The Scary Truth About Canada’s Energy Security

While Canadian oil producers are scrambling to sell their oil at a fair price due to a pipeline shortage to take away the crude to foreign markets, Canada’s own domestic oil supply could be threatened due to court decisions and heightened tension in the Middle East. Canada, the world’s fourth largest oil producer, may not be as energy secure as its producer status would otherwise suggest, Peter Tertzakian, Executive Director of the ARC Energy Research Institute in Calgary, Alberta, writes in Financial Post.  That’s because…


Callon Buys Carrizo Oil & Gas in an All-stock Deal Valued at $3.2 Billion

Callon Petroleum has agreed to acquire Carrizo Oil & Gas for $3.2 billion, with shareholders of Carrizo set to receive 2.05 shares of Callon for each share they hold. That represents $13.12 per Carrizo share based on Callon’s closing common stock price on July 12 and a 25 percent premium to Carrizo’s prior day closing price. Pro-forma, Callon shareholders will own 54 percent of the combined company and 46 percent will be held by former Carrizo owners.

“This deal checks a lot of the boxes on what seems to make sense for corporate-level E&P M&A,” said Drillinginfo M&A analyst Andrew Dittmar. “You have two small-to-midsize companies active in the Delaware Basin combining to build economies of scale, reduce G&A expenses, and hopefully accelerate the move to positive free cash flow.”

With the all-stock consideration, Callon is building scale while preserving cash on the balance sheet for development and avoiding having to attempt raising additional capital from a frozen Wall Street. It can also leverage the slightly higher valuation its stock carries over Carrizo. While not exactly a “merger-of-equals” they are similar sized companies and the post-deal shareholder split will be a relatively even with 54 percent buyer, 46 percent seller.

From a valuation perspective, the acquisition looks very reasonable. A 25 percent premium to a prior close is a moderate premium for a public E&P buyout. After adjusting for the value of Carrizo’s existing production and Eagle Ford acreage, Callon is acquiring the Permian leasehold at a bit under $20,000 per acre. That compares favorably to the $30,000 per acre or more seen in other public E&P buyouts in the Permian.

“If there is anything slightly surprising about this deal, it would be that Callon is willing to pick up the Eagle Ford assets of Carrizo and lose its status as a Permian pure-play which the market seems to favor,”  said Dittmar. “With more mature wells, the Eagle Ford assets do provide some stability to the combined company’s production base and supply much-needed cash flow, but we wouldn’t be that surprised to see Callon look to monetize these assets and return its focus exclusively to the Permian provided they can find a buyer in this market willing to pay a fair price.”

There continues to be a strong case for further consolidation among the shale drillers, especially in the Permian. Other companies will be closely monitoring how the market takes this deal and how badly Callon is beat up for announcing an acquisition in the current low-growth Wall Street mood. The market is already taking what would be expected to be the initial reaction and selling Callon off to the tune of ~15 percent. We will have to wait a bit and when the dust clears see what the longer-term implications are for its stock. Check back on our blog for more details and commentary from our expert M&A analysts as we follow this deal and others.

The post Callon Buys Carrizo Oil & Gas in an All-stock Deal Valued at $3.2 Billion appeared first on Drillinginfo.

Tesla Cuts Model 3 Prices In New Sales Push

Tesla is cutting the starting price of its Model 3 to US$38,990, but it’s dropping standard-range variants of the premium Models S and X, lifting their starting prices, Reuters reported on Tuesday, citing the company. “To make purchasing our vehicles even simpler, we are standardizing our global vehicle lineup and streamlining the number of trim packages offered for Model S, Model X and Model 3,” Reuters quoted Tesla as saying in a statement. “We are also adjusting our pricing in order to continue to improve affordability…


UAE Looks To Launch New Regional Oil Benchmark

The Abu Dhabi National Oil Company (ADNOC), which pumps most of the crude oil of OPEC’s third-largest producer, the UAE, plans to launch its own oil benchmark for the region, possibly as soon as November, as part of an effort to boost its regional influence and bolster its oil trading business, Reuters reported on Tuesday, quoting four sources with knowledge of the plans. The oil benchmark idea is part of an ADNOC plan to overhaul its oil trading business and gain more pricing influence for its oil sales. The company hasn’t finalized…


Georgia set to be a leader in energy storage in the Southeast: Georgia Power to own and operate 80 MW of battery energy storage

ATLANTA, July 16, 2019 /PRNewswire/ — The State of Georgia is positioned to become a leader in battery energy storage in the Southeast with Georgia Power’s planned investment to own and operate 80 megawatts (MW) of battery energy storage. The company’s 2019 Integrated Resource Plan (IRP), unanimously approved today by the Georgia Public Service Commission (PSC), [Read more]

Source: BOE Report

An Operator in Canada Partners with Ulterra to Combat Challenges in Briar Ridge Field

Recently, an operator targeting the Montney formation in Canada, an extensive resource play that reaches across northwest Alberta and into northeast British Columbia, was challenged with a particular pad in the Briar Ridge field. Specifically, this operator experienced several instances of bit balling while drilling the upper formations with 6-bladed bit designs. This resulted in a significant loss in ROP and instances where a trip was required as the bit was unable to be fully cleaned to the point where drilling could not continue.

Prior to engaging with Ulterra, this operator experienced a higher than normal damaged beyond repair (DBR) run history in the Briar Ridge Field. On average, 33% of drillout runs were DBR’d and 66% of the runs did not make the entire interval to the intended kick off point (KOP). The first two runs with a competitor bit only reached ~1,600 m before being pulled in the Nikanassin.

The Goal & Challenge

The goal was to drill to KOP in the Charlie Lake in one run. However, due to the prior instances of bit balling, a 5-bladed design with more junk slot area was selected for the interval.

The challenge was drilling in the Briar Ridge field, specifically through the infamous Nikanassin, and the many formations below it to the underlying Charlie Lake. This formation consists of course-grained silica cemented sandstone, interbedded with multiple layers of conglomerate containing chert and quartzite nodules, and then transitions into finer-grained hard quartzose sandstone-siltstone layers.

Ulterra’s Solution

On the third run, this operator teamed up with Ulterra to complete the interval. Ulterra’s team suggested a combination of Omega™ Reaper and Ninja Cutters paired with our CounterForce™ technology to capitalize top hole ROP, complete the high inclination tangent, and challenging directional well profile while providing the durability required to drill through the Cadomin and Nikanassin formations.

Utilizing Ulterra’s CF513 equipped with the latest generation of premium deep leached cutters, this operator drilled to the intended KOP through the Nikanassin to Charlie Lake, while holding a 20°tangent. This operator completed their goal, reaching the intended 1,583 m. at a depth in of 462 m. and a depth out at 2,045 m. Drilling passed the Nikanassin to Charlie Lake was a huge accomplishment for this operator, making it the first bit to drill to intended KOP in Charlie Lake on this pad.

Additional Success with Ulterra

On the next run, Ulterra and this operator sought to complete the drillout and build in one run – a feat that has never been successfully accomplished in the Briar Ridge Field. Again, utilizing a CF513 equipped with Ulterra’s Reaper and Ninja Cutters, this operator drilled out with a 2.12 motor bend setting and drilled 1,798 m with an average ROP of 37 m/hr, drilling to Montney B1, making it the first bit to complete the vertical and build in the Briar Ridge field in one run! This operator saved ~25.5 hours in comparison to the next fastest well on the pad. Not only did this operator set a new pacesetter interval, but also set a pacesetter well for the area while overcoming the toughest drilling challenges faced in the Briar Ridge Field. Overall, this operator saved over 2.2 days on this well, in addition to saving cost on additional downhole tools, bits, and trip expenses.

Even Tougher Drilling with Ulterra

Utilizing Ulterra’s CF513 on the sixth run, this operator drilled to the intended KOP, held a 30°tangent and drilled through even tougher formations in the Nikanassin, Fernie, Nordegg, Baldonnel, Charlie Lake, Halfway, and to the Doig. This specific run drilled further than any other bit holding a 30° tangent in the area.

Based on historic performance in Canada’s Briar Ridge field, this operator was determined to make the intended intervals and Ulterra was steadfast to provide a solution.

Source: Ulterra

Photo – The Silk Way International Rally 2019 has drawn to a close in the Chinese city of Dunhuang. The gas-fueled KAMAZ driven by Sergey Kupriyanov has conquered every challenge and took fifth place in the general truck category.<br>#silkwayrally #silkwayrally2019 #камазмастер

The Silk Way International Rally 2019 has drawn to a close in the Chinese city of Dunhuang. The gas-fueled KAMAZ driven by Sergey Kupriyanov has conquered every challenge and took fifth place in the general truck category.
#silkwayrally #silkwayrally2019 #камазмастер

U.S. Intel: UAE Tanker Could Have Been Forced Into Iranian Waters

The U.S. intelligence increasingly believes that a United Arab Emirates (UAE) tanker may have been forced into Iranian waters by naval forces of Iran’s Islamic Revolutionary Guard Corps (IRGC), CNN Pentagon correspondent Barbara Starr reported late on Monday. “CNN has learned: US intel increasingly believes UAE tanker MT RIAH forced into Iranian waters over the weekend by #IRGC naval forces,” Starr tweeted. The UAE is not sharing information, while some Gulf sources told CNN that the UAE vessel had simply broken down and has been…


Gulf Of Mexico Oil Production Restarts After Tropical Storm

After tropical storm Barry passed through the U.S. Gulf of Mexico and made landfall in Louisiana early on Saturday, oil and gas producers began on Monday to slowly restore oil production that had shut in as much as 73 percent of the oil production in the Gulf. Exxon, Chevron, Anadarko, BHP, and Shell began to return workers to the platforms they had evacuated ahead of the storm. Last week, those companies evacuated staff from many platforms in the U.S. Gulf of Mexico. Chevron was evacuating all the staff from five platforms and shutting them down…


New EPA ruling expands sale of 15% ethanol blended motor gasoline

On May 31, 2019, the U.S. Environmental Protection Agency (EPA) issued a final rule allowing the year-round sale of motor gasoline blends containing up to 15% fuel ethanol, or E15. The ruling increases the availability of E15 blends in the United States, which are currently sold at more than 1,800 retail fuel stations across 31 states, according to Growth Energy, a trade association that represents producers and supporters of fuel ethanol.