Crude Oil ( ) Brent Crude ( ) Natural Gas ( ) S&P 500 ( ) PHLX Oil ( )

January 13, 2016

CRUDE OIL INVENTORY/’000 bbls (Week Ended 1/8/16)

Current: 482,558
Actual Build/(Withdrawal): 234
Economist Average Estimate: 2,025
Previous: 482,324

Click here for the chart with five year averages.

Stephens Investment Banking - Building Blocks of a Stronger Oil & Gas Industry


*Whiting Petroleum’s Geoscientists are Helping Build a Smarter Oil Company: a Look Behind the Scenes at the Bakken-Three Forks Oil Play – Oil & Gas 360®

It’s a tough market for the oil companies, but Whiting Petroleum Corporation (ticker: WLL) has figured something out. While oil and gas companies across the planet are battling a commodities price environment in which a barrel of oil fetches 70% less than it did 18 months ago, Whiting has found and implemented a secret weapon that has changed the dynamic of how the largest Bakken-Three Forks producer is developing its assets. The new knowledge that Whiting’s geoscientists are gaining from a large scale, high tech project in its core lab has allowed the company to continue to lower its costs and increase its production. – Read More

*Oil Gives Up Gains on Inventory Data – The Wall Street Journal

Oil prices gave up their gains Wednesday as weekly supply data showed inventories of crude oil and refined products hit new record highs. Prices have settled lower for seven straight sessions, with the U.S. benchmark dipping below $30 a barrel Tuesday for the first time since 2003. The inventory data from the U.S. Energy Information Administration showed stockpiles of crude oil rose 234,000 barrels last week, compared with expectations for an increase of 2.1 million barrels. – Read More

*Oil slump is hitting other sectors – USA Today

The unrelenting slide in oil prices is rippling to the broader economy as the industry’s downturn squeezes sectors as diverse as airlines and restaurants, steelmakers and law firms. The U.S. crude benchmark price was up about 3% Wednesday morning but has fallen about 15% so far this year after plummeting in 2015 and is close to 12-year lows. The crash has led oil producers to sharply scale back drilling and cut jobs. United Airlines said this week it expects lower passenger revenue in the fourth quarter because of reduced bookings by Texas oil executives — who often travel first class — and the impact of the Paris terror attacks, among other factors. – Read More

*The Six States Being Hammered Hardest by Lower Oil Prices – Oil & Gas 360®

Severance taxes on oil and gas extraction make up a significant portion of the budgets of a number of states in the U.S., but the rapid decline of prices since November of 2014, has put several of those states in a bind as they prepare to re-evaluate current and upcoming operating budgets and taxation structures. According to the Energy Information Administration (EIA), Alaska, Texas, North Dakota, Wyoming, Oklahoma, and West Virginia, in particular will be strongly affected by the coming re-evaluations. – Read More

*The Woman Shaping Iran’s Oil Future – Bloomberg

At Monsoon, a bistro in Tehran that serves sushi, Szechwan beef, and Gouda and calamari on whole wheat toast, the fusion cuisine is an act of defiance. So are the women’s fashions—tight robes, exposed calves, headscarves that barely conceal blond and henna-colored hairstyles. The restaurant, with its rough concrete walls, red countertops, and statues of Hindu and Buddhist goddesses, looks more Manhattan than Islamic Republic. Seated at a corner table is Elham Hassanzadeh, almost 6 feet tall, with dark eyes, thick eyebrows, and lush brown hair that overflows her hijab. – Read More

*Russia seeks spending cuts to ready for low oil price era – Reuters

“New realities” including the possibility that oil prices will remain low for a prolonged period will force Russia to take hard decisions about government spending, its finance minister said on Wednesday. Anton Siluanov warned the country’s budget would only balance at an oil price of $82 per barrel, well in excess of the $50 per barrel assumption used for this year’s calculations, let alone the $30 per barrel near which oil is currently trading. Some forecasters have predicted crude, Russia’s major export and main source of revenues, could fall to $20 per barrel or lower. – Read More

*Samson Oil & Gas to Secure 50,000 Williston Basin Acres in Transformative Acquisition – Oil & Gas 360®

Samson Oil & Gas (ticker: SSN) has nearly doubled its output overnight, announcing a $16.5 million acquisition on January 6, 2016. The properties currently produce 720 BOPD from 41 net producing wells and contain proved reserves of 8.5 MMBO as of October 1, according to estimates from Netherland, Sewell & Associates. On a cash comparison, SSN is paying $22,916 for each producing barrel and just $1.93 for each proved barrel. Nearly 6.4 MMBO, or 75% of the reserves, are classified as proved undeveloped. – Read More

*IHS study: Permian single-handedly sustaining domestic oil activity – Midland Reporter-Times

If there is a bright spot in an oil and natural gas economy hard-hit by low commodity prices, it is the Permian Basin. The Permian, popular for its established infrastructure, stacked play potential and strong economics, has been so popular it merited its own study from the energy research firm IHS Inc. In the report, IHS writes, “In an energy market struggling from oil price declines and anemic financial returns, the Permian Basin is the only U.S. unconventional liquids resource seeing significant year-over year, per-well productivity gains.” – Read More

*Canadian bank CEOs sees little contagion in rest of Canada from Alberta — so far – Financial Post

Royal Bank of Canada chief executive Dave McKay says there has been little “contagion” across Canada from the economic challenges Alberta faces as a result of low oil prices. “Contagion back to the rest of the country is nominal right now,” he said at an investor conference in Toronto on Tuesday featuring discussions with the chief executives of the country’s major banks. This “remains a contained-within-Alberta challenge,” McKay said. With the formerly booming province’s unemployment just now catching up with the national rate, McKay said he doesn’t expect the bank’s auto loan, credit card, or mortgage portfolios to take a hit in the near term. – Read More

*Iran and Saudi Arabia: if Current Actions Escalate to War, What Happens to Oil Prices? – Oil & Gas 360®

Relations continued to worsen this week between Iran and Saudi Arabia in the Middle East, with Iran claiming that Saudi Arabia intentionally struck its embassy in Yemen with an airstrike late Wednesday night. Yemen has served as a proxy battleground for Iran and Saudi Arabia, with the former backing the Shia-minority Houthis against the Sunni-led government of President Abdu Rabu Mansour Hadi. “Saudi Arabia is responsible for this action, as well as for compensating Iran for injuries to the embassy personnel and the damages to the embassy building,” said Iranian Foreign Ministry spokesman Hossein Jaberi Ansari, reports CNN. – Read More

*Oil Markets In 2016: 1986 Or 1998? – Forbes

Oil markets have started with a bang or, more precisely, an implosion with prices hitting levels not seen since pre-peak oil days (i.e., 2003, especially if you ignore December 23, 2008) and causing havoc in not just the oil industry but commodity and equity markets and even some currency markets. For the youngsters, this probably resembles the apocalypse, a once-in-a-lifetime catastrophe that could spell the end, or at least smaller bonuses. The question remains as to where the bottom is, and what is a sustainable price for the medium and long-term. – Read More

*Denial of Keystone XL Leads to More Rail Capacity for Canada’s Crude Oil – Oil & Gas 360®

Canadian crude oil is still making its way south into the U.S. despite the decision by the Obama administration to reject the project plan for TransCanada’s (ticker: TRP) Keystone XL pipeline. Most recently, Houston-based USD Group announced that it plans to double the capacity of its rail terminal in Hardisty, adding heavy crude oil, butane and propane to the mix of products it can load at the terminal. The Hardisty terminal is relatively new, only having started operations in June 2014. – Read More

Important disclosures: The information provided herein is believed to be reliable; however, EnerCom, Inc. makes no representation or warranty as to its completeness or accuracy. EnerCom’s conclusions are based upon information gathered from sources deemed to be reliable.  This note is not intended as an offer or solicitation for the purchase or sale of any security or financial instrument of any company mentioned in this note.  This note was prepared for general circulation and does not provide investment recommendations specific to individual investors. All readers of the note must make their own investment decisions based upon their specific investment objectives and financial situation utilizing their own financial advisors as they deem necessary. Investors should consider a company’s entire financial and operational structure in making any investment decisions. Past performance of any company discussed in this note should not be taken as an indication or guarantee of future results.  EnerCom is a multi-disciplined management consulting services firm that regularly intends to seek business, or currently may be undertaking business, with companies covered on Oil & Gas 360®, and thereby seeks to receive compensation from these companies for its services.  In addition, EnerCom, or its principals or employees, may have an economic interest in any of these companies.  As a result, readers of EnerCom’s Oil & Gas 360® should be aware that the firm may have a conflict of interest that could affect the objectivity of this note.