No new drilling permits issued in shale play

SALEM – There were no horizontal drilling permits issued in the Utica/Point Pleasant shale play for the week ending Jan. 23, placing the total number of permits issued at 2,118, according to the Ohio Department of Natural Resources (ODNR).

There are 1,136 wells in the producing stage of the 1,671 that have been drilled. There are 16 rigs operating in the play, up two from the previous ODNR report. There were 55 drilling rigs in the play as late as the third week of December 2014, a high-watermark for drilling rigs.

No rigs are drilling in the Ohio Marcellus shale, according to the ODNR where there are 44 horizontal wells permitted – 29 drilled and 20 producing. The year begins with a surplus of over 1 million barrels a day.

Halliburton Corp – one of the world’s largest providers of products and services to the energy industry, selling a wide range of products and services like artificial lifts, cementing, chemical services, consulting, coring, drill bits, drilling, fluid services – has felt the oil glut squeeze like everyone.

Dave Lesar, CEO of Halliburton put a bit of corporate spin on the 4Q earnings call on Monday.

“I want to begin with a few of our key accomplishments in 2015,” he said on the Seeking Alpha website. “First, total company revenue of $23.6 billion declined 28 percent year-over-year, outperforming a 35 percent decline in both the average worldwide rig count and global drilling and completion spend.”

In its North American business, he mentioned that third-party analysts expect Halliburton customers to spend about 30 percent, and possibly up to 50 percent, less in 2016.

That’s on top of the “estimated 40 percent decline” in industry spending last year.

He pointed out most customers use real-time, rig-by-rig management and “we are going to take this market week-by-week, and in some cases crew-by-crew.”

Revenue was down 14 percent sequentially, which is in line with the reduction in the drilling rig counts and driven by exhausted customer budgets and cash flows together with the extended holiday period.

In its latest earnings call, Paal Kibsgaard, Chairman and CEO of Schlumberger, a Halliburton competitor, noted, as transcribed on the Seeking Alpha website, that its pre-tax operating margins remain resilient at 7.1 percent driven by proactive cost and resource management.

He said the company’s excellent performance from its supply chain and distribution organization, strong execution and new technology sales from our operations, all supported by a transformative program.

He said that onshore drilling in North America, the slowing in activity resulted in additional commercial pressure for all product lines and in particular in pressure pumping where pricing levels drop further into unsustainable territory for both operating margins and cash flow.

There was pricing pressure and activity reductions in the U.S. and Gulf of Mexico, as the drilling rig count drops another two percent sequentially and year-end multiclient seismic sales were largely muted, he said.



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