels of methane in the water are unrelated to the location of hundreds of oil and gas wells that tap hydraulically fractured, or fracked, rock formations. The finding suggests that fracking operations are not significantly contributing to the leakage of methane from deep rock formations, where oil and gas are extracted, up to the shallower aquifers where well water is drawn. Similar findings in Texas have come to the same conclusion. Current oil prices seem to be the only impediment to further fracking gains.

Halliburton Company announced March 27 that its stockholders approved Halliburton’s proposal to issue shares of Halliburton common stock as contemplated by its merger agreement with Baker Hughes Incorporated. In addition, Baker Hughes announced that its stockholders adopted the merger agreement and thereby approved the proposed combination of the two companies. Ninety nine percent of the shares voted at Halliburton’s special meeting voted in favor of the proposal to issue Halliburton shares. Separately, more than 98 percent of the shares voted at Baker Hughes’ special meeting voted in favor of the transaction, representing more than 75 percent of all outstanding shares of Baker Hughes. “We are extremely pleased Halliburton and Baker Hughes stockholders have shown overwhelming support by approving the pending transaction,” said Dave Lesar, chairman and chief executive officer of Halliburton. “We are more confident than ever that this combination will create a stronger, more diverse organization with an unsurpassed depth and breadth of services benefitting our stockholders, customers, employees and other key stakeholders of both companies.” Martin Craighead, chairman and chief executive officer of Baker Hughes said, “Today’s results are an important milestone in our efforts to build a global leader in oilfield services that can deliver more benefits for customers, improved value for stockholders and more long-term opportunities for employees. We look forward to continuing to work collaboratively with Halliburton on the regulatory review process and the creation of a thoughtful integration plan that combines the best of both companies.” The close of the transaction is expected to occur late in the second half of 2015, and remains subject to regulatory approvals, as well as other customary closing conditions.

Texas Rig Count, Production & Storage
According to the Texas Railroad Commission, the Texas average rig count as of 13 February 2015 was 598, representing about 46 percent of all active land rigs in the United States according to Baker Hughes. The Railroad Commission reports that in the last 12 months, total Texas reported production was 901 million bbl of oil and 8.2 trillion cf of natural gas. The Commission’s estimated final production for December 2014 is over 83 million bbl of crude oil and over 500 million Mcf of gas well gas. (These production totals do not include casinghead gas or condensate.) Texas natural gas storage reported to the Commission for January 2015 was almost 330 million Mcf compared to about 265 million Mcf in January 2014. The February 2015 gas storage estimate is about 307 million Mcf. The Commission’s oil and gas division set initial March 2015 natural gas production allowables for prorated fields in the state to meet market demand of 8 million Mcf. In setting the initial March 2015 allowables, the Commission used historical production figures from previous months, producers’ demand forecasts for the coming month, and adjusted the figures based on well capability. These initial allowables will be adjusted after actual production for March 2015 is reported.