Oilman Magazine July/Aug 2017 : simplebooklet.com

LETTER FROM THE PUBLISHER It has been a wild ride in the oil and gas market since the OPEC meeting May 25 The price has fluctuated considerably as the OPEC member countries and Russia agreed to cut production again and this time for nine months Many analysts expected the agreement that reduced production to 1 8 million barrels a day would in turn push the price past 60 per barrel However the price has been in decline since the meeting According to industry analysts there are several reasons why the price is under pressure The main reason voiced by many in the industry is the OPEC agreement to reduce production should run through 2018 to make a meaningful impact on supply Another is the instability in Libya and Nigeria in which OPEC exempted the two countries from supply reduction and as a result flooded the market What is perhaps a minor point but has impact is energy investors speculating that the price would increase and are now beginning to unload their investments Several agencies that monitor supply have also mentioned that global oil inventory has receded much slower than expected leaving supply above historical levels Another major reason for the global price pressure is from U S producers increasing production Most of the production increase is coming from shale drilling which is booming in many shale plays mainly the Permian Basin Since the downturn that began in 2014 oil and gas producers have trimmed expenses employed technological advances and are utilizing the best properties to drill As a result several shale producers indicated they can be profitable at 40 per barrel The IEA estimates that U S crude supply will grow almost 5 on average this year and nearly 8 in 2018 potentially vaulting ahead of Saudi Arabia in daily output Despite the low barrel price many believe our increased production is good for the U S oil and gas producer consumer and overall economy In this issue of OILMAN our feature takes a look at shale and how its resurgence has played a pivotal role in the renewal of many communities around the country Emmanuel Sullivan Publisher OILMAN Magazine Don Briggs Mark A Stansberry Mark A Stansberry Chairman of The GTD Group is an award winning author columnist film producer radio talk show host and 2009 Western Oklahoma Hall of Fame inductee He has been involved in the oil and gas industry for over 39 years He is currently serving as Chairman of the Board of the Gaylord Pickens Museum Oklahoma Hall of Fame Vice Chairman of the Board of Regents of the Regional University System of Oklahoma Board of Directors of OKC Port Authority Board of Governors of the Recording Academy Grammys Texas Chapter Lifetime Trustee of Oklahoma Christian University and Board Emeritus of the Oklahoma Governor s International Team He has served on several private and public corporate boards Eric R Eissler Eric is the former editor in chief of Oil Gas Engineering magazine and previous to that worked as an editor for Dubai based The Oil Gas Year magazine He is currently an administrator at Northwestern University in the McCormick School of Engineering Joshua Robbins At Beachwood Marketing Group our mission is to market oil and natural gas properties in the most cost effective and efficient way We strive to provide excellent leadership and unparalleled service for each of our clients Josh has been instrumental in defining Beachwood s market leading solutions and has overseen the company s expediential growth Josh is also an accomplished writer on the acquisition and divestment market and a speaker and presenter at conferences He continues to keep his focus on the strategic direction of Beachwood Marketing Group and its expansion into new markets 2 JULY AUGUST 2017 PUBLISHED BY Oilman Magazine LLC P O Box 771872 Houston TX 77215 800 562 2340 OilmanMagazine com PUBLISHER Emmanuel Sullivan publisher OilmanMagazine com 800 562 2340 Ex 5 EDITOR Samuel Cook DIGITAL CONTENT MANAGER Tim McNally CONTRIBUTORS Biographies Don Briggs is the President of the Louisiana Oil and Gas Association The Louisiana Oil Gas Association known before 2006 as LIOGA was organized in 1992 to represent the Independent and service sectors of the oil and gas industry in Louisiana this representation includes exploration production and oilfield services Our primary goal is to provide our industry with a working environment that will enhance the industry LOGA services its membership by creating incentives for Louisiana s oil gas industry warding off tax increases changing existing burdensome regulations and educating the public and government of the importance of the oil and gas industry in the state of Louisiana MAGAZINE Jason Spiess Jason Spiess is an award winning journalist talk show host publisher and executive producer Spiess has worked in both the radio and print industry for over 20 years All but three years of his professional experience Spiess was involved in the overall operations of the business as a principal partner Spiess is a North Dakota native Fargo North Alumni and graduate of North Dakota State University Spiess moved to the oil patch in 2012 living and operating a food truck in the parking lot of Mac s Hardware In addition to running a food truck Spiess hosted a daily energy lifestyle radio show from the Rolling Stove food truck The show was one of a kind in the Bakken oil fields with diverse guest ranging from U S Senator Mike Enzi WY to the traveling roadside merchant selling flags to the local high school football coach talking about this week s big game Thomas G Ciarlone Jr Tom is a litigation partner in the Houston office of Kane Russell Coleman Logan PC where he serves as the head of the firm s energy practice group Tom is also the host of a weekly podcast on legal news and developments in the oil and gas industry available at www energylawroundup com and a video series on effective legal writing available at www theartofthebrief com Steve Burnett I was raised in a small West Texas town where the school mascot is a roughneck Growing up with a roughneck as the town symbol how could I not spend most of my adult life working in the petroleum industry I started working in the oilfields age 16 In Texas you had to be 17 with a signed minors release from your parents but my parents were glad to keep me working I had been working since my first job working on a commercial elephant garlic farm at age 12 By the time I reached 16 I had enough work experience to prove I knew how to hold my own on a work crew Anybody whose parents survived the great depression can attest to the fact that their children learn the value of a solid work ethic Phil Graves Phil Graves has spent nearly a decade working in the oil and gas industry He has served as Director of Sales and Director of Digital Development for a large national industry publication and has held various management positions with a completions company and was in charge of operations in the Permian Basin and Eagle Ford shale Phil now runs a marketing and photography company focused on providing vivid images of the industry at work in multifaceted disciplines and projects Oilman Magazine July August 2017 OilmanMagazine com GRAPHIC DESIGNER Kim Fischer CONTRIBUTORS Don Briggs LOGA President Mark Stansberry Chairman of The GTD Group Phil Graves PhilGravesPhotography com Steve Burnett CrudeOilCalendars com Story Sloane III The Sloane Gallery Houston Texas 281 496 2212 Eric R Eissler Administrator at Northwestern University McCormick School of Engineering Jason Spiess TheCrudeLife com Joshua Robbins CEO of Beachwood Marketing SUBSCRIPTIONS OilmanMagazine com subscribe ADVERTISING 800 562 2340 Ex 1 advertising OilmanMagazine com OilmanAdvertising com Copyright 2017 by Oilman Magazine LLC All rights reserved Reproduction without permission is prohibited All information in this publication is gathered from sources considered to be reliable but the accuracy of the information cannot be guaranteed Image credits The Sloane Gallery Houston TX 123rf com

Page 5

Page 6

Page 7

Page 8

Page 9

Page 10

OILMAN COLUMN Preventing Common Oil Gas Injuries By Richard Perkins LWCC Safety Services Manager When working in the oil gas industry prevention is the strongest form of protection against workplace injuries Taking extra measures to avoid injury helps ensure you and your employees stay safe The following sections detail the most common oil field injuries and tips to help prevent them Incorporating these recommendations into your daily work processes can help your workers and your job sites stay injury free Struck By Injuries Struck by injuries are defined by OSHA as any injury produced by forcible contact or impact between the injured person and an object or piece of equipment Some of the most common causes are sling failures bad connections and improperly secured pressurized lines To stop sling malfunctions from happening make sure that slings are inspected prior to every use not just through routine inspection Educate yourself and your staff on the proper use of the different types of slings and their unique working loads Slings should be stored out of weather when not in use to keep them from suffering unnecessary wear Properly executed and maintained pipe and hose connections are vital to a safe and secure rig In addition all pipe connections should be made precisely to the manufacturer s specifications this includes not over tightening connections in an attempt to ensure a tight seal Pressurized line malfunctions can be very dangerous In order to protect against malfunction make sure all pressurized lines have the proper whip chicks to help restrict them in case of a connection failure Each line s specific working pressure should be monitored and all lines and valves should be pressure tested after maintenance of any kind is performed Vehicle Accidents On site and transportation vehicle accidents can often be prevented by imposing and holding drivers to strict guidelines Ensure all drivers stay within legal drive time limits and 8 Photo Credit macor www 123RF com are not encouraged or pressured to continue driving if fatigued To monitor and protect against distractions cell phone blockers can be installed to prevent any non emergency cell phone usage while driving Establish a driver program that includes the following checks to ensure your drivers are well protected as well as taking their responsibility to themselves and their employer seriously This can protect both your company and your drivers and allow you to rest assured knowing that your drivers are operating responsibly Driver programs can include Motor vehicle record checks An established acceptable number of violations within a given time frame Driver evaluations Road observations Vehicle inspections Discipline policy for Driver Policy violations Establish or enforce an existing pre post random and for cause drug testing policy Reaction to Chemicals and Welding Flash Burns Common welding flash burns are often caused by improper use or lack of welding hoods and lenses and no additional protection under hoods They can be prevented simply through care and attention All welders should be educated on the proper use of different welding hoods and Oilman Magazine July August 2017 OilmanMagazine com Richard Perkins lenses and equipped with the proper lenses and hoods for the type of welding being performed If possible welders should be spaced out so that they are not working next to each other When close proximity between workers is unavoidable set up flash screens and ensure all workers wear eye protection beneath hoods and lenses to help avoid flash from others nearby Regardless of type chemicals should always be handled with care Any personnel handling chemicals on the job site should be properly trained and educated on the handling and use of chemicals they will be working with In case of an accident there should always be a means to remove chemicals from employee s skin and eyes nearby Employees who handle chemicals should bring a change of clothes in the event that their clothes become saturated if spills occur All spills should be cleaned up immediately and when their use is finished all chemicals should be properly stored in approved containers LWCC offers online training webinars on site training and more value added safety resources from our safety loss and prevention team free to all policyholders With more than 20 years of experience in safety and risk management with LWCC Richard Perkins Safety Services Manager leads a team of professional consultants whose job is to help you maintain a low risk work environment For more information on the cause and prevention of workplace injuries visit lwcc com

Page 11

OILMAN COLUMN Texas Supreme Court Issues Back To Back Decisions with Profound Implications for the Oil And Gas Business By Thomas G Ciarlone Jr In a case that has been closely watched in the oil and gas industry Lightning Oil Company v Anadarko E P Onshore LLC the Texas Supreme Court decided in May whether drilling through a mineral estate one which is not under lease by the driller to access a reservoir beneath a bordering tract constitutes a form of trespass The operator in the case Anadarko Petroleum secured permission from the surface owner of a tract adjacent to the company s leasehold to spud a well and drill directionally into the mineral estate next door The owner of the mineral rights under the surface of the spud site Lightning Oil argued that Anadarko trespassed when it bored through Lightning s mineral estate The Texas high court affirmed decisions from the appellate and trial courts that had roundly rejected Lightning s claims As the Texas Supreme Court sees it the surface owner is presumptively the master of the mass of earth undergirding the surface and therefore it alone will usually have the authority to authorize this kind of subsurface activity The Court did acknowledge that the appropriate test is nevertheless fact intensive involving a careful balancing of the competing interests of all the involved parties The fundamental inquiry will be the extent to which the horizontal drilling will cause the unleased mineral owner to suffer a loss of oil and gas In Lightning s case only a small amount of minerals was lost through that process and according to the justices this is not enough to rise to the level of mineral trespass In that context we have no doubt that individual interests in the oil and gas lost through being brought to the surface as part of drilling a well are outweighed by the interests of the industry as a whole and society in maximizing oil and gas recovery That being so we conclude that the loss of minerals Lightning will suffer by a well being drilled through its mineral estate is not a sufficient injury to support a claim for trespass Accordingly such a loss will not support injunctive relief Lightning also argued that even if Anadarko s existing well had not caused it to suffer substantial harm the operator s slate of proposed wells would prejudice Lightning s ability to produce its minerals in the future This according to Lightning would result in precisely the kind of irreparable harm that would support the entry of an injunction against Anadarko The Court was unimpressed with this argument because Lightning had adduced virtually no evidence of such harm On this score Justice Phil Johnson writing for an undivided Court was direct and to the point Speculation is not enough On the heels of its opinion in Lightning the Texas Supreme Court issued another watershed decision with sweeping implications for the oil and gas industry In Davis v Mueller the Court decided an appeal that challenged as ambiguous a mineral conveyance that had been made on a countywide basis in other words a mineral deed providing for the transfer of all the seller s oil and gas interests in a specific county When the Court heard oral arguments in March industry observers were concerned After all to the extent it was held that allencompassing county wide conveyances are invalid as a matter of law the floodgates would open and unleash a torrent of mineral title litigation Indeed as it was argued to the Texas Supreme Court earlier this year if blunderbuss mineral conveyances were invalidated as ambiguous we would expect to see small armies of landmen descend on courthouses across the state All of them would be tasked to pour over deed records to isolate just these kinds of conveyances and then to obtain mineral leases from those who might have claims to the minerals Thomas G Ciarlone Jr under the changed law Naturally this would wreak havoc on operators that spent millions of dollars developing big plays only to be confronted with the possibility that entire mineral leaseholds are invalid Mercifully the Texas Supreme Court reached the correct decision and came to the common sense conclusion that county wide mineral deeds are valid and enforceable Leaving no room for doubt Chief Justice Nathan Hecht wrote that on its face a county wide conveyance could not be clearer Justice Hecht then added simply enough that all means all Tom is a litigation partner in the Houston office of Kane Russell Coleman Logan PC where he serves as the head of the firm s energy practice group Tom is also the host of a weekly podcast on legal news and developments in the oil and gas industry available at www energylawroundup com and a video series on effective legal writing available at www theartofthebrief com Oilman Magazine July August 2017 OilmanMagazine com 9

Page 12

Page 13

Page 14

Page 15

Page 16

OILMAN COLUMN Brothers Inc A Family Run Business Serving the Marine Construction Industry for Over 70 Years By Arlene B Collee Noe Raywood Broussard better known as N R or Pedo was born in Pecan Island Louisiana in 1921 He completed high school then joined the Navy in 1942 By the time he left the Navy in 1946 he had risen from recruit to first class petty officer After returning to Louisiana N R and his brother originated a tugboat business known as Broussard Brother s Boat Service in Chalmette Louisiana In 1959 Mr Broussard moved his family back to Vermilion Parish to a low lying area at the end of a small village known as Intracoastal City Together with his brothers John Huey Broussard and Joseph L Broussard they developed the Broussard Brothers Boat business in Intracoastal City with a vision of developing a facility to better meet the growing needs of the oil industry There was absolutely nothing when we first came to Intracoastal City A lot of people thought I was more than a little crazy says N R Broussard N R quoted something he heard once A man should work as though everything depended upon himself and pray as though everything depended on God This saying influenced the motto Everybody works At first the brothers rolled pipe all day then went into the office to do paperwork When the children were old enough to be out by their side they were taught the business The girls worked in the office during summer break alongside their mother Today a family approach to business is becoming rare especially one that has been successful for 70 years and touched so many lives Playing its Part Culture is an important part of South Louisiana and everyone has a part to play The role of Broussard Brothers in the developing oilfield industry in Vermilion Parish created an environment for new jobs allowing people to make a good living locally Broussard 14 Brothers helped keep families together a significant element to preserving the local culture The jobs have sustained generations of families working in the company Father and son often work side by side Today the 5th generation of some of these families are taking a role in sustaining the company contributing considerably to keeping the Cajun Culture in Vermilion Parish alive and well The company also still employees up to 4 generations of the Broussard family The 80 s Being in business for 70 years has come with its challenges The company struggled in the 80 s bust but due to its prudent financial practices incredible work ethic and service built on a handshake the company came through it stronger All of our equipment was paid for said Broussard If not for that it would have been a lot tougher The Current Downturn In today s challenging industry as before Broussard Brothers is forced to make difficult cuts to their operating costs while still trying to protect its most valuable asset their employees The magnitude of these burdens are multiplied today due to the increased size of the company More employees and families depend on its success Thankfully there are signs that the industry is beginning to slowly turn around Over the years the brothers recognized their success would be directly tied to meeting the needs of its customers With this in mind they expanded their six acre low lying marshland area where they initiated Broussard Brothers Inc in Vermilion Parish to a commercial development containing over a mile of well developed waterfront property The business includes tugs barges and crew boat rentals as well as oilfield and pipeline construction services Today the company has grown into one of the gulf coast s premier oilfield service and construction companies Oilman Magazine July August 2017 OilmanMagazine com The ever changing marine construction and towing environment presents many challenges The company has grown and changed with the times and has consistently upgraded equipment and trained and developed an experienced workforce to meet those demands head on Capable of providing a variety of services to the oilfield and construction industries Broussard Brothers contribution to the business industry of Southwest Louisiana developed into a multifaceted expansion of specialized marine fabrication construction blasting and painting land and offshore crews and dock side services which ran primarily under the sister corporation known as Acadian Contractors Together the businesses provided jobs to over 700 employees Broussard Brothers Inc still operates out of their original Intracoastal City docks although the flooding of hurricane Rita drove the business office to Abbeville N R Broussard nearly 96 years old still goes into the business office daily and frequently attends company operations meetings at the Intracoastal City location The staff he has assembled to run the company often relies on his wealth of knowledge and experience to better serve customers and to keep Broussard Brothers a leader in the oilfield service industry Broussard Brothers Inc is located in Abbeville Louisiana and can be reached at 337 8935303 or at www broussardbrothers com

Page 17

OILMAN COLUMN Success in the Permian Lilis Energy Stakes its Claim Interview with Abraham Avi Mirman By Eric R Eissler While the past two years of the oil glut have taken their toll on many companies other niche producers are rising from the dark days of low oil prices to take the reins and steer themselves towards success Lilis Energy is one of them Based in San Antonio the independent oil and gas exploration and production company holds a stake in the Delaware Basin one of the most fertile regions in the larger Permian Basin It has some of the deepest reservoirs that are teeming with hydrocarbons However the Delaware Basin is not an easy play because all these resources require a high level of hydraulic fracturing techniques to access them But at the same time the amount of capital investment going into this region is low and has some of the highest returns for the Permian Basin This is a major advantage to any company operating in the Delaware Basin When Lilis Energy acquired the brownfields at auction they got 12 wells Since 2015 they have completed four re entries with a fifth that just came online on June 26 2017 Within the next three to five years Lillis plans to have all 12 wells reentered and producing including several new grassroots wells to bump up its production capacity CEO Abraham Avi Mirman confirmed the fact that working in the Delaware Basin is the true sweet spot of the U S shale plays American shale has seen an incredible resurgence particularly led by the Permian Basin in West Texas Mirman highlighted the advances in drilling and completing technologies and operational methods have steadily increased production while lowering costs This continues to add to the attractiveness of the basin We are very pleased to operate in such a basin said Mirman in an interview He added that it was a great decision to switch from operations in Colorado where return ratios are much lower than Texas to come to the Delaware Basin The industry is on the up Concerning the Trump Administration s effect on the industry it has been a bit of a doubleedged sword The administration has rolled back regulations and that is a good thing for operators However when regulations are removed it is easier to extract hydrocarbons resulting in a flood of oil and gas on the market dropping prices That is the effect of the double edged sword Roll back of regulations is good but high supply and weak demand are not good for prices Low prices are bad for the small producers and the companies working in the shale plays in the U S Mirman went on to say that the Permian is an island in the midst of all the hardship because of its plentiful resources and relative ease of access In terms of looking at the industry for the present and medium term Mirman believes that the market is generally positive There is a need for fuel domestically something that may not change anytime soon The hybrid and electric cars are a growing segment of the U S automobile industry but are in no way a direct threat to the oil and gas industry Looking back to 2016 s data the highest volume selling vehicle was the SUV followed by pick up trucks Trucks and SUVs are not the lightest on fuel consumption An afterthought to car sales shows that consumer confidence is high People are buying larger cars with bigger price tags and lower fuel economy a sure signal to the industry that the demand for gasoline will not fall anytime soon despite a growing presence of hybrid vehicles Furthermore another growing segment of the downstream sector is petrochemicals Mirman noted that this sector is growing and is increasing the demand for oil and its Abraham Avi Mirman value added products The U S Gulf Coast is seeing major investments in downstream facilities For example Saudi Aramco is investing 18 billion over the next five years to expand its footprint in the country The investment is to be a general investment to increase refining capacity branching into petrochemicals expanding its commercial operations marketing and brand presence That being said the market is on the up and up albeit at a slower pace Lilis Energy was founded by Avi Mirman in 2015 when he moved from the oil and gas industry in Colorado to pursue a more fruitful and better opportunity to work in the Delaware Basin He settled there with 3 400 net acres in June 2016 and has been on the rise ever since Five wells are in operation with another eight reentries to come online within the next three to five years including new wells Oilman Magazine July August 2017 OilmanMagazine com 15

Page 18

OILMAN COLUMN The Impact of the Shale Revolution Continues By Mark A Stansberry Chairman of the GTD Group Award winning author Energy Advocate The impact of the shale revolution continues to create economic opportunities and to weaken OPEC The American oil and gas industry has come a long way since the 1973 74 OPEC oil embargo timeframe There was a time according to projections that the U S was reaching a point of running out of oil that dependence on foreign oil would be the norm A little over three years ago the West Texas Intermediate oil price was around 110 per barrel Today the price is hovering around the 50 per barrel range The American oil and gas industry has increased reserves dramatically due to advanced technology Therefore OPEC is not the force it once was As an editorial in Investor s Business Daily recently stated the point is fracking horizontal drilling and new shale oil techniques will keep energy cheap for years to come bringing economic stimulus to America after 10 years of economic neglect As for OPEC sure it will survive But it s not likely to be the force in global markets it once was Hydraulic fracturing was first commercially used well over sixty years ago primarily for drilling conventional wells In the late 90s the combination of hydraulic fracturing 16 and horizontal drilling were introduced According to the Horinko Group a Washington D C based environmental firm the process of hydraulic fracturing is used today in more than 90 of new oil and natural gas wells in the U S Industry estimates show that hydraulic fracturing has been applied to more than one million wells nationwide in thirty three states where oil and gas production occurs With all the great opportunities that are ahead for oil and natural gas exploration by the use of technologies of hydraulic fracturing and horizontal drilling there should be the continued goal of environmental preservation There is an industry focus placed on providing technologies for maintaining water resources and reusing water that is generated The opportunity for economic development is before us As Eric Claeys states in his article in National Affairs When energy companies discover new oil and gas reserves they expand American consumers freedom of action by expanding the supplies of fuel food plastics and other products available to everyone If and when expanded supplies drive prices down energy production increase consumers liberty a second time by letting them reroute savings from basic needs especially fuel and energy bills to other more satisfying parts of their lives And new energy discoveries also empower the citizen Oilman Magazine July August 2017 OilmanMagazine com Mark A Stansberry who take the new jobs they produce Claeys article goes on to state in a system of free enterprise owners use their land to make their own lives and everyone benefits when energy companies increase the supply of energy available for all America Needs America s Energy Go to Facebook and join our effort National Energy Talk Future generations are depending on us the people to take control of our energy future here in America

Page 19

OILMAN COLUMN Education is Critical in Dynamic Industries By Eric R Eissler The Beverly Hillbillies became rich by Another major education provider is the inadvertently shooting the ground while Society of Petroleum Engineers SPE hunting causing oil to rush forth Jed The society offers a petroleum engineering Clampett was just lucky to make such a certification program to provide the find without the help of technology or a opportunity to obtain an international team of professionals The days of easy credential that recognizes petroleum finds and easy to extract hydrocarbons are engineering knowledge This kind of gone Getting oil credential is very out of the ground helpful for people who Not too long ago the energy industry operated in an environment of scarcity of natural resources with only is a high tech are working overseas a few key players Now it operates in an environment operation that and may need to prove of abundance in natural resources with a multitude requires more their competencies to of new players in search of a place in this newer education and prospective employers environment which has become more dynamic interconnected and globalized Professor Ghosh skills than before In addition to While many of credential certifications the operational skills are learned in the there are in person courses and seminars field many new technologies and skill sets webinars and e learnings all of which are must be learned in the classroom On top easy to access through membership of that having a degree in engineering or Train online to save on travel and time geology is essential for many positions If you are young and getting started many On the periphery several online universities offer degrees in petroleum companies offer training and education engineering However if you are a seasoned via websites such as EKT Interactive employee looking to stay current or seeking OilandGasTraining com and PetroSkills a promotion then there are surely new skills PetroAcademy to name a few of the many that you must acquire before advancing that are on the Internet Sites like these can save time and travel because the courses can Furthermore Industries especially oil and be done from home or office Most have gas are constantly changing Continuing associated fees to access the educational education is mandatory for workers to stay materials but prices are much lower than current with the latest developments skills traditional schools and are designed for the and new technologies required for their working professional profession Formal and executive programs In addition some professions also require continuing education to comply with laws The University of Oklahoma Price College remain licensed or certified or maintain of Business offers an Executive MBA membership in an association or licensing program to provide skills to professionals body In general continuing education is already working in the field Professor and considered a way for industry professionals Executive Director of the Price College of to keep up to date in their fields so they Business Energy Institute Dipankar Ghosh don t fall behind or miss opportunities said that the program was designed to work in conjunction with energy professionals Professional memberships add to the curriculum was designed so that every resumes course is focused on the energy industry Luckily getting training learning new skills including topics that are particularly staying on top of the industry or getting relevant to energy industry professionals continuing education credits CEUs has e g reserve valuation and reporting and been made simpler due to a wealth of delivered outcomes which are expected in online providers and institutions such as the industry s future leaders the American Petroleum Institute API These kinds of skills are going to be very Not only does API set many standards useful as the industry quickly changes and rules regulations and compliance items it evolves Executives are going to have more also offers accredited education to its many to learn and manage and they will require members which to be a member must a breadth of knowledge spanning across comply by taking CEUs several areas Professor Ghosh went on to emphasize this by highlighting that leaders of the energy industry now have to ensure that corporate policy investment criteria and business practices are all geared to deliver the goods and services that support their organizations strategic intent He noted that Continuous education business technology policy economics and their interconnectivity will be needed for all participants in the industry so they understand the potential evolution and long range implications of this new complex and uncertain environment Opportunities for the engineer There are educational opportunities for the engineers and operators too Taking an executive MBA program in energy is a unique opportunity to integrate business knowledge sharpen leadership skills and better understand the management processes Professor Ghosh pointed out Never stop learning never stop growing After school is out and work life begins many people feel that education is done This is a mistake because this way of thinking is not what is going to lead to promotions and exciting career opportunities down the line Additionally working in a dynamic industry such as oil and gas it is important to grow with the industry and understand where it is headed so that you can be prepared to learn develop and grow your skill sets to stay relevant in an ever changing industry Top 10 Traditional Degree Universities for Petroleum Engineering 1 University of Texas at Austin 2 Stanford 3 Texas A M 4 University of Tulsa 5 Colorado School of Mines 6 Pennsylvania State University 6 University of Oklahoma 6 University of Southern California 9 Texas Tech 10 Louisiana State University at Baton Rouge As ranked by US News Tie Oilman Magazine July August 2017 OilmanMagazine com 17

Page 20

PRODUCT SHOWCASE ProOne Inc With artificial lift systems ALS being the workhorses on the majority of wells lubrication has been a critical but generally unaddressed problem Now inefficient production and untimely wear failure are tackled with California based ProOne Inc s solution ProFlow Production Fluid Lubricant Driven by the success of the company s XPL Xtreme Pressure Lubrication technology for drilling fluids ProOne has now developed ProFlow patent pending for production wells ProOne s XPL technology has a polarized strong ionic charge so that it bonds to the metal surfaces of rod tubing and pump components creating primary behavior changes in ALS systems including a reduction in friction and drag in rod pumps and torque in PCP and ESP applications As a result of these primary changes in behavior the use of ProFlow leads to reduced flowline pressures lower energy consumption less rod load and a reduction in pressure at contact points between collars rods and tubing which increases pump efficiency fluid displacement and increases laminar flow In many cases this leads to increased speeds in pumps with VSD s and in wells that don t pump off quicker times to pump off occur Because ProOne s thin film nano technology bonds to metal parts it continually adds lubricity to the entire system working with the production fluid which by itself provides virtually no lubrication at all The bonding technology also inhibits rust and corrosion from building up on tubing pipes rods plungers and pumps while adding life to rod pumps PC pumps and ESP pumps by continually lubricating the pump and encapsulating sand and other debris 22 hours to 19 7 hours In other rod pump tests the company has consistently demonstrated reduced friction between rod and tubing which frequently occurs in deviated wells In PCPs where high surface drive torque or amperage are limiting production speeds ProFlow reduced torque and energy consumption to allow for a significant increase in RPM and thus production volume With friction a major factor in both drilling and production ProOne has innovated groundbreaking solutions in both sectors For more information contact Lawrence Kahn COO at www pro1energy com In testing conducted by a major oil company in Bakersfield California in a PC application torque and power consumption were smoothed out with daily peak torque average reduced from 620 to 535 and power average from 20 78 to 17 93 kW In a West Texas rod lift pump with significant barrel wear application of ProFlow resulted in an increase in pump efficiency from 60 to 99 and the well pumped off sooner from ProOne Inc 940 S Coast Drive Ste 200 Costa Mesa CA 92626 4th Annual HSE for Unconventional Oil and Gas September 19 21 2017 Houston TX Attending This Premier marcus evans Conference Will Enable You To Distinguish the hazards and risks from chemical exposures during E P operations with Chevron Discuss how culture determines the presence of safety and the absence of incidents with TechnipFMC Master a driver safety plan that safeguard s transportation and achieves significant improvement in fleet safety efficiency and compliance with Southwestern Energy and FTS International Increase employee engagement empowerment utilizing a recurrent risk assessment approach with Talos Energy LLC Increase the service quality within the workforce through proper safety orientation training with Halcon Resources Speakers Include Randy Burow Health Safety Environmental Manager US Latin America Unconventionals Assets Shell Exploration Production Company SreeRaj R Nair Technical Safety Engineer Chevron U S A Inc Scott Long Contractor Safety Manager Corporate Safety Security Kinder Morgan John E Snawder Ph D D A B T Leader Biomonitoring Research Team Co Director NIOSH Center for Direct Reading and Sensor Technologies NIOSH James Senger Vice President HSE FTS International Evan Girling HSE Supervisor Drillmec Drilling Technologies Tim Chetwynd HSES Director North America TechnipFMC Brittany Benko VP Environment Health and Safety Chesapeake Energy Ziad Naufal Toxicologist Chevron For More Information Please Contact Amanda Pink T 312 894 6310 E AmandaP marcusevansch com 18 Oilman Magazine July August 2017 OilmanMagazine com

Page 21

PRODUCT SHOWCASE Applied Physical Sciences Corp At the Offshore Technology Conference in Houston Texas this year one exhibitor stood out as evidenced by the wave of excitement surrounding the release of their new and innovative technology FutureWaves Applied Physical Sciences Corp APS a wholly owned subsidiary of the defense giant General Dynamics known for their advanced technological contributions to national security and worldwide commercial markets released a revolutionary wave and vessel motion forecasting product that is sure to have a progressive impact on the offshore operations industry FutureWaves originally developed by APS under funding provided by the United States Navy s Office of Naval Research is a realtime shipborne system that uses a specialized X band radar to measure and forecast ocean waves in the vicinity of the ship It takes this information and determines the timing of waves and their impacts which is then used to predict ship motions such as heave pitch and roll for minutes into the future The system provides feedback for operational planning such as best course and speed for a particular operation but also uniquely delivers critical timing information during ship and deck operations Though the FutureWaves development was initially focused on the U S Navy s interest in loading and offloading of heavy equipment at sea seabasing the offshore operational applications are vast and varied One current application of the product involves a world leading international offshore oil and gas industry marine contractor who is planning to install the product on their largest deepwater construction vehicle APS is also in discussions for planned installations on cruise lines transport vessels sea based helicopter landing platforms oil drilling and production vessels and platforms and other offshore construction vessels Forecasting waves is not a new idea yet past attempts and previous methods have fallen short While buoy methods are useful for measurement of wave conditions they are logistically challenging and cannot provide wave timing information Other radar methods have been limited to statistical products and not proven to provide the fidelity and high level of effectiveness required to support critical operations FutureWaves provides detailed wave characterization that is far superior to any existing system and is the most advanced wave and vessel motion forecasting system of its kind available today The U S Navy needed a real time solution with actionable outputs and so does the offshore operations industry For more information visit www aphysci com Applied Physical Sciences Corp 475 Bridge Street Suite 100 Groton CT 06340 Phone 860 448 3253 www aphysci com EFFICIENCY ACCURACY SAFETY AUTOMATED Whether using Spotter the Customizable Inspection App or a fully custom digital solution built to suit your business needs consider your company s biggests threats a thing of the past WHAT WE OFFER MOBILE APPLICATIONS CUSTOM SOFTWARE DIGITAL MARKETING DIGITAL WEB PRESENCE ONLINE REPUTATION SERVICES ENVOC COM ENERGY Oilman Magazine July August 2017 OilmanMagazine com 19

Page 22

OILMAN COLUMN Measuring the Pace By Josh Robbins After heavy transaction volume in the first quarter A D has stalled out at the end of the second quarter With the vast amount of data and the fantastic software that is available to sort it we have seen many of the companies dig into the same areas looking at the same rock and target the same assets With this focus the availability of assets has become scarce Those that have the acreage to develop have now turned inward and begun drilling programs highlighting potential plugging liability and planning through 2018 using the price deck of today Companies are still focused on the trade Trading non core acreage into core acreage has been the highlight of the divestiture culture so far this year We expect that to continue regardless of commodity pricing Once cored the acreage is being proven if need be and developed This process is heavily dependent on commodity pricing company focus available budget dollars and service prices Completion costs have steadily risen for the past six months and frac schedules in specific areas are full driving prices higher We expect any quality rock within these highly targeted areas that hits the market to be purchased for far more than the current values that exist per acre As the market begins to see that the target area has limited availability the deals will rise and fall with the price of oil and gas We also expect some private equity exit strategies to start taking shape If gas and oil trend upward we may see some of the companies that made large asset purchases earlier in the year flip non core acreage and production We expect many companies to reevaluate their acquisition strategies over the next 18 months Finding the assets has become the key How can they find targeted rock There will be a continual focus on current cash flow how to lower expenses and how to use today s technologies in yesterday s wells This will take more time to engineer more time to evaluate and more time to transact If and when the good rock hits the market it will Josh Robbins move fast Everything else is moving at a much slower pace And unless you know where to find off market assets the A D market will continue to look like this for the rest of 2017 OILMAN CROSSWORD PUZZLE ANSWERS Across 1 7 8 9 12 13 14 17 18 20 21 22 24 26 27 28 31 32 34 20 Unconventional _____ 36 Atlanta s state Compass direction 38 Unconventional Resources Technology Color of goethite sometimes 39 Sooners locale Building the _____ Down Rate setter 1 Known as the Jurassic Cyberchats briefly period rock formation Produced _____ 2 ____ Basin Connection 3 Classified ad abbreviation Marcellus _____ 4 Judicial garb Relating to 5 Durable wood Street fleet 6 Thick Perform 7 Big rig Frozen liquid 10 Promotional effort Prefix with valve 11 Equipment _____ drilling 12 Hydraulic ____ Hawaiian welcome gift 15 Inn serving To _____ is human 16 Tellurium symbol Used a shovel 19 It happens every even Hydrochloric ____ used numbered year in the fracking process 22 23 25 26 Oilman Magazine July August 2017 OilmanMagazine com CSI evidence Bituminous sands are also known as ____ sands Eagle ____ Shale Shale region that shares a city name in New York 29 30 33 35 37 Start of a conclusion OPEC member Russian neighbor for short North or South state for short ____ touch

Page 23

Page 24

Page 25

FEATURE The oil industry has always had a stunning fascination with numbers discovery and points toward the real human impact of shale To the casual observer it may at times seem that the oil and gas industry s love of numbers supersedes all else When most newsworthy topics about the industry find their way to print there s invariably a number somewhere leading the story inexorably answering the key questions how much or how many Stretched across large swaths of Pennsylvania and West Virginia with tips in Ohio Virginia and New York lies a vast 104 000 mile region known as the Marcellus Formation Consequently if one were to overlay a map of America s Appalachian coal country with that of the Marcellus Formation it becomes apparent that these two regions cover a significant amount of the same territory In a world where content is king for oil and gas data still takes the top spot Barrels of oil per day bpd index prices production output estimated reserves jobs numbers both gained and lost one might be hard pressed to find a news story about oil that doesn t have at least some ear to the ground for data Yet behind those numbers indices barrels and projections are Americans whose days begin and end with oil the old and the young the hopeful and the hopeless A steadily growing number of livelihoods depend on the oil industry but few Americans in the nation s largest population centers have much first second or even third hand experience with an unstable industry that s ironically considered a stabilizing economic backbone for America s economy The human face of oil and its impact on America is felt more tangibly with the hurried resurgence of shale oil and gas exploration According to the U S Energy Information Administration the United States is now producing as many barrels of oil per day since it reached its 1970s zenith of more than 9 6 million bpd Over half of the U S oil production numbers now are due to shale oil a stark contrast to America s pumpjack heavy past It s easy to question whether the oil boom of today shares any resemblance to booms of yesteryear Numerically speaking there are some similarities However the biggest difference between the current shale surge and the peak oil production period that rounded off the 1970s is the noticeable level of preparedness both within the industry and the communities who immediately feel the impacts of these boom and bust periods Even now the oil industry is experiencing another boom of sorts with shale We are seeing new stories emerge that reveal just how important the oil industry is to many American lives and communities A Nation of Shale Reserves Perhaps ironically it s the cold numbers that explain why shale will play a leading role in the future of oil and gas exploration and Consequently as many have lamented the gutting of the coal industry in the past decade the development of the natural gas industry in a region that shares the same space as Appalachian coal has turned many landowners into millionaires The growth has also created new job opportunities for struggling communities and created a distinct dichotomy between states that choose to adopt mining and those that choose to reject it A Tale of Two Cities It s a tale of two cities explained George Stark of the Cabot Oil Gas Corporation Cabot which operates over 500 wells in Susquehanna County Pennsylvania has been at the forefront of a new tale of American progress one highlighted by farmers landowners and struggling towns becoming flush with economic success seemingly overnight university Binghamton which historically has ensured the area maintains some level of economic stability There seems to be a bit of envy from people from New York state explained Peter Quigg President of The Community Foundation of the Endless Mountains While Quigg has benefited from a few wells on his own property he has family just over the border in Binghamton that have seen no such benefit My brother in law in the Binghamton area jokes he wants some Pennsylvania gas royalties for Christmas Quigg joked On a more serious note Quigg highlighted the many benefits that now exist for Susquehanna County which include increased charity better educational opportunities and more jobs Natural gas has saved family farms Quigg explained And while some residents do have a distaste for the wells and the drilling People who are not from this area are less inclined to embrace the gas activity said Quigg even those who would prefer no drilling have reaped the rewards Still for those do choose to relocate to the bucolic setting that can be found in Susquehanna County Quigg has one message Those who move here to view the pastoral poverty of cows in pastures and quaint dilapidated barns need to remember the farmer who is scraping by to hang onto his property Those two cities that Stark mentions are not so much two cities but two states Pennsylvania and New York As the estimates for how much gas sits underneath the Marcellus Formation ticked upward Pennsylvania made the decision to allow the hydraulic fracturing necessary to gain access to the untapped reserves Just across the border New York decided to disallow such drilling Stark of Cabot Oil Gas stated that the difference between the Pennsylvania and New York counties is evident in the infrastructure You see it in the storefronts the farmers barns the equipment they re using Stark said With the injection of dollars from shale drilling Susquehanna s government and landowners have seen a growth opportunity the county has not experienced since the coal boom following the Civil War Stark and others in the area have seen the results of these disparate policies Over the past eight years Cabot has paid landowners in Susquehanna County over 1 billion It s hard not to pay that much money and not see a community grow from top to bottom Stark said In many ways the infusion of cash into the county s local economy has been a boon With a 4 9 unemployment rate as of June 2017 the county s employment situation is the best it has been since just before the recession hit in 2008 Shale Extends Across the United States Just over the border in Broome County New York a different story is playing out Susquehanna s neighbor to the north has seen its population decline since the 1970s with no clear signs of a reversal The county is sustained primarily by the presence of a state The Marcellus is of course not the only region in the U S with significant shale deposits Although the Marcellus shale play produces the most significant output of liquid natural gas in the U S other major regions also playing a large role in shale oil include the Permian Utica Eagle Ford HaynesvilleBossier Barnett Woodford Fayetteville Niobrara and Bakken plays Shale plays now exist in 16 different US states As a combined force shale plays are contributing 50 of America s crude and dry natural gas However the size of the Marcellus combined with its estimated natural gas reserves are enough that anyone can easily understand why there s an increasing amount of interest Continued on next page Oilman Magazine July August 2017 OilmanMagazine com 23

Page 26

FEATURE in that region By some estimates the Marcellus Formation contains anywhere between 143 8 trillion to 480 trillion cubic feet of recoverable natural gas Even if the Marcellus were the only source of natural gas in the U S its lowest estimated recoverable gas would be enough to meet the entire yearly US natural gas demand 26 6 Tcf year for over 5 years At the high estimate it would cover that demand for 18 years When all of the shale oil reserves are taken into account the U S has around 2 474 trillion cubic feet Tcf of recoverable natural gas According to the U S Energy Information Administration that s enough natural gas to supply current U S demand for 93 years Shale s Transformation of Small Town America Beyond just the Marcellus Formation the steadily increasing projections for the amount of natural gas and crude oil trapped in rocky shale formations has resulted in a literal transformation of placid small town across the US One such town that experienced a dramatic transformation was Dickinson North Dakota Before the early 2000s Dickinson epitomized the problems inherent in North Dakota and in particular the state s western portion Both an aging population and population decline had been stymying the state s economic growth potential for decades North Dakota reached a population high point of over 680 000 people in 1930 According to Shawn Kessel City Administrator for Dickinson the city s population exploded with a run on shale mining in 2010 The city of Dickinson s population in 2010 was just over 17 000 he said By 2015 we grew to over 25 000 Photo Credit Cabot Oil Gas Corporation www cabotog com Economically however the city expanded Kessel notes that sales tax revenue increased 50 during the 2010 2015 period where oil prices were high and shale was particularly booming in the city And while lower gas prices in the past few years resulted in a large drop in that revenue as well as fewer jobs in the shale oil industry many people chose to stay in the city post boom We have lost some population but many newcomers have changed industries and remained in Dickinson Kessel said As a result the population growth remained the school enrollment numbers continue to be higher than they were before the boom and Dickinson is building new schools to meet enrollment demands The city of Dickinson is much better off after the oil boom than before from an infrastructure perspective Kessel explained According to Kessel the benefits to shale in Dickinson were muted by the negative consequences that often exist when such booms occur Rents increased to somewhat unaffordable levels Roads crumbled under the weight of heavy trucks they weren t designed to handle Water sewage and hospital services were stretched to their limits And then came the crime Dickinson is one of many boom towns taking advantage of the Bakken formation as well as several smaller formations in the region According to Dean Bangsund a North Dakota State University research scientist in agribusiness and applied economics North Dakota has seen its fortunes change for the better thanks to the 2008 2014 boom in the Bakken and other regions Certain types of crime increased said Kessel which he explained included bar fights drug use and human trafficking Kessel stated that the city anticipated the increases in crimes that city has historically seen very little of The city increased its police force in the run up helping to keep a better handle on the new wave of criminality that followed the shale boom Bangsund stated that the average age of population in North Dakota not only grew younger but that the shale oil boom has reversed a decades long population decline in the state 24 He also explained that the boom from the early 2000s caused significant growing pains in many cities but that the state is now positioned well to absorb the steady growth Oilman Magazine July August 2017 OilmanMagazine com Alongside well pads that are already in place Bangsund noted that the state s infrastructure grew however painfully to match the sudden surge Now all that remains is to meet the continued need for workers While there aren t over 100 000 positions needing to be filled as there were when oil prices were high Bangsund explained that North Dakota is still hiring even at 50 a barrel We still have possibly five digits in employment opportunities going unfilled he said The Future of Shale Although data on the most recent renewed interest in shale comes with an air of impersonality it can hint at the more interesting human stories nestled underneath Where job numbers exist so too does increasing birth rates and revitalized communities Where shale plays take hold unsuspecting landowners are made millionaires almost overnight Where old communities turn into shale boom towns older populations contend with both the depths of human depravity that often follow and the very human predilection for charity Shale now seems to bring with it every aspect of the human countenance in a manner not too dissimilar to the 1800s gold rush Shale may yet play host to the most interesting revitalization of forgotten communities now reaping its benefits What remains to be seen is whether those towns now finding their fortunes in shale can successfully invest in a future however far off that may be without shale

Page 27

Page 28

OILMAN COLUMN Interview with Chris Buckley CEO and Founder of ST9 Gas Oil By Tim McNally CB Oh it was fantastic It s been so well received The people that I know in the industry have been so grateful that I have actually gone off and am doing it myself I met a brand new supplier last week and I told him how we do business the reason why we got into it and he said that s just like our company I think people are seeing that there is a lot of correlation between what we are doing and what they want The launch was a huge success with a lot of press lots of customers a lot of people asking when can we get product so it went really well Below is an interview with CEO and Founder of ST9 Gas Oil Chris Buckley ST9 Gas Oil manufactures products for Upstream drilling operations Tim McNally What inspired you to create ST9 Chris Buckley I went into oil and gas and it was very frustrating to look at the big margins with little or no control over the market and a lot of inefficiencies which the big margins covered over As soon as the downturn started to change I noticed that the whole industry in its entirety was already starting to expedite things and I thought I could do this better That s why on our website it says We said up yours to upstream It s not meant to be disrespectful to the industry it s just saying that the whole business practice needs to change TM I understand you all had a sort of public launch at the Oil Technology Conference Could you tell me how that went 26 TM Your company seems to have a focus on total cost of ownership Why was that chosen to be the primary focus of ST9 CB The reason why is because that s the true way that a company as in one of our customers can measure themselves at being successful Not buying just the cheapest or most expensive components it s about how to get the best value from that component We just launched a new product line and we ve done some field trials under some very arduous conditions The product actually lived 15 longer than the components people were using and it lived 24 longer than another market leader However we are selling ours for 35 cheaper than what the competition offers My whole ethics is to govern the SG A so the overall expenditure of the company to limit at a certain amount the affordability to makes sure I can get North American fracking companies profitable all the way down to 40 a barrel Oilman Magazine July August 2017 OilmanMagazine com TM Can you speak to how your focus on lean and affordable operations is disrupting the industry CB Our model is really simple and it s been around for years but the oil and gas industry has been very slow on the uptake Each company needs to have its core competencies which it concentrates on Traditionally oil and gas companies want to make everything Making everything is not the answer because these companies are not good at making everything and that s the problem So they become inefficient at it and then they have a large burden and when they go into a recession it leaves them in a bad place We re not saying that we are not manufacturing We are manufacturing certain products but we are also outsourcing certain products It takes a very vigorous make buy strategy to make sure we do the best thing physically for the company Chris Buckley

Page 29

OILMAN COLUMN The Center of the Natural Gas Universe By Don Briggs Louisiana Oil and Gas Association Here in Louisiana a source of pride amongst our oil and gas industry has been the pipeline infrastructure and exporting facilities we possess in the state This infrastructure has allowed Louisiana to lead the charge as we pursue energy security and haul energy resources across the state nation and globe There is one place an unassuming Cajun town in south Louisiana where all transportation aspects intersect and shape the natural gas market as we know it the Henry Hub Named after its location in the Henry hamlet of Erath Louisiana the Henry Hub is the center of the natural gas trading universe The North American gas market relies on this hub to set the Henry price that will allow all other natural gas trading points to set their reference price on thousands of commercial contracts According to a 2012 article by RBN Energy an average of nearly 400 000 natural gas futures contracts are traded at this hub every day Today the Henry Hub stands as one the best known known trading post in all of North America The Henry Hub which is owned and operated by Sabine Pipe Line LLC a subsidiary of EnLink Midstream serves as a connecting point for nine interstate and four intrastate pipelines that includes Gulf South Pipeline Southern Natural Gas Natural Gas Pipeline Co of America Texas Gas Transmission Sabine Pipeline Columbia Gulf Transmission Transcontinental Gas Pipeline Trunkline Gas Jefferson Island Pipeline and Acadian Gas These pipelines along with the two compressor stations on site allow for extreme flexibility and the ability to transport 1 8 billion cubic feet per day bcf of natural gas For more than a quarter of a century traders from across the nation have revered the Henry Hub as the ultimate pricing authority to set current and future U S natural gas contracts This hub is the center of natural gas spot trading and virtually every British thermal unit more often referred to as BTU that is sold can be linked to the Henry Hub In one way or another the Henry Hub touches almost every single aspect of the United States natural gas market Among other things the location of the Henry Hub is very advantageous for Louisiana We are in the midst of what some would say is an LNG revolution The technology used to produce natural gas has dramatically improved This was not always the case as some used to argue that it was too costly to produce In Louisiana the Haynesville Shale was once pushed aside because shale gas could be Don Briggs produced in the northeast at a lower cost Now companies are reexamining that decision because of Louisiana s access to the Gulf and more importantly the abundance of pipeline infrastructure This vital infrastructure is taking the ability away from OPEC to control the price of the global market The operation of the Henry Hub the reemergence of the Haynesville Shale and the expansion that LNG facilities are experiencing throughout south Louisiana are all contributing toward a brighter future and something we must continue to work towards Oilman Magazine July August 2017 OilmanMagazine com 27

Page 30

NEWS AT A GLANCE American Energy Dominance By Eric R Eissler At the Houston Offshore Technology Conference Largest oil and gas convention in the U S in early May Secretary of the Interior Ryan Zinke stated that America s future role is not only energy dependent but energy dominant and dominance is what America needs However what is American energy dominance This term was left fuzzy in the minds of the audience One might be able to dismiss these statements without proper backing but the U S shale is leading the charge once again the Permian Basin has the strongest showings Furthermore oil production is projected to rise by 17 percent to a record 10 24 million barrels per day by the end of 2017 surpassing Saudi Arabia s 9 9 million barrels per day bpd average in April 2017 Additionally according to Bloomberg and the Financial Times U S shale companies are in the black as finances have improved over the past five quarters This is good news for the industry however With the former CEO of Exxon Mobil as secretary of state and many fingers pointing towards Russian collusion with the current administration it is hard to say what will happen in Russia and its surrounding sphere of influence namely the republics of the former USSR especially oil rich Azerbaijan and Kazakhstan While the U S will see independence from foreign oil it is unlikely that it will become a dominant exporter due to growing domestic demand in 2016 SUVs and Trucks were the best selling vehicles and its location between energyproducing giants Canada and Mexico Furthermore a global supply glut of liquefied natural gas LNG hampers exports combined with the U S s lack of export terminals Regarding economics China would get better shipping rates from Australia or Qatar and quicker delivery than from the U S According to shipping news outlet IHS Fairplay China imported 26 1 million tons of LNG in 2016 of which only 200 000 tons were imported from the U S The majority share of China s imports arrived from Australia U S Named Top Petroleum Natural Gas Producer Again By Alex Mills Some people may find it hard to believe that the United States was the largest producer 28 Photo Credit prykhodov www 123RF com of petroleum and natural gas hydrocarbons last year As a matter of fact it was the fifth consecutive year that the U S beat Russia Saudi Arabia and all of the other OPEC producers The U S beat everyone For some 40 years oil and natural gas production declined in the U S and there was little hope of reversing the downward trend Along came marvelous technological developments in a little area just north of Fort Worth called the Barnett Shale Wildcatters began drilling into shale vertically and then horizontally and using multiple fractures in the formation Originally the process showed little promise in releasing natural gas from tight shale formations But they kept trying and learning from each venture By 2008 the U S was well on its way to being the top producer The United States has been the world s top producer of natural gas since 2009 when U S natural gas production surpassed that of Russia and it has been the world s top producer of petroleum hydrocarbons since 2013 when its production exceeded Saudi Arabia s according to the Energy Information Administration For the United States and Russia total petroleum and natural gas hydrocarbon production in energy content terms is almost evenly split between petroleum and natural gas while Saudi Arabia s production heavily favors petroleum EIA said total petroleum production is Oilman Magazine July August 2017 OilmanMagazine com made up of several different types of liquid fuels including crude oil and lease condensate tight oil extra heavy oil and bitumen In addition various processes produce natural gas plant liquids NGPL biofuels and refinery processing gain among other liquid fuels In the United States crude oil and lease condensate accounted for roughly 60 percent of total petroleum hydrocarbon production in 2016 In Saudi Arabia and Russia this share is much greater as those countries produce lesser amounts of natural gas plant liquids and they also have much smaller volumes of refinery gain and biofuels production Even though low commodity prices caused U S petroleum production to fall by 300 000 barrels per day and natural gas production to decline 2 3 billion cubic feet per day in 2016 the U S still had more total petroleum production than any other country Russian hydrocarbon production has been rising as capital expenditure spending on exploration and production increased Saudi Arabia did not reduce its petroleum production between late 2014 and 2016 to defend its market share even as prices remained low and world oil inventories continued to grow In 2016 Saudi Arabia s total petroleum and natural gas hydrocarbon production rose by 3 percent Today there is talk of the U S being less reliant on imported oil and becoming energy independent Thanks to advances

Page 31

NEWS AT A GLANCE in hydraulic fracturing and the development of other technologies the U S is experiencing an energy renaissance Crude Oil Pricing Can Be Confusing By Alex Mills The factors contributing to the price of crude oil have confused many seasoned observers for years Generally supply and demand have been the most important considerations For example when there is an oversupply prices decline which increases demand and consumption When demand increases and the oversupply turns into a shortage prices increase resulting in a decline in consumption and the cycle starts again A few weeks ago OPEC announced that it was going to continue its reduction in oil production by 1 2 million barrels per day b d Some believed that would have caused the price of oil to rise with the anticipation that supplies would be reduced The opposite happened and prices fell On Wednesday the Energy Information Administration a part of the Department of Energy released its weekly report on U S crude oil inventories showing a decline of 1 7 million barrels for the week ending June 9 Again some thought that a decline in inventories would show a rise in price The opposite happened and prices on the New York Mercantile Exchange declined 1 73 to settle at 44 73 the lowest in seven months with production 920 000 b d higher than yearend 2016 The agency s first look at 2018 suggested that U S crude production will increase 780 000 b d year over year but such is the dynamism of this extraordinary very diverse industry it is possible that growth will be faster Crude oil pricing gets even more complicated when supply and demand factors are taken into consideration worldwide The global demand forecast continues to show growth of 1 3 million b d in 2017 despite significant downgrades to estimates of the first half s demand The International Energy Agency IEA which attempts to track worldwide supply and demand released its monthly report last week stating it anticipates that the world s oil oversupply will remain in place through 2017 as efforts by the OPEC to restrain petroleum production will be replaced by increases in U S oil production U S production is expected to continue rising along with other non OPEC producers in 2018 outpacing the expected demand increase Growth in total non OPEC production in 2018 is forecast to be 1 5 million barrels per day b d compared with expected growth of 660 000 b d this year In 2017 IEA expects U S crude supply to rise 430 000 b d and the year to end IEA expects demand increases in India and China during the remainder of 2017 OPEC crude oil output rose 290 000 b d in May to 32 08 million b d the highest level so far this year after comebacks in Libya and Nigeria which are exempt from supply cuts Output from members bound by the production deal edged lower which kept year to date compliance strong at 96 percent Compared with May 2016 OPEC crude production was down 65 000 b d Confused Me too Alex Mills is President of the Texas Alliance of Energy Producers The opinions expressed are solely of the author Safety and Dividends Go Together Like Oil and Gas We want to fuel your profits with safety that s why we provide group and individual dividends to companies that keep their people safe Plus as members of the Texas Oil and Gas Association Safety Group you may receive a greater discount on your workers comp premium We re helping our policyholder owners be safer and stronger and we think you are going to find it very rewarding To see how safety can power your dividends contact your agent or Jim Sierra at 512 478 6631 or jsierra txoga org While we can t guarantee dividends every year Texas Mutual has returned more than 2 billion to safety conscious policyholder owners since 1999 Texas Mutual Insurance Company is rated A by A M Best Company 2017 Texas Mutual Insurance Company Oilman Magazine July August 2017 OilmanMagazine com 29

Page 32

OKLAHOMA NEWS AT A GLANCE Oklahoma is Still a Sweet Spot for New Wells By Tim McNally Many large oil and gas companies have found the prospect of drilling new wells and operating in new areas to be unattractive The reasoning is sound enough if certain plays are not profitable with an oil price within the 40 50 range then why pursue those options This explains the decline in offshore production and the rise of shale production in the northeast However Oklahoma seems to still be a place where companies are willing to begin anew with fresh wells using clever strategies For example Wright Drilling Exploration based in Denison Texas recently announced that it had successfully completed its sixth Oklahoma oil well project On June 14 the company revealed that it had completed testing and drilling on its JULIE 2 project located in Okfuskee County in Oklahoma and the firm had deemed it to be a productive well The release notes that JULIE 2 is a direct offset well to another Wright Drilling project JULIE 1 An offset well is typically a previously existing wellbore that is used to smooth along the process of drilling a new well in a nearby or similar region We re excited that our partners are developing oil fields with us and taking advantage of direct offset drilling opportunities stated the President of Wright Drilling Exploration Scott M Casper Drilling new wells based on your own successful oil and gas well data is just another way to potentially improve your end results The firm s strategy of having multiple oil and gas wells located near to each other is clearly a hand to their operations in drilling new wells using existing data from previously drilled wells to optimize drilling and production for future operations Some companies operating in Oklahoma such as Devon Energy consider themselves fortunate for having dependable oil inventory from exceptionally economic wells during these trying times By making use of innovative technologies new techniques and internal processes the company has been able to maximize its production efficiency Despite these advancements the firm still faces difficulty in generating as much cash flow as it did 30 Photo Credit Jonathan Mullen www 123RF com when the oil price was riding high at 100 competitive edge We re fortunate that we have a strong inventory with drilling opportunities we can make in this price range that make a good economic return But obviously our cash flow is not as strong as if prices were higher Devon CEO Dave Hager stated according to newsok com The bigger challenge is not can you generate good returns on the incremental capital but do you have enough cash flow to reinvest in those projects to make good returns According to a news release by Woodlands Texas based Newfield Exploration Company the company recently decided to break ground on a new recycling facility The facility s purpose will be the cleansing and eventual reuse of flowback and produced water from its operations in the Sooner Trend Anadarko Basin Canadian and Kingfisher counties also known as the STACK regions The facility will be located in Kingfisher Oklahoma and will use aerated biologic treatment technology to recycle water for use in hydraulic fracking operations Such questions are prominent in the minds of all oil and gas executives as they strive to produce oil and gas in an environment already saturated with their product Finding new ways to do the same processes in a more efficient manner has been and will continue to be essential to the survival of these firms Newfield Looks to Recycling to Boost Cost Efficiency By Tim McNally As companies seek to maximize efficiency in this unfavorable economic environment they employ new technologies which enable them to re use certain resources in a cost effective manner Whether it be through software hardware or new refinery or recycling facilities equipped with state of the art technologies companies are increasingly looking to new means to gain a Oilman Magazine July August 2017 OilmanMagazine com The new Barton facility will be capable of recycling both the flowback and produced water currently generated from our STACK wells and hydraulic fracturing operations stated Newfield Chairman Lee K Boothby Today s innovative technologies are allowing us to more cost effectively recycle and reuse the water we produce from our operations This is good for our economics and good for the environment he continued The facility which will be named the Barton Water Recycle Facility will require a multimillion dollar investment and will process roughly 30 000 barrels of water per day It will be built upon a 30 acre site and will have the ability to store 6 5 million barrels of water in underground pipelines

Page 33

OKLAHOMA NEWS AT A GLANCE The process for treating the water uses natural and enhanced bioremediation to separate and exterminate impurities in the produced water The firm will be able to use the recycled water in its fracking operations as the quality of the water will be similar to the water originally found in reservoir rock The time when the procurement and disposal of water in oil and gas operations was viewed as routine is over stated Dana Murphy the Chairman of the Oklahoma Corporate Commission Water has now become an absolutely critical component that demands careful planning for environmental conservation and business reasons This facility is a step in the continuing evolution of the industry The facility is expected to be completed early in the third quarter of 2017 ONEOK Announces Expansion Plans in STACK Region By Tim McNally Tulsa Oklahoma based ONEOK Inc released a statement on June 19 detailing its plans to expand its natural gas liquids NGL gathering system and its Sterling III Pipeline The total project is expected to require an investment of 130 million and is expected to be completed by year end 2018 The plans for expansion will be partly enabled by the assistance of a subsidiary of EnLink Midstream which will be fulfilling a long term contract to help accommodate the expected volume growth from both EnLink s and other customers natural gas processing plants in the region The anticipated changes include expanding the capacity of the Sterling III Pipeline which transports NGLs of varying quality to Mid Continent infrastructure from 190 000 bpd to 250 000 bpd according to the release There would also be an expansion of ONEOK s Arbuckle Pipeline so that it will now connect to the EnLink Cajun Sibon Pipeline in Southeastern Texas Furthermore to enhance the firm s ability to support the increasing natural gas activity within the STACK region ONEOK will be entering into a long term processing services agreement with a third party This will enable the company to increase its access to natural gas processing capacity by 200 million cubic feet per day volume of NGL production occurring within the STACK region according to Terry K Spencer President and CEO of ONEOK Producers continue to accelerate their investments in the STACK due to the higherreturn economics driven by strong crude oil and NGL rich natural gas production rates he stated This expansion of our NGL gathering system further underscores our ability to meet the NGL service needs of STACK area natural gas processors and demonstrates our continued commitment to providing reliable high quality service to our customers ONEOK s current NGLs segment gathers around 150 000 to 200 000 bpd of NGL from the region with connections to over 100 third party operations The firm s vast third party network in addition to the expected increase in volume of NGLs coming out of the STACK region couple to create a large benefit for ONEOK and the clients it serves This agreement provides an attractive option for timely access to existing natural gas processing capacity to better serve the rapid growth occurring on our dedicated acreage concluded Spencer The expansions are mainly due to the higher Oilman Magazine July August 2017 OilmanMagazine com 31

Page 34

TEXAS NEWS AT A GLANCE United States is Positioned to Become a Dominant Liquefied Natural Gas Exporter By Emmanuel Sullivan Golden Pass Products LLC has been authorized by the U S Department of Energy to export domestically produced liquefied natural gas to countries that do not have a free trade agreement with the United States The joint venture between Qatar Petroleum and ExxonMobil has been given the green light to export up to the equivalent of 2 21 billion cubic feet per day from the Golden Pass Terminal near Sabine Pass in Jefferson County Texas In addition to Golden Pass the Department of Energy has authorized a total of 19 2 billion cubic feet per day to be exported to non free trade agreement countries from planned facilities in Texas Louisiana Georgia and Maryland If these projects get off the ground the United States would be positioned as a dominant LNG exporter in the world U S Secretary of Energy Rick Perry stated This announcement is another example of President Trump s leadership in making the United States an energy dominant force This is not only good for our economy and American jobs but also assists other countries with their energy security Golden Pass estimates the construction of its facility will provide 45 000 direct and indirect jobs over five years and the project will provide 3 800 direct and indirect permanent jobs over the next 25 years of operational activity The cumulative impact of construction and 25 years of operation will provide 2 4 billion in federal tax revenue and 1 2 billion in state tax revenue The Energy Department conducted an extensive review of the Golden Pass application and found positive benefits to the U S economy in scenarios with liquefied natural gas exports up to 28 billion cubic feet per day Federal law requires approval of natural gas exports to countries that have a free trade agreement Countries that do not have a free trade agreement the Natural Gas Act directs the Energy Department to grant export authorization unless the agency finds that the proposed exports are not consistent with the public interest 32 Photo Credit Oleksandr Kalinichenko www 123RF com Texas Oil and Gas Expansion Frustrates Opec Production Cuts By Alex Mills Upstream oil and gas development in Texas rallied for the fifth straight month in April according to the Texas Petro Index which improved to 164 3 to post its first year over year increase in 27 months Among TPI indicators logging big yearover year gains in April were wellhead prices for crude oil and natural gas the number of drilling rigs at work wellpermitting activity and the value of Texas produced oil and gas Joining those positive signs was total upstream oil and gas employment which registered the first year over year increase since February 2015 and the volume of oil produced in Texas which was up more than 2 percent compared to April 2016 Texas producers are responding to higher wellhead prices that have resulted from coordinated efforts by OPEC Russia and others to curtail oil production said Karr Ingham the economist who created the TPI and updates it monthly But in large part production growth in Texas and the U S is keeping a lid on crude oil prices which continues to frustrate parties to that agreement Ingham said the volume of crude oil being exported from the U S about 1 3 million barrels per day is only slightly less than the volume of crude the curtailment agreement has been able to remove from global markets Producers in Texas and across the U S will gladly take the market share given up by nations that Oilman Magazine July August 2017 OilmanMagazine com attempt to manage oil markets and prices by centralized decisions to manipulate production A composite index based upon a comprehensive group of upstream economic indicators the Texas Petro Index in April was 164 8 up from 160 4 in March and a slight 0 3 percent higher compared to the April 2016 TPI of 164 3 Before the recent economic downturn the TPI peaked at a record 313 5 in November 2014 which marked the zenith of an economic expansion that began in December 2009 when the TPI stood at 187 4 About the TPI The Texas Petro Index is a service of the Texas Alliance of Energy Producers the nation s largest state association of independent oil and gas producers Are Rising Texas Exports Too Much of a Good Thing By Tim McNally The Port of Houston has seen a recent surge in Liquid Natural Gas LNG exports which is terrific news for the industry but it has been accompanied by a decrease in available space for the many transportation ships which make use of the port The dreaded traffic jam already ubiquitous on the automotive highways of Houston could be the newest dilemma for exporters to solve while the activity in the port continually increases There s no question that you get bogged down occasionally in the Ship Channel stated Greg Garland chief executive

Page 35

TEXAS NEWS AT A GLANCE at Phillips 66 according to the Houston Chronicle It s just congested The port does not only become congested due to the extensive traffic that passes through the channel but the ports avenues are also quite often hampered by unfavorable weather conditions that come in from the coast Hurricanes storms and fog are all frequent occurrences exacerbating the existing congestion found within the port The sheer number of ships that utilize the port within a given year might sufficiently summarize the issues found in the region In 2016 over 220 000 barges cruised or more accurately sluggishly maneuvered through the port according to data from the Greater Houston Port Bureau compiled by the Houston Chronicle That figure represents a 10 percent increase since 2010 when the number of barges that passed through the port came in at approximately 203 000 Given the problematic conditions which are presented in dealing with the port some companies are considering alternatives to circumvent the traditional routes of exportation including other ports in the region The Houston Chronicle reported that Greg Garland considers the Freeport option a swifter more efficient option for transporting the firm s resources Speaking of the port s beneficial attributes Garland stated Customers like that Ship owners like that We think it s going to be a very competitive location versus the Ship Channel The Brownsville port is also garnering significant interest from firms looking to develop LNG plants within the region Lower real estate costs coupled with growing interest in less trafficked ports have driven some firms to begin using new locations and methodologies to move gas and other natural resources from the region out into the worldwide market The search for sensible and affordable exportation options will undoubtedly continue to stimulate companies drive for discovering novel solutions Congressman Gonzalez Starts Oil Gas Caucus in House of Representatives By Eric R Eissler Congressman Vicente Gonzalez TX15 announced the formation of a Congressional Oil and Gas Caucus This organization composed of congressional members will be created to educate members of congress about the oil and gas industry From upstream extraction and production midstream transport and downstream refining value added petroleum products Additionally it will cover all other related hydrocarbon products such as oil natural gas gasoline natural gas liquids etc SENIOR GEOPHYSICIST Lukoil Intl Upstream West Inc Houston TX 77046 Lukoil Intl Upstream West Inc has an opening for a Senior Geophysicist position Requires Masters in Geosciences Geophysics or Geology 5yrs experience required Duties Provide quant qual anal comparisons of seismic time depth gathers in order to characterize amplitude variation within offset domain inside area of interest areally stratigraphically defined as area of lead or prospective interest possess the ability to integrate these results with overall exploration effort provide quant and qual support anal to internal or outside party generated seismic inversion products from input calibration well data provide well data identification selection quality control quality assurance characterization fit for purpose modeling application supplied to outside or internal party interpret the same results test against actual data provide quant and qual estimates on data accuracy ability to predict physical location of expected reservoirs analyze quality of expected reservoirs ability or lack thereof to predict presence of hydrocarbons have ability to understand apply various seismically derived attributes how these attributes may or may not directly impact prospective area in terms of delineating confirming or denying existence of a reservoir prone depositional system its character relationship to a prospective area of interest with particular knowledge of how overall impact of seismic attributes affects prospect risk have ability to understand apply rock physics calculations methodologies to calibrate seismic results predictions limitations against actual conceptual well control within a seismic understand importance of well well data selection quality control and quality assurance understand formation evaluation its potential to effect overall results understand intrinsic limitations of seismic data to predict reservoir presence location quality how the application of rock physics methods will affect the prediction of same have ability to model various lithology fluid reservoir properties predict their effect on seismic response interpret 2D 3D seismic reflection data either in time or depth create structure thickness various amplitude maps combine with geological model s extant well control to produce various lead prospect maps in given area of interest integrate velocity models with PSTM interpretations to build final grids as input into static geo models Congressman Gonzalez will serve as the chair of the new caucus and hopes to expand the size of the caucus quickly As chair he will serve as an advocate about the economic benefits of fully harnessing the country s natural resources In recent years our nation s energy sector has experienced dramatic growth and increased innovation we have seen the United States become the world s leading producer of oil and natural gas Congressman Gonzalez said Congressman Gonzalez is a strong supporter of maximizing American energy resources as a comprehensive approach to strengthen the economy The Eagle Ford Shale potentially the largest economic development in Texas runs through the Congressman s district and has created thousands of jobs in the region Energy is the base on which the economy is built The 15th District of Texas is home to several refineries pipelines and part of the Eagle Ford Shale I have witnessed the effects of a thriving oil and gas industry firsthand Congressman Gonzalez said As a Texan I have a unique understanding of how the industry works and its importance for the communities in my district across the country and around the world I hope that the Oil and Gas Caucus can serve as a space for members from all over the country to learn more about the oil and gas industry and come away not only with a better understanding of the scientific and technical aspects but also gain a better understanding of how technological advancements and growth benefit all of us Congressman Gonzalez concluded PLEASE FAX RESUMES TO 713 386 2749 Oilman Magazine July August 2017 OilmanMagazine com 33

Page 36

LOUISIANA NEWS AT A GLANCE OEG Offshore Announces Merger with Cargo Specialist Paragon Industries By Tim McNally OEG Offshore announced on May 1 2017 that it would be merging with Cargo Specialist Paragon Industries OEG Offshore specializes in producing and delivering customized mini containers dry van containers offshore baskets pumps and filters and a variety of other containment and utility products The firm was founded in 2010 in Aberdeen Scotland when Vertec Engineering and Continental Offshore merged in January of the same year The merger with Paragon Industries a manufacturer of Oil Country Tubular Goods OCTG line pipe products and structural pipe piling will further heighten OEG s position as one of the world s leading offshore container suppliers The deal will increase OEG s already extensive fleet by 1400 units and will include new container designs from Paragon OEGs presence in the Gulf Coast will be further solidified with the addition of some new full service locations We are delighted to align with Leonard and the Paragon team to develop our product range in the U S Gulf of Mexico market and believe that with the similar culture and service ethos of OEG and Paragon that we shall achieve a rapid integration of the two companies and provide rapid benefits to our expanded customer base stated OEG Offshore Chief Executive John Heiton Paragon was founded in 1987 by Leonard J Guarisco Snr the father of the current President and CEO Leonard J Guarisco Jr It has been servicing its clients by moving cargo between land and sea on the Gulf Coast operating out of its main facility in Morgan City Paragon Industries is confident that its merger with OEG Offshore will result in a new united ability to offer an increased breadth and depth of complementary product offerings and service capabilities to meet our customers requirements This merger will not only support ongoing working relationships with our existing customer bases but will provide a more efficient and effective enterprise to continue to provide and improve its quality level of service across a broader scope of needs stated Paragon President CEO Leonard J Guarisco Jr 34 Photo Credit Brian McDonald www 123RF com Haynesville Shale Formation Holds Potential for Economic Revival in Louisiana By Tim McNally Over the past few years certain oil and gas shale formations have been sidelined as producers search for cheaper means of production The appeal of the typical low cost resource deposit has drawn companies away from viable and established options to relatively younger opportunities such as those which can be found in the northeast However there is a steady trickle of production coming back to areas where the production value is still high due to the existing infrastructural advantages of certain regions The Haynesville Shale formation is not very well known for its oil production but the amount of shale gas it produces is quite significant when compared to the national level Spanning approximately 9 000 miles within the regions of northwest Louisiana east Texas and southwest Arkansas the formation accounts for 13 of the United States shale gas production and potentially holds 500 trillion cubic feet of gas The formation was one such opportunity which experienced a significant decline in activity these past few years while Northeastern opportunities such as the Marcellus Shale formation have grown in popularity among producers The region s popularity has proven to be a conundrum for companies attempting to transport their extracted resources across the nation as pipeline bottlenecks in the region have been proliferating due to the Oilman Magazine July August 2017 OilmanMagazine com increased supply Thus what were previously seen as invalid options have arisen once again as potential sources of production The Haynesville formation in particular is expected to experience a substantial increase in activity Indeed Forbes reported that Chesapeake CEO Doug Lawler stated The Haynesville was largely written off by industry two to three years ago but it has reemerged stronger than ever Industry wide advancements in drilling technology the transportation and processing infrastructure already available in Louisiana and the convenient location of Louisiana in the gulf are some of the critical factors which are persuading companies to return to the Haynesville formation With six U S LNG export facilities expected to be fully operational by 2022 the region is appearing more and more attractive to businesses According to LOGA the Production in this formation will now climb for the seventh straight month in June reaching the highest since October 2014 If the level of activity in the region continues to increase Louisiana could experience an economic boon which would reestablish the state as a solid producer and transporter of natural gas Venture Global LNG Announces Successful Close to Private Funding Round By Emmanuel Sullivan Washington D C based LNG producer Venture Global LNG announced today it raised 81 4 million in additional capital from high profile very large institutional

Page 37

LOUISIANA NEWS AT A GLANCE the states and would instead be bequeathed to the federal government Most of these states rely heavily on the oil and gas industry to boost their economy Cutting off the income received from oil operations in ocean waters could detrimentally affect their economic wellbeing This is even truer during such times as the present when the states that rely on their oil based businesses are struggling to balance their state budgets as the overall level of production has fallen with the price of oil Photo Credit Tomasz Wyszolmirski www 123RF com investors This is the company s sixth round of equity investment which brings the latest Reg D transaction to an aggregate funding total of 361 million Co CEOs Mike Sabel and Bob Pender stated This private placement represents the capital markets continued confidence in our ability to execute on our development of 30 million tons of LNG production By 2021 we expect to launch commercial operations for Calcasieu Pass and deliver the lowest cost LNG from North America to the global market The proceeds will fund Venture Global s development activities for its LNG export facilities in Louisiana The company is developing two export facilities Calcasieu Pass located in the southwestern Louisiana Cameron Parish less than 50 miles south of Lake Charles and Plaquemines located in Plaquemines Parish south of New Orleans The two innovate export facilities are planned to provide long term low cost clean and reliable North American liquefied natural gas Over 240 billion in exports are expected over the lifecycle of both facilities The project is projected to provide power to 30 9 million homes in Europe and Asia In March Venture Global LNG filed a formal application with the U S Federal Energy Regulatory Commission requesting authorization to site construct and operate the Plaquemines LNG export terminal The company is also seeking permission to build the Gator Express pipeline system following the preliminary review process with FERC Construction of the Plaquemines LNG project is expected to begin in 2018 Once FERC authorizes the project full operation is scheduled to begin in Q1 of 2023 When fully operational the facility may produce up to 24 mtpa or the equivalent of approximately 1 240 Bcf yr of natural gas according to filings with the Department of Energy Gulf States May Suffer if Proposed Budget Cut is Approved By Tim McNally Alabama Louisiana Mississippi and Texas received 36 5 million in payments between 2009 and 2016 due to an act passed by President Bush which allocated some offshore drilling revenue to Gulf states However if Congress approves a recently proposed budget cut from the Interior Department these states may receive nothing from the companies which operate in the Gulf region The Gulf states have been the beneficiaries of the Gulf of Mexico Energy Security Act GOMESA which was signed into effect in 2006 and began the sharing of offshore leasing revenues with Gulf producing states and the Land Water Conservation Fund for restoration purposes The act also banned drilling within 125 miles off Florida s coastline in the Eastern and Central Planning Areas until 2022 If the budget cut is approved the funds generated from GOMESA would be diverted from Due to the potential environmental hazards of the oil industry the Gulf states have argued that bearing the risk of an oil spill entitles them to some sort of financial compensation which would at least partially cover the possibility of a spill The 2010 Deepwater Horizon oil spill involving BP where 1 100 miles of coastline experienced considerable damage is a frequently referenced example of the catastrophic damage that can be caused when an offshore operation goes haywire According to CNBC Republican Congressman Bradley Byrne a representative of Alabama stated The GOMESA program is critical to coastal states who assume the environmental and economic risks and provide a majority of the infrastructure and workforce for the offshore oil and gas industry However the argument that these businesses are also struggling is undoubtedly true Companies more than ever need to maximize profitability and efficiency to continue to operate Such a budget cut would give a slight boost to profits in offshore operations Offshore operations have seen a general decrease in activity as the price of oil has fallen The revenue derived from such operations were not satisfactory to justify the costs incurred while drilling offshore The intention of the plan was not of course an attempt to harm these states but rather an attempt to cut down the U S deficit The Office of Management and Budget estimates the termination of the revenue sharing would save the federal government 3 6 billion over the course of a decade The administration further justified the cut stating that rather than only allowing four states to benefit from the operations of offshore drilling all parties within the United States should receive a boon from such business activity Oilman Magazine July August 2017 OilmanMagazine com 35

Page 38

OILMAN COLUMN Oil Company Tests Unique Model in Texas Now Looking at Bakken Niobrara By Jason Spiess One of the more interesting slices of the oil and gas world is witnessing how innovation is prodding along major changes to the industry Sure you have the core of the change hydraulic fracturing and horizontal drilling But I am referring to those paradigm shifts that end up turning those changes into an evolution a new way of doing business Just as layers of technology eliminated the guess work on where to drill the wired world is influencing the industry as well Eagle Natural Resources an independently owned oil and gas asset acquisition and management company has tested a new approach to oil and gas development utilizing crowdsourcing on the Internet We ve integrated with a couple of technology firms that allows us to offer investing opportunities online for accredited investors the company s CEO and founder Jeremy Paul said Investors are able to create an account and if they want to review and invest in a down energy market via tax advantaged direct oil and gas programs they now have the ability to do so through eaglenaturalresources com Currently Eagle Natural Resources has a growing portfolio of income producing assets and developmental drilling inventory in Texas Oklahoma and the Gulf Coast Region Now they are looking at other shale plays Paul explained that integrating the online investing element was tricky Not only did you have additional regulations due to opening up investing online but crowdfunding investors typically are not the same as oil and gas investors It s a lot different process as far as going and getting a regulation crowdfunding deal Paul said Crowdfunding investors are typically non accredited investors They don t have to verify their annual income or net worth For our investors we have to Paul added because they had such a precise target for qualified accredited investors it streamlined much of the work It was actually somewhat easy to launch that type of offering and create that platform Paul said The investment process and the investment 36 platform itself is really just geared towards offering investors a way to kind of piggyback on some of these oil and gas plays according to Paul The basic theory is that by bringing together a purchasing power of investments Eagle Natural Resources can go and acquire large acquisitions That s the key that s what we are looking for Paul said Because we always want to keep a drill bit in the ground but we also want to go and acquire as much property and production that we can right now given the current state of oil prices And oil prices do affect plenty in oil and gas But first the goal is finding the properties that match the strategy We mainly look for HBP held byproduction properties and look for upside drilling room further exploit proven undeveloped locations if you will Paul said As opposed to going out there drilling in someone else s backyard where there is no oil or gas to be proven Instead we go into known homogeneous reservoirs Additionally Eagle Natural Resources targets financially distressed energy assets that need an infusion of capital Their baseline goal for each project is driving a minimum 200 percent increase in production through smart redevelopment We ve got Permian Basin assets currently We ve also got some assets in the north and northwest Texas area just off the shelf of the Permian West Texas Paul said We ve had a lot of drilling programs that we ve done in the past East Texas South Texas very shallow stuff Woodbine east Texas and some Frio Sand in southern Texas Paul added they have also drilled a number of wells in Oklahoma We plan on going out and revamping the acquisition model we have here in Texas and going and looking at the Stack and the Scoop plays in Oklahoma Paul said But we are also looking at purchasing PDP Proved Developed Properties between all the major plays Overall Paul said they are targeting the Permian Eagle Ford STACK SCOOP Niobrara Shale and the Bakken Basically where we are right now is where the price of oil is at Anything prior Oilman Magazine July August 2017 OilmanMagazine com Photo provided by Jason Spiess to 60 a barrel is an acquisition business model in our frame Paul said If you hit a certain level of the price per barrel than certain areas are going to be opening up to more investment because things are going to become more economic as the price goes up Paul added there is something that can impact the bottom line almost as much as the price of oil real estate We have started in the Permian where there are lower lifting costs and production costs although the acreage prices are going up Paul said Tremendously I might add 40 to 60 000 an acre in some cases But rising real estate prices are not everywhere Neither is a universal break even price Paul understands patience and timing is very critical to his model s success in oil and gas You want to be going and looking at these places that others aren t because the acquisition prices are going to be much lower for the prices that they are at now Paul said Especially for the Bakken The Bakken isn t really economic past a certain dollar perbarrel Paul said they were looking at some projects that were somewhere between 60 and 80 a barrel but since then lower cost producers are coming in and the Dakota Access Pipeline finished Paul believes those factors should lower infrastructure prices down somewhat We are looking at some acquisitions up there in the Bakken Paul said We are definitely looking at the northern shale plays and we want to surround ourselves with some good landmen in the Bakken and Niobrara

Oilman Magazine July/Aug 2017

Page 1

Page 2

Page 3

Page 4