Fed: Oklahoma, Texas Boast Lowest Breakeven, Opex

The Permian Basin and Oklahoma’s STACK/SCOOP are at the center of the oil and gas recovery with the lowest breakevens and opex, according to a Dallas Federal Reserve report.

The Fed polled around 60 E&P companies in mid-March to ask two questions: What WTI price do you need to profitably drill a new well and where does WTI need to be to cover opex for existing wells? The companies’ responses largely indicated that the current oil price is slightly above breakeven in the prolific plays while prices at the depths of the downturn still weren’t low enough to shut in wells in the top shale regions.

The Midland Basin had the best breakeven for new wells at $46/bbl. This was followed closely by the STACK/SCOOP at $47/bbl, Eagle Ford at $48/bbl, Delaware at $48/bbl and Central Basin Platform at $50/bbl. The average Permian breakeven price was down to $48/bbl this year from $51/bbl last year, according to the survey.

The Midland also led the pack as the cheapest play in terms of opex, with operators saying $24/bbl was needed to keep their wells flowing. The STACK/SCOOP again was second at $27/bbl, followed by the Eagle Ford at $29/bbl and the Delaware and CBP at $33/bbl. Opex for 1Q17 was similar to 1Q16.

Source: PLS PetroScout

Oklahoma Federal Court Delivers Blow to Sierra Club

AAPL - In a win for the industry, on April 4, in Sierra Club v. Chesapeake Operating LLC (Case No. 5:16- cv-00134), the U.S. District Court for the Western District of Oklahoma dismissed an environmentalist lawsuit against multiple oil and gas companies blaming hydraulic fracturing for increased earthquake risk.

The lawsuit was premised on the notion that the Oklahoma Corporation Commission (OCC) - which has primacy over the U.S. Environmental Protection Agency's Underground Injection Control program - is doing an inadequate job implementing induced seismicity mitigation measures. 

The Court disagreed, noting that "the OCC has been taking the action requested by plaintiff." Further, the Court noted that the OCC "has responded energetically to that challenge" and that the OCC "has brought to bear a level of technical expertise that this court could not hope to match."

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