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Oil Price

In 2003, the late author and investment banker Matther Simmons predicted that with “certainty,” by 2005 the U.S. would enter a long-term natural gas crisis for which the only solution was “to pray.” T. Boone Pickens and a number of high-profile energy insiders concurred.

ConocoPhillips and ExxonMobil made large acquisitions of natural gas companies, betting on a future with much higher natural gas prices. Liquefied natural gas (LNG) import terminals were being built to help address the expected supply shortfall.

By 2005, U.S. natural gas production had begun to decline. Natural gas spot prices regularly spiked above $10 per million British thermal units (MMBtu), and sometimes as high as $15/MMBtu.

What happened next was unanticipated. Natural gas producers were experimenting with a combination of hydraulic fracturing (“fracking”) and horizontal drilling. Their success would change everything.

Instead of an ongoing decline, by 2007 U.S. natural gas production was moving substantially higher. The industry was in the early stages of the largest expansion of U.S. natural gas production in its history.

A decade later, natural gas production was 50% higher than the level in 2007. Today, it is 86% higher and still climbing. Along the way, LNG import terminals were converted into LNG export terminals, and many more were built.

Natural gas expansion was so dramatic, that in 2016, the U.S. began to sharply increase LNG exports. At first, exports were a drop in the bucket compared to those of Qatar and Australia — the world’s two largest LNG exporters. But the rise was steep, and by 2022 it looked like a possibility that the U.S. could soon overtake those countries as the world’s largest LNG exporter.

That has now happened, according to data compiled by Bloomberg. Data through the end of December 2023 showed record U.S. exports of 91.2 million metric tons. The U.S. became the world’s leading LNG exporter in 2023, surpassing Qatar and Australia.

The increase in production was attributed to the return of Freeport LNG to full service, adding 6 million metric tons, and the full-year output of Venture Global LNG’s Calcasieu Pass facility, which added 3 million metric tons more than in 2022.

This is an extraordinary achievement for U.S. natural gas producers, but it is even more impressive when you consider the state of the industry in 2005. It turns out that predicting the future is hard, even for an integrated supermajor like ExxonMobil.

By Robert Rapier

 

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Toby Z. Rice, President and CEO, said, “This HOA with Texas LNG highlights continued momentum behind EQT’s differentiated LNG strategy, which is focused on achieving the best combination of upside exposure and downside risk mitigation. Our tolling capacity gives us direct connectivity to end users of natural gas globally, allowing for end-market structuring flexibility and superior downside protection.”

Rice continued, “EQT’s low-cost structure, peer-leading core inventory depth and environmental attributes uniquely position us to compete and win in the global energy arena and we believe the international market will increasingly covet our molecules as a long-duration secure supply source that can drive meaningful emissions reductions via coal displacement.”

Investor Contact:Cameron HorwitzManaging Director, Investor Relations & Strategy412.395.2555[email protected]

About EQT CorporationEQT Corporation is a leading independent natural gas production company with operations focused in the cores of the Marcellus and Utica Shales in the Appalachian Basin. We are dedicated to responsibly developing our world-class asset base and being the operator of choice for our stakeholders. By leveraging a culture that prioritizes operational efficiency, technology and sustainability, we seek to continuously improve the way we produce environmentally responsible, reliable and low-cost energy. We have a longstanding commitment to the safety of our employees, contractors, and communities, and to the reduction of our overall environmental footprint. Our values are evident in the way we operate and in how we interact each day – trust, teamwork, heart, and evolution are at the center of all we do. To learn more, visit eqt.com.

Cautionary StatementsThis news release contains certain forward-looking statements within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and Section 27A of the Securities Act of 1933, as amended. Statements that do not relate strictly to historical or current facts are forward-looking. Without limiting the generality of the foregoing, forward-looking statements contained in this news release specifically include statements regarding the Company’s plans, objectives, expectations, goals, and projections relating to the Company’s entry into the HOA with Texas LNG and any potential definitive agreement for LNG tolling services from Texas LNG, including statements relating to the anticipated timing and benefits therefrom, and statements relating to the Company’s plans, objectives, strategies, expectations and intentions with respect to the Company’s LNG strategy.

The forward-looking statements included in this news release involve risks and uncertainties that could cause actual results to differ materially from projected results. Accordingly, investors should not place undue reliance on forward-looking statements as a prediction of actual results. The Company has based these forward-looking statements on current expectations and assumptions about future events, taking into account all information currently known by the Company. While the Company considers these expectations and assumptions to be reasonable, they are inherently subject to significant business, economic, competitive, regulatory and other risks and uncertainties, many of which are difficult to predict and beyond the Company’s control. These risks and uncertainties include, but are not limited to, volatility of commodity prices; the costs and results of drilling and operations; uncertainties about estimates of reserves, identification of drilling locations and the ability to add proved reserves in the future; the assumptions underlying production forecasts; the quality of technical data; the Company’s ability to appropriately allocate capital and other resources among its strategic opportunities; access to and cost of capital, including as a result of rising interest rates and other economic uncertainties; the Company’s hedging and other financial contracts; inherent hazards and risks normally incidental to drilling for, producing, transporting and storing natural gas, natural gas liquids (NGLs) and oil; cyber security risks and acts of sabotage; availability and cost of drilling rigs, completion services, equipment, supplies, personnel, oilfield services and sand and water required to execute the Company’s exploration and development plans, including as a result of inflationary pressures; risks associated with operating primarily in the Appalachian Basin and obtaining a substantial amount of the Company’s midstream services from Equitrans Midstream Corporation; the ability to obtain environmental and other permits and the timing thereof; government regulation or action, including regulations pertaining to methane and other greenhouse gas emissions; negative public perception of the fossil fuels industry; increased consumer demand for alternatives to natural gas; environmental and weather risks, including the possible impacts of climate change; and disruptions to the Company’s business due to acquisitions and other significant transactions. These and other risks are described under Item 1A, “Risk Factors,” and elsewhere in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 and other documents the Company files from time to time with the Securities and Exchange Commission. In addition, the Company may be subject to currently unforeseen risks that may have a materially adverse impact on it.

Any forward-looking statement speaks only as of the date on which such statement is made, and, except as required by law, the Company does not intend to correct or update any forward-looking statement, whether as a result of new information, future events or otherwise.

 View original content to download multimedia:https://www.prnewswire.com/news-releases/eqt-announces-tolling-agreement-with-texas-lng-302033095.html

SOURCE EQT Corporation (EQT-IR)

 

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Oil Price

The Canada Energy Regulator is hearing arguments on Friday from Trans Mountain Corporation on why it should allow a change in the route and diameter of a small section of the pipeline. The company has warned that without that change it could face a worst-case scenario of a delay of two years in the completion of the pipeline.

The expanded Trans Mountain pipeline will triple the capacity of the original pipeline to 890,000 barrels per day (bpd) from 300,000 bpd to carry crude from Alberta’s oil sands to British Columbia on the Pacific Coast.

The Federal Government of Canada bought the Trans Mountain Pipeline Expansion (TMX) from Kinder Morgan back in 2018, together with related pipeline and terminal assets. That cost the federal government $3.37 billion (C$4.5 billion) at the time. Since then, the costs for the expansion of the pipeline have quadrupled to nearly $23 billion (C$30.9 billion) and could continue to increase.

The expansion project has faced continuous delays over the years. The latest roadblock emerged in December when the Canadian regulator denied a variance request from the project developer to move a small section of the pipeline due to challenging drilling conditions. Trans Mountain is now waiting to receive the reasons for the decision, the corporation said, adding that construction on the project was more than 97.8% complete.

The company has asked the regulator to reconsider its decision to deny the variance request and is presenting arguments on Friday on the reasons why the request should be granted.

Trans Mountain has previously said that it plans on achieving first oil on the expanded pipeline to the Westridge Marine Terminal by the end of the first quarter of 2024.

Last week, the company said it plans to start line fill in March or May, depending on the diameter of pipe it uses and assuming there would be no other setbacks.

By Charles Kennedy for Oilprice.com

 

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Turnover with Brazil nearly doubled in December as the South American country ramped up imports of commodities from Moscow

 

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Oil and Gas 360

HOUSTON, Jan. 11, 2024 (GLOBE NEWSWIRE) — Prairie Operating Co. (Nasdaq: PROP; the “Company” or “Prairie”) today announced it has entered into a definitive agreement to acquire the assets of Nickel Road Operating LLC (“NRO”) for a total consideration of $94.5 million, subject to certain closing price adjustments and other customary closing conditions.  The total consideration consists of $83 million in cash and $11.5 million in deferred cash payments.  The effective date of the transaction is February 1, 2024.

The acquisition is expected to be accretive to Prairie’s shareholders across key financial metrics including production, reserves, and free cash flow.  Furthermore, the addition of NRO’s assets strategically expands Prairie’s core operating area, increases inventory of high rate-of-return drilling locations, and provides additional flexibility to the 2024 drill schedule.  The transaction adds over 5,500 net leasehold acres and 62 fully permitted proven undeveloped (“PUD”) drilling locations. The 84% liquids weighted assets produce approximately 3,370 net Boepd and add third-party engineered proven reserves estimated at 22.2 MMboe and $254 million in PV10 value, according to an independent, third-party reserve report by Cawley, Gillespie & Associates, Inc. (“CG&A”) using SEC pricing as of December 31, 2023.

NRO’s assets and operations are located near Prairie’s existing DJ Basin operations in largely rural Weld County, Colorado.  The permitted PUDs are expected to payout in approximately 1 year from the onset of production and are economic in a low commodity price environment, with operational break-evens below $30/bbl WTI. (1)  In addition, existing infrastructure provides takeaway capacity and opportunities to improve efficiencies.

“This acquisition increases and strengthens our overall position within a top-tier U.S. shale basin and aligns with our strategy of creating value through accretive acquisitions,” stated Ed Kovalik, Chairman and Chief Executive Officer of the Company.  “Furthermore, the transaction positions us to accelerate our development program within free cash flow, supporting the Company’s stated goal of debt-free, long-term growth.”

Gary Hanna, President of the Company, added, “Today’s announcement underscores our commitment and ability to create value for our shareholders through accretive acquisitions.  Today’s target rich environment gives us ample opportunity to continue executing our acquisition strategy.  These assets strategically enhance our existing operations, enabling us to capitalize on operational efficiencies in the DJ Basin.”

Strategic Drivers & Asset Overview: (1)

3,370 net Boepd (84% liquids) flowing from 26 operated horizontal wells
5,500 net contiguous acres across four lateral targets
90% held by production (“HBP”)
94% working interest in seven operated Drilling and Spacing Units (“DSUs”) 74% net revenue interest
Adds 62 permitted PUDs
Free cash flow expected to support full field development program
No exposure to federal leases
Key infrastructure in place to support development plan

Financial Highlights: (1)

Expected to be immediately accretive to key financial metrics, including production, reserves, and cash flow
Adds 22.2 MMboe and $254 million in 1P PV10 value
Adds 5.3 MMboe and $104 million in PDP PV10 value
Cash flow from PDP operations expected to be ~$40 million over the next twelve months
Average IRRs of 75% and discounted ROI of 1.9x
Net payout after approximately 1 year of production per well
Development Break-even below $30/bbl WTI

Transaction Metrics: (1)

Based on an effective date of February 1, 2024, and existing production of approximately 3,370 Boepd, the transaction metrics are as follows:

PV15 of Proved Developed Producing (“PDP”) reserves
Implied multiple of 2.3x NTM cash flow
$28,000 per net flowing Boe
$17,000 per net acre
$4.25 per Boe of 1P reserves of 22.2 MMboe, as determined by CG&A. Including approximately $182 million of net undiscounted future development capital results in a recycle ratio of approximately 3.6x times.

A summary of reserves and values as of December 31, 2023 and as determined by CG&A follows.

Reserve Category
Formation
Well Count
Net Oil (mbo)
Net Gas (mmcf)
Net NGL (mbngl)
Net Equiv. (mboe)
PV10 ($000s)
PDP
Codell
 7
 746
 1,145
 189
 1,125
 26,582
Niobrara
 19
 1,909
 6,733
 1,160
 4,191
 77,313
Total
 26
 2,655
 7,878
 1,349
 5,317
 103,895
PUD
Codell
 19
 2,697
 4,379
 715
 4,142
 42,269
Niobrara
 43
 6,141
 19,483
 3,392
 12,780
 107,252
 
Total
 62
 8,838
 23,862
 4,107
 16,922
 149,521
 
TOTAL PROVED
 88
 11,493
 31,740
 5,456
 22,239
 253,416

Note: PV10 is a non-GAAP financial measure. See the “Non-GAAP Financial Measure” section below.

Based on CG&A reserve report using SEC pricing as of December 31, 2023, and NRO provided lease operating statements and corporate financial statements

Additional Information

A company presentation describing the acquisition can be found on the Company’s website (www.prairieopco.com).  The transaction is currently expected to close in the first half of 2024. The Company expects to fund the transaction through a combination of public and / or private issuance of common stock, cash on hand, and proceeds from existing warrant exercises.

Non-GAAP Financial Measures

PV10 is derived from the Standardized Measure of Discounted Future Net Cash Flows (“Standardized Measure”), which is the most directly comparable GAAP financial measure for proved reserves.  PV10 is a computation of the Standardized Measure on a pre-tax basis. PV10 is equal to the Standardized Measure at the applicable date, before deducting future income taxes discounted at 10 percent.  We believe that the presentation of PV10 is relevant and useful to our investors as supplemental disclosure to the Standardized Measure, or after-tax amount, because it presents the discounted future net cash flows attributable to our reserves before considering future corporate income taxes and our current tax structure. While the standardized measure is dependent on the unique tax situation of each company, PV10 is based on prices and discount factors that are consistent for all companies.

About Prairie Operating Co.

Prairie Operating Co. is a publicly-traded company engaged in the development, exploration, and production of oil, natural gas, and natural gas liquids with operations focused on unconventional oil and natural gas reservoirs located in Colorado focused on the Niobrara and Codell formations. The company also owns crypto miner computer assets, complementary to its energy assets. The Company is dedicated to developing affordable, reliable energy to meet the world’s growing demand while continuing to protect the environment. To learn more, visit www.prairieopco.com.

Forward-Looking Statements

The information included herein and in any oral statements made in connection herewith include “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. All statements, other than statements of present or historical fact included herein, are forward-looking statements. When used herein, including any oral statements made in connection herewith, the words “could,” “should,” “will,” “may,” “believe,” “anticipate,” “intend,” “estimate,” “expect,” “project,” the negative of such terms and other similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. These forward-looking statements are based on the Company’s current expectations and assumptions about future events and are based on currently available information as to the outcome and timing of future events. Statements concerning oil and gas reserves also may be deemed to be forward looking statements in that they reflect estimates based on certain assumptions that the resources involved can be economically exploited. Except as otherwise required by applicable law, the Company disclaims any duty to update any forward-looking statements, all of which are expressly qualified by the statements in this section, to reflect events or circumstances after the date hereof. The Company cautions you that these forward-looking statements are subject to risks and uncertainties, most of which are difficult to predict and many of which are beyond the control of the Company. These risks include, but are not limited to, the ultimate outcome of the acquisition of NRO by the Company; the Company’s ability to consummate the proposed transaction with NRO; the Company’s ability to finance the proposed transaction with NRO; the possibility that the Company may be unable to achieve expected free cash flow accretion, production levels, drilling, operational efficiencies and other anticipated benefits within the expected time-frames or at all and to successfully integrate NRO’s operations with those of the Company; that such integration may be more difficult, time-consuming or costly than expected; that operating costs, customer loss and business disruption may be greater than expected following the proposed transaction or the public announcement of the proposed transaction; uncertainties inherent in estimating quantities of oil, natural gas and NGL reserves and projecting future rates of production and the amount and timing of development expenditures; commodity price and cost volatility and inflation; general economic, financial, legal, political, and business conditions and changes in domestic and foreign markets; the risks related to the growth of the Company’s business; and the effects of competition on the Company’s future business. Should one or more of the risks or uncertainties described herein and in any oral statements made in connection therewith occur, or should underlying assumptions prove incorrect, actual results and plans could differ materially from those expressed in any forward-looking statements. There may be additional risks not currently known by the Company or that the Company currently believes are immaterial that could cause actual results to differ from those contained in the forward-looking statements. Additional information concerning these and other factors that may impact the Company’s expectations can be found in the Company’s periodic filings with the Securities and Exchange Commission (the “SEC”), including the Company’s Annual Report on Form 10-K filed with the SEC on March 31, 2023, and any subsequently filed Quarterly Report and Current Report on Form 8-K. The Company’s SEC filings are available publicly on the SEC’s website at www.sec.gov.

Reserve Information

The Company obtained the reserve report information referenced herein from CG&A with respect to the reserves of NRO. The reserves were calculated in accordance with SEC guidelines using the price of $76.97 per barrel for oil, $2.252 per MCF for gas, and $20.619 per barrel for NGL. The base rates of oil of $78.22 bbl and gas of $2.637 per million British Thermal Units (MMBtu) were based upon WTI-Cushing spot prices (EIA) during 2023 and upon Henry Hub spot prices (Platts Gas Daily) during 2023, respectively. The reserve classifications and the economic considerations applied in the reserve report conform to the criteria set forth in the 2018 Petroleum Resources Management System (PRMS) approved by the Society of Petroleum Engineers (SPE). All reserve estimates represent CG&A’s best judgment based on data available at the time of preparation of the reserve report, and CG&A’s assumptions as to future economic and regulatory conditions. It should be realized that the reserves are actually recovered, the revenue derived from, and the actual cost incurred could be more or less than the estimated amounts.

Investor Relations Contact:Wobbe Ploegsma[email protected]832.274.3449

 

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LONDON – Oil prices climbed about 3% on Friday, as some  tankers diverted course from the Red Sea following overnight air and sea strikes by the United States and Britain on Houthi targets in Yemen after attacks on shipping by the Iran-backed group.

Witnesses in Yemen confirmed explosions throughout the country.

 futures were up $2.21, or 2.9%, at $79.62 a barrel at 1350 GMT, while U.S. West Texas Intermediate crude futures climbed $2.13, or 3%, to $74.15.

Both benchmarks were on course for a second straight weekly rise.

The U.S. and UK strikes come in retaliation for Houthi attacks since October on commercial vessels in the Red Sea, concentrated on the Bab al-Mandab Strait to the southwest of the Arabian Peninsula, in a show of support for Palestinian militant group Hamas in its fight against Israel.

The escalation has fuelled market concerns about the Israel-Hamas war widening into a broader conflict in the Middle East affecting oil supplies from the region.

That includes the important Strait of Hormuz, on the opposite side of the Arabian Peninsula, between Oman and Iran. Iran seized on Thursday a tanker carrying Iraqi crude south of the strait destined for Turkey.

“If a large part of Strait of Hormuz flows were to be halted, it would present up to three times the impact of the 1970s oil price shocks and over double the impact of the Ukraine war on gas markets, atop already fragile supply chains and stock levels,” said Saul Kavonic, an energy analyst at MST Marquee.

ING analysts in a note said more than 20 million barrels per day of oil move through the Strait of Hormuz, equivalent to around 20% of global consumption.

U.S. President Joe Biden said the “targeted strikes” in Yemen were a clear message that the United States and its partners will not tolerate attacks on its personnel or “allow hostile actors to imperil freedom of navigation”.

A Houthis spokesperson said the group would continue to target shipping heading towards Israel.

Saudi Arabia, a top oil exporter and regional power, called for restraint and “avoiding escalation” and said it was monitoring the situation with great concern.

Attacks by the Houthis in the Red Sea have disrupted international commerce on a route between Europe and Asia which accounts for about 15% of the world’s shipping traffic.

Shipping giant Maersk and others are diverting vessels away from the Red Sea, warning customers of further disruptions.

 

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Workers in China, Russia, and Mexico saw their inflation-adjusted earnings rise in 2023, a new report reveals

 

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The ambassador to New Delhi calls on businesses to explore further opportunities in Russia

 

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Houthi attacks from Yemen on commercial vessels in the Red Sea and Gulf have generated major disruption across key shipping artery

 

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