BigBull, Good Section today in the Sunday Midland-Reporter Telegram- details outlook/ plans of most producers in the Permian Basin (roughly 100+ E&P companies interviewed).
Definitely worth going to the local newsstand and purchasing for all of the raw data here. For OS companies I reprint the first section of the 1999 Outlook. The Outlook goes on for four pages and I'm too bad of a typer to type the whole thing, and also do not have a scanner handy- but note:
"Production-Have you shut in wells, if so will you shut in more. What is the critical posted price for your operations?
Nearly every operator has shut in some production, but apparently nothing radical at this moment, unless one considers Texaco's Mabee CO2 Project which was turned off. However the number of wells shut in could increase in the future as many wells begin to face serious workovers and repairs. Expensive repairs or workovers are the main criteria used by most operators for shutting in a well.
If it goes down and cannot pay for repirs in 90 days, it stays down, says Danny Kellum, Vice President for US operations for Pioneer Natural Resources. Because there are so many variables affecting the economics of each well- production, sour or sweet, corrosion and chemicals, water cut etc.,- operators say that there is no such thing as a critical posted price where all production is shut in....
Capital Budgets What is your total capital budget for 1999. How does this compare to 1998. Was your 1999 budget revised downward?
Capital budgets where they exist are a mere shadow of former budgets. The average reduction would probably be 50 percent of last year.
Nearly all capital projects other than drilling- waterfloods, CO2,gas plants pipelines, etc., have been put on hold according to operators."
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Lots of interesting facts here. For the Permian Basin, it looks like production will do a slow continual fade as workover operations are deferred. Thus OS service companies will get hit as well repairs and workovers are delayed. In turn once prices firm the service workload should spike as companies move to repair all of the wells idled in order to save workover dollars?
Also it looks like drilling is the "sacred cow" at least in the Permian Basin. Whenever limited capital dollars are allocated, they go to actual drilling..... |
