May 2013

FREE

VOLUME 1 NO. 6

MAY 2013

www.PBEMag.com

XCOR Aerospace

A QUESTION OF

12

WATER

Lights all Shinin’ on

Texas Trucking

8

TOP 10 THINGS to Know about Shale 37

18

38 • U.S. RIG COUNT • TOP 35 Drillers & Operators

Industry Data

in midland

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News

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Tech Bites... p. 29

Events

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Auctions

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Calendar

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Travel

|

Tips

|

Energy

|

Tech

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PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

www.PBEMag.com

To Advertise call

432. 559. 5886 or email

sales@pbemag.com

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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MAY 2013

contents 8

Pbe Features 8

A Question of Water

12

XCOR in Midland

18

Lights all Shinin’ on Texas Trucking

Other Editorials

7 PBE Cares 11 Calendar of Events 16

Conferences in May-June

17 Upcoming Auctions 21

Top 8 Enhanced Oil Recovery Enablers

24

Energize your Workforce, Top 5 Reasons Employees Stay

26

Festivals and Events in Texas

29

Tech Bites - Twitter

30

PBE News Briefs: Basin, Government, State, Nation, OffShore, World

34

Restaurant Bites - Basin Burger House

35

PBE Inspires

37

Top 10 Things to Know about Shale

38

By The Numbers: Rig Count, Top Drillers, Top Operators

41

This Month in Petroleum

4

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

12 18

Under New Ownership!

LETTER FROM

THE EDITOR “a man who wants to lead the orchestra must turn his back to the crowd” - Max Lucado

There are so many new and exciting things going on in the Permian Basin right now it was hard deciding what to feature in this month’s edition of PBE. It seems as though there are new business opportunities, new technology or new concerns being raised almost weekly as a result of our booming economy.

In this month’s issue, I tried to highlight something in each of those categories based on what the hot topics have been around town. You’ll read about how shale development technology has the eyes of the world on West Texas; get the latest update on a space flight technology and production company moving into our airport; and hear the most asked water-worry questions answered by an expert. Add to that recent developments in oil discovery overseas and the incredible impact of the trucking industry in Texas, and you are sure to learn a little something about everything people are talking about around the Basin, around the industry and around the world.

As always, please feel free to send me your ideas and suggestions of what you’d like to see featured in the next issue.

Carlos Madrid Editor in Chief/Publisher sales@pbemag.com

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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EDITORIAL CONTRIBUTORS PBE MAGAZINE CONTACTS EDITOR IN CHIEF/PUBLISHER

Carlos Madrid

sales@pbemag.com 432. 559. 5886 SALES EXECUTIVE

Megan Dotson

megan@pbemag.com 432. 528. 1082 ART DIRECTOR/LAYOUT & GRAPHICS

HALEY RAGSDALE WRITER haley@pbemag.com

Luke Pawliszyn

Lukasz Design Studio West Hollywood, CA luke@lukaszdesign.com

SUBMISSIONS Submit story ideas & other news to: haley@pbemag.com

ADVERTISING

IRIS FOSTER WRITER

For advertising info call 432. 559. 5886 or email sales@pbemag.com

PUBLISHED BY: PBE Magazine, LLC. Permian Basin Energy Magazine 4500 Erie Drive Midland, TX 79703 Main Phone: 432. 559. 5886 www.PBEMag.com

DANIEL STEPHENS SENIOR PASTOR Mid-Cities Community Church Midland TX daniel.stephens@midcities.org

Copyright © 2013 Permian Basin Energy, Inc. • Mad Ads Media All rights reserved.

Reproduction in whole or in part without the written permission of PBE MAGAZINE, LLC is strictly forbidden. The greatest care has been taken to ensure the accuracy of information in this magazine at time of going to press, but we accept no responsibility for omissions or errors. PBE Magazine welcomes any comments, feedback, suggestions, and/or submissions for consideration for publication. These may be submitted to: sales@pbemag.com.

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PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

Cares The American Cancer Society’s, Round Up 2013 Cattle Baron’s Ball celebrated their 30th anniversary with a special evening dedicated in memory of the Honorable Judge John Hyde. After a lengthy and tough battle with non smoker’s lung cancer, Judge Hyde lost his battle on January 2, 2012. The event, held on May 4th, raised over $120 thousand dollars in the live auction and $650 thousand overall. Featuring a catered meal by Perini’s Steakhouse and a performance by country music artist Joe Nichols, it was a memorable night of good food and fun, all for a great cause. Thanks to the generous donations of many of our local businesses through Round Up, the American Cancer Society can continue providing valuable services and resources to our local community as well as fund life saving cancer research.

Picture captions from left to right

Representing the American Cancer Society Leslie Kitto, Catharine Nunn (Event Chair), Amanda Arpe, Cheryl Mertz

Representing Kruse Auctioneers Steve Taylor (Live Auctioneer) & Dawn Taylor, Reecie and David Long, Leisa & Mike Bridges

Representing Pioneer Natural Resources (Top Event Underwriter) Julie Montgomery, Dan & Teri Pender, Diana & Danny Barker

Representing Apache Corporation (Top Table Sponsor) Roger & Cynthia Macarevich, Rosie & Ken Neupert

Thank You All! Joe Nichols MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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by Haley Ragsdale

H 2 0, not only a vital resource for our day-to-day existence but an important component in producing oil in the Permian Basin. So, is our booming oil economy taking its toll on quenching our thirst? Your top water worries and questions answered with seasoned hydrologist Darrell Peckham.

Question: Darrell, what is your background with water?

Answer: I have been a hydrologist studying groundwater in Texas for the past twenty-eight years. I have worked for state agencies, private companies, and with municipalities on water planning. I am currently a consultant for the non-profit, Water Quest. The mission statement is to seek and save water for the Permian Basin.

A: Most people really take water for granted until there is a problem, and then they start asking a question when they turn on their faucet and nothing comes out.

The Permian Basin gets its water from a combination of surface and groundwater. Lake Ivie provides the majority of surface water and a number of water well fields in Ward and Winkler counties provide freshwater.

Q: When are we going to run out of water?

Q: Explain the challenges facing the Permian Basin for drinking water?

A: This is the main question I get all the time. The answer is complicated. We are not going to run out of water. There is plenty of water; we are eventually going to run out of cheap freshwater. Then the problem is finding water sources that are both economically and politically feasible.

A: The problem we ran into two years ago with the drought was that we were running out of surface water and were going to have to rely only on the well fields. My goal as a water seeker is to find new sustainable sources of water that are drought resistant and can supply water for the next 250 years.

Q: Most of us probably haven’t given much thought to where our water comes from. Explain where we get our supply.

Q: Is there hope locally for a new water supply?

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PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

A: Fort Stockton has several large aquifers that could hold the answer to our water supply. I am very excited about the possibilities of the Capitan Reef. This is a much deeper water formation that does not feed off the Edwards-Trinity aquifer. In the coming weeks we will begin testing the possibilities of this water formation.

Q: A concern for the Permian Basin is with the boom in drilling, and the thousands of gallons of water used for fracking. Is this going to hurt our drinking water supply?

A: I am a groundwater advocate and believe with prudent use that we can have both. There is a big difference between a fracking demand and a municipal demand. A municipal demand is centralized and coming from the same source. Oil producers are fracking all over the region so they are using many different water sources. Also many companies do not use freshwater when they are drilling only brackish water. After all, they drink the water too and do not want to use the public drinking water supply.

Q: Residents that own their own water wells may be concerned about contamination from the fracking process. Please explain?

There is even some research being conducted to turn this water into drinking water.

Q: What concerns do you have with the oil and gas industry as it relates to water?

A: The oil and gas industry can afford to pay more money for water than municipalities. So landowners are able to sell their water for double or more the price to oil companies. This could impact the supply if it is close to a public drinking supply well. There is current legislation proposed right now debating if groundwater districts have enough authority to manage water when it pertains to the oil industry.

Q: In conclusion, where are we now as it pertains to the future of water in the Permian Basin?

A: There is plenty of water, but we have to find water sources that have sustainable production and quality that is politically and economically worth it. One thing we do know as we are looking at new supplies for municipalities, it will cost more than it currently does and that will eventually be passed along to citizens.

A: The design of frac jobs to release hydrocarbons takes place much deeper than any fresh water source. Oil producers also cement after they drill to seal it off. There is no greater risk to the water supply from fracking than from just regular drilling.

Q: What is being done with the water left over after a frac job?

A: There is a lot of new and exciting research being done and starting to be implemented on the reuse of produced water and flowback water. Primarily, the research is being done to reuse these during fracking.

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

CALENDAR of events

MAY 2013

1-31

STEELMARK MONTH Steelmark Month recognizes the tremendous contribution made by the steel industry in the United States to national security and defense.

12 12 MOTHER’S DAY INTERNATIONAL NURSES DAY

15

POLICE WEEK

17 NATIONAL DEFENSE TRANSPORTATION DAY

18 27

MEMORIAL DAY ARMED FORCES DAY

JUNE 2013 1

ATLANTIC HURRICANE SEASON BEGINS Hurricane Season: June 1 to November 30

14

August & September are peak months.

16 FLAG DAY

FATHER’S DAY

21

FIRST DAY OF SUMMER MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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by Iris Foster photography courtesy of XCOR Aerospace / Mike Massee

The imminent arrival of XCOR Aerospace to the airport area will give a unique diversity to the Permian Basin. With a commercial spaceport license anticipated by year end, Midland International Airport has grown significantly in the past 25 years.

From its start as a regional airfield (acronym is still MAF) to booking flights outside the United States to hosting vintage warbirds and occasional Air Force flyovers, the airport will soon be home to reusable launch vehicles (RLVs) developed by XCOR. 12

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

Mayor Wes Perry, Chief Test Pilot Rick Searfoss, COO Andrew Nelson greet the Governor on his arrival

Chief Test Pilot Rick Searfoss describes the value of XCOR’s expansion to Midland

Lynx reveal!

Texas Governor Rick Perry

The privately held California C Corporation is During its 14 years of operation, XCOR Aerospace has establishing a research and development flight test developed and built 13 different rocket engines. In center in Midland and will start with about 50-60 addition, it has flown two of its manned, rocked-powered employees, most relocating from their site in Mojave, aircraft, setting a record in 2008 with seven X-Racer CA to 2901 Enterprise (the old AMI Hangar) in pursuit flights in one day, and one in 2005 for the longest pointof its goal “to make space travel affordable for private to-point flight by a rocket-powered aircraft. citizens.” The deal was consummated after significant evaluation of important factors. After On the political stage, XCOR helped these came back positive, Midland pass the Commercial Space Launch Development Corporation provided an Amendments Act of 2004, and its CEO “...sonic boom economic incentive package valued at served on the “Review of US Human $10 million over 10 years. XCOR is Space Flight Plans Committee” whose analysis to be committed to generating up to $12 recommendations set the current space sure the pressure million in combined payroll and capital policy. wave does not investment during that timeframe.

affect windows or eardrums...”

Lynx Main Engine MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

13

Development of critical pump systems and a nonflammable, composite tank material are aiding in XCOR’s next-generation vehicle--Lynx. Once the airport becomes a commercial spaceport, this vehicle will lift off with a pilot and one passenger and take them to the edge of space. Suborbital launches from the ground will benefit academic, scientific, and engineering communities as well as related markets.

Getting the spaceport license is not a simple application process, according to Marv Esterly, director of airports.

There are a number of qualifications and plans that must be approved during the step-by-step process with the FAA and the Office of Commercial Space Transport (FAA-AST), he stated. The Department of Airports hired a consulting firm to assist in completing the Environmental Assessment (EA) and other parts of the application

14

process. Corridors were delineated to show that XCOR’s spacecraft could be operated from MAF safely. Other aspects of the process included developing an explosive site plan, emergency plan, site layout, scheduling plan, hazardous materials plan, and accident investigation plan. In addition, noise pollution was addressed by studying baseline noise at the airport as well as sonic boom analysis to be sure the pressure wave does not affect windows or eardrums. The finalized application and EA should be submitted by end of July, Esterly said.

Working together, the Midland Development Corporation, city government, chamber, and Department of Airports made it possible for XCOR to relocate. The resulting space flights, which company officials expect to launch in 2014, will help Midland reach for the stars in “creating the best business climate on the planet.”

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

FISHING & RENTALS

FISHING & RENTAL TOOLS REVERSE UNITS FOAM/AIR UNITS

1511 Garden City Hwy • PO Box 150

MIDLAND TEXAS

432.684.3898

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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Conferences in MAY - JUNE 2013 AFPM National Occupational and Process Safety Conference and Exhibition

Orlando, FL, United States

05/14/2013 - 05/15/2013

meetings@afpm.org • www.afpm.org/Conferences

The Woodlands, TX, United States 202 457 0480 • 202 457 0486 info@npra.org • www.npra.org/meetings

202 457 0480 • 202 457 0486

AFPM Reliability and Maintenance Conference and Exhibition 05/21/2013 - 05/24/2013

Unpiggable Pipeline Solutions Forum

Orlando, FL, United States

05/15/2013 - 05/16/2013

202 457 0480 • 202 457 0486

Houston, TX, United States

info@npra.org • www.npra.org/meetings

www.clarion.org/index.php

Annual Unconventional Gas and Oil Summit 06/03/2013 - 06/06/2013

International Conference and Exhibition on Liquefied Natural Gas - LNG 17 05/16/2013 - 05/19/2013

London, United Kingdom www.oilandgasuncoventional.com/?xtssot=0

+44 207 978 0770

ILTA Annual International Operating Conference and Trade Show

ajordan@thecwcgroup.com • www.LNG17.org

06/03/2013 - 06/05/2013

Houston, TX, United States

Houston, TX, United States

AAPG Annual Convention and Exhibition

703 875 2011 • 703 875 2018

05/19/2013 - 05/22/2013

info@ilta.org • www.ilta.com

Pittsburg, PA, United States 918 584 2555 • 918 560 2665

AAPL’s Annual Meeting 06/05/2013 - 06/08/2013

IOGCC Midyear Issues Summit

Washington DC, United States

05/19/2013 - 05/21/2013

www.landman.org/events/annual-meeting

Point Clear, AL, United States www.iogcc.state.ok.us/events

SPEE Annual Meeting 06/08/2013 - 06/11/2013

AFPM Annual Meeting

Coeur d’Alene, Idaho, United States

05/21/2013 - 05/24/2013

713 651 1639 • 713 951 9659 info@spee.org • www.spee.org

Offshore Support Vessel Technology Conference 06/09/2013 - 06/12/2013 Abu Dhabi, United Arab Emirates www.oilandgasiq.com/events.cfm?p=2

The 2013 EIA Energy Conference 06/17/2013 - 06/18/2013 Washington DC, United States JW Marriott www.eia.gov 16

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

Leading Auctions in the Oilfield Industry.

Upcoming Auctions and Auction Equipment listings from Tradequip International’s online and site-held auction companies.

Saurce: Tradequip International

Drilling Rigs

Prod.

Equip.

Drilling Equip.

Tubular Goods

Oilfield Trucks

Oilfield Trailers

Parts & Tools

Support Equip.

www.tradequip.com

SOUTHCENTRAL

AUCTIONS

COMPANY

DATES

LOCATION

ANNUAL SUMMER AUCTION

Cannon Sales Inc

May 15, 2013

Oklahoma City, OK

COMPLETION RENTAL TOOLS

Kruse Energy & Equipment LLC

May 22, 2013 May 23, 2013

Lafayette, LA

SAN ANTONIO, TX

Richie Bross

May 23, 2013

San Antonio, TX

DENVER, CO

Ritchie Bros Auctioneers (America)

May 31, 2013

Denver, CO

DRILLING & WELL SERVICE TRUCKS & TRAILERS

Kruse Energy & Equipment LLC

Jun 05, 2013 Jun 06, 2013

Odessa, TX

DRILLING & WELL SERVICE TRUCKS & TRAILERS

Kruse Energy & Equipment LLC

Jun 19, 2013 Jun 20, 2013

Oklahoma City, OK

INVENTORY

INTERNET AUCTIONS

COMPANY

DATES

LOCATION

PIPE & EQUIPMENT AUCTION

Network International Inc

May 15, 2013 May 22, 2013

Internet

CONSTRUCTION EQUIPMENT & VEHICLE AUCTION

Network International Inc

May 22, 2013 May 29, 2013

Internet

PIPE & EQUIPMENT AUCTION

Network International Inc

May 29, 2013 Jun 05, 2013

Internet

PRIME PIPE & EQUIPMENT SEALED BID

Network International Inc

Jun 05, 2013 Jun 12, 2013

Internet

INVENTORY

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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Lights All Shinin’ on

Texas Trucking

The Texas Economy recently spoke with John Esparza, President and CEO of the Texas Motor Transportation Association about the important role our state’s trucking industry plays in keeping the Texas economy strong.

On the entrepreneurial roots of the Texas trucking industry …

Our association is made up of trucking companies and allied members. They may be a son or daughter who inherited a company that their parents may have started in the ‘30s or ‘40s and they’ve grown into operation with more than 200 trucks today. Or may have started it themselves. They’re real ‘bootstrap folks.’ They know the industry from experience. It’s like the UPS model, where many of the executives started by making deliveries themselves in the brown shorts.

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Source: texaseconomy.org This industry is full of self-starting enterprises – moms and pops who built their success with their own blood, sweat and tears. They’re fierce competitors with each other, but also some of the greatest of friends. And with technology and the industry changing so quickly, I think that kinship is becoming more critical for all of them. If somebody is wading into the water to test something new, the other person who is thinking about making a similar investment wants to ask them a few questions.

And guess what? The ones that care about this industry and want to make it better are the ones that participate with us and are very open to sharing what works.

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

They’re successful businesses and a big part of the communities in which they operate. They’re job creators.

Trucking is the industry that quite literally drives the state’s economy. We’re right in the middle of it.

On trucking’s importance to Texas and the economy …

You’re looking at anywhere between $11,000 to $13,000 per truck in terms of what they contribute directly into state and federal coffers for the purpose of contributing to infrastructure and all the causes that follow therein.

Huge factor.

...there are a lot of excellent schools in Texas now training this new generation of drivers...

Trucking accounts for one out of every 16 jobs in our state.

On how the trucking industry has changed over the years …

Nearly 82 percent of the communities in Texas and around the U.S. rely on trucking exclusively to bring them their goods. The rest we share with airports, seaports and rail. You cannot take trucking away from that component.

When my grandfather was first driving a truck, the trailer was probably not more than 26-feet long. Trucks have gotten bigger, stronger, longer and the weight tolerances have gotten higher.

Trucking is increasingly a more and more skilled position.

On the national level, there’s a perception that trucking and rail don’t get along. Here in Texas, that’s certainly not the case. We work closely with our rail friends. Our industries want the same things 98 percent of the time, so there’s a lot of commonality there. And there should be a good relationship because the freight industry is only going to grow – particularly here in Texas where we’re dependent on a strong freight industry what with so many people moving into our state. Figuratively speaking, freight’s not going anywhere. That is, until we figure out how to telepathically move things!

With the Federal Motor Carrier Administration’s CSA (Compliance, Safety, Accountability – an initiative on large truck and bus safety), the regulatory environment in our industry changed. We’ve embraced this effort and are working with the federal government to smooth over some of the rough spots. But at the end of the day, it’s good for trucking. It’s good for drivers and technicians because the standards are so much higher. Without question, when these changes were implemented, it identified a large pool of drivers out there that aren’t

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

19

driving today because they aren’t qualified to drive. So a well-qualified driver today is a hot commodity. And that’s good for them because for far too long we’ve existed in an age where the general public’s perception was that driving jobs were not as desirable.

But when you consider the impact that moving freight effectively and efficiently has on our economy, it’s important to have highly trained, well-qualified drivers. And there are a lot of excellent schools in Texas now training this new generation of drivers.

On bringing great efficiencies to the trucking industry …

We’ve worked with TxDOT to streamline their permit issuing process. And in October 2011, Texas instituted TxPROS, now under the leadership of TxDMV, which modernizes the routing and permitting of oversize and overweight loads.

With this automated system, permits can be issued on a much more timely basis. Some interesting things happened with this one change alone. Before, all the folks that needed permits used to be waiting in the queue for hours before they got someone on the phone – all the while receiving pressure from the shipping industry to get rolling or they’ll find someone else to do the job. So for truckers, it came down to either losing the business or be illegal. And running hot is a position no one wants to be in … In the first year under TxPROS, they saw an increase of nearly $30 million coming in. And I’d suggest it’s not extra freight; it’s because they made the process more efficient, allowing trucking companies to get in gear and get their work done.

So we’re looking at other areas, everything from registrations and inspections to other things that are part of the trucking business in the state. For instance, trucking companies will register their trailers in states where they have a nexus and the process is simple. People are going to maintain their fleet registration where it’s the easiest to do. And while it may cost them more per-plate, the manhour savings can be significant. It boils down to a simple matter of business economics. You can’t create a cumbersome environment that would make someone want to do business elsewhere just because it’s easier. TxDMV understands this and this is an example of industry and state agency coming together to streamline the regulatory process without compromising safety.

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PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

TOP

enhanced oil recovery enablers

According to the article ‘Enhanced Oil Recovery: Challenges and Opportunities’

by Sunil Kokal and Abdulaziz Al-Kaabi from the EXPEC Advanced Research Centre, Saudi Aramco, the top 8 enhanced oil recovery enablers are:

Focus on Ultimate Oil Recovery

Capability Development

Moving Towards Difficult Resources

Stepwise Implementation

Oil and gas companies realised that they need to focus on ‘ultimate’ oil recovery and not on ‘immediate’ oil recovery to maximize long-term profits.

A move towards difficult hydrocarbon resources such as heavy and extra heavy crudes, oil sands, shale oil should be deployed to intensity EOR methods.

Life-Cycle Planning

Life-cycle planning includes thinking about EOR early enough to conduct relevant R&D studies, feasibilities testing and conducting pilots to enable key decisions to be made at the right time.

R&D

Investment in R&D is essential to generate the right options for field development. The correct strategy can maximize the overall recovery.

EOR projects are manpower-intensive and require highly-skilled professionals to run them. For companies that invest in capability development EOR will be easier.

Stepwise implementation and integration of R&D, technology, people, and commitment can reduce risks and facilitate EOR projects.

Energy Security

EOR implementation may be aided by a company’s or country’s need for energy security concerns.

Environmental Concerns

Recently a strong boost to EOR has come from environmental concerns. This is especially true for C02-EOR. CO2 a greenhouse gas, has been closely linked to global climate change. There are incentives for light crudes and is generally miscible with the oil at moderate reservoir pressures. The number of projects injection C02 for EOR has been steadily rising.

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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TOP 5

ENERGIZE YOUR WORKFORCE

REASONS Employees STAY

Like every industry in the Permian Basin right now, the oil and gas industry has been affected by a shortage of skilled staff. As a consequence, retention is becoming a major concern for companies. At a Human Capital Conference in London this month, the main factors motivating employees to stay in a company were discussed and this is what they found: employee engagement with the organization, interesting projects, career incentives, recognition, good supervision style and training developments. Money is important but non-monetary factors, such as working conditions, quality of life and the opportunity to live in a country as opposed to another, may prevail.

Because people are different, it is vital to engage with employees before they want to leave the company and join competitors. The main 5 reasons why companies aim at retaining their talented employees are:

1.

Increase productivity and operating income

2.

Continuity in leadership and effective succession management

3.

Motivation of employees 5.

Unification of corporate culture for global companies 24

4.

Reduction in turnover

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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MAY & June TOP

FESTIVALS AND EVENTS IN TEXAS

ROAD TRI P

All across Texas, a variety of festivals, events and attractions are a great way to have fun and to spend time with your family.

100TH ANNIVERSARY RIBBON CUTTING Fasken Oil & Ranch, Ltd

May 16 8:30 PM TO 9:00 PM 6101 Holiday Hill Rd Midland, TX The Midland Chamber of Commerce and M-Squad Ambassadors congratulate Fasken Oil & Ranch on their 100th Anniversary celebration.

(432) 683-3381

HOT SUMMER NIGHTS WITH COOL MUSIC

May 31 and June 7, 14 21, 28 and July 12, 19, 26, Odessa, TX From Texas Swing to bluegrass, patriotic to jazz—a different musical journey every Friday night. Free admission. Located at Noel Heritage Park in downtown

Odessa at 5th & Sam Houston Streets. Sponsored by Odessa Council for the Arts & Humanities and Main Street Odessa (432) 337-1492 www.odessaarts.org

WEST TEXAS WESTERN SWING FESTIVAL

June 4-8 Snyder, TX Hear the “best of the best” western swing musicians at this annual gathering, including Jody Nix, Eddie McAlvain, Kelly Spinks, Billy Mata, Jake Hooker, Larry Lange, Mark Powell, Justin Trevino, Tommy Hooker and many more. Held at The Coliseum.

(325) 573-3558. www.snyderchamber.org

WILD HORSE PRAIRIE DAYS

June 7-8 Haskell, TX Western musical entertainers, ranch rodeo, parade, ranch horse competition, kids’ rodeo, dance, trade show, cutting horse contest & cowboy church service at Haskell Rodeo Grounds at Civic Center.

(940) 864-2477 www.haskelltxchamber.com 26

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

JUNE OLD SOREHEAD TRADE DAYS

June 8 • 9:00 AM - 6:00 PM & June 9 • 12:00 PM - 5:00 PM Old Sorehead Trade Days is the best little show in West Texas (if you call 615 booths and 30,000 visitors “little”.)

Stanton hosts a Trade Days 3 times a year, 6 days of wonderful shopping. Shows are scheduled the 2nd weekend in April, June and October.

(432) 756-2006 www.stantontex.com

TEXAS BLUEBERRY FESTIVAL

June 8 Nacogdoches, TX The largest producer of blueberries in Texas presents a blueberry pancake breakfast, kid’s water park, arts & crafts, farm-fresh blueberries for sale, classic car show, live musical entertainment, blueberry farm tours & family fun downtown. Presented by Brookshire Brothers.

(936) 560-5533 www.texasblueberryfestival.com

CLASSIC CAR SHOW

TOMATO FEST

June 8 Jacksonville, TX Enjoy many tomato activities, including Salsa Contest, Tomato Eating Contest, Tomato Peeling Contest & Got Talent Contest, plus 200 vendors, Chili’s Street Dance, entertainment, history display, Farmer’s Market, Gospel concert, soccer/tennis tournaments and more. Free admission. In its 29th year!

Contact the Jacksonville Chamber of Commerce: (903) 586-2217 www.jacksonvilletexas.com

June 8, Paris, TX 30+ classes, many special awards, ARTS/CRAFTS, food, SWAPMEET, kid activities, special shopping! Cruise night, giant 50’s street party, music/entertainment Friday 6pm, Love Civic Center - 2025 South Collegiate. Hosts: Red River Valley Honkers Car Club. SEEKING VENDORS: Contact S. Carrol.

(903) 739-9763 www.RRVhonkers.com • kscarrol@att.net

WEST TEXAS FORD DEALERS MEX-TEX FAMILY FIESTA June 7-8 Midland, TX Centennial Plaza-Downtown Midland by Midland Center (105 N. Main) www.txchamber.com MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

27

28

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

Tech Bites-Twitter...

Are you on Twitter? This is a list of the top 10 oil and gas twitter accounts we think you should be following to be updated with the latest oil and gas news.

1

6

@worldoilngas

WorldOilnGas keeps you updated! They keep you updated about oil and gas key challenges and issues from all over the world. The main topic areas discussed are oil and gas developments, shale gas, National Oil Companies, exploration, production, research and development, technology, environment and human resources. They can also be found at: http://blogs.terrapinn.com/world-oil-and-gas

2

@OGJOnline

OGJO Online is the twitter account of Oil and Gas Journal. It tweets international oil and gas news with a particular interest in technology updates. They can also be found at: http://www.ogj.com/index.html

3

@WorldOil

World Oil provides news and trends in the exploration, drilling and completion of onshore and offshore oil and gas promotions. They can also be found at: http://www.worldoil.com

4

@Rigzone

Rigzone tweets Europe and worldwide news on oil and gas. It highlights finance, investing and commodities news. They can also be found at: http://www.rigzone.com

5

@UpstreamOnline

Upstream Online twitter account provides essential daily reading on upstream industry news. They can also be found at: http://www.upstreamonline.com

@YourOilandGas

Your Oil and Gas twitter account provides quality and up to the minute informative news and articles across a diverse range of topics. They can also be found at: http://www.youroilandgasnews.com

7

@IFAXnews

IFAX News (Interfax Europe) provides real-time, accurate and unbiased news releases from Russia & CIS, China, Central Asia, Ukraine and Kazakhstan. They can also be found at: http://www.interfax.co.uk

8

@PlattsOil

Platts Oil twitter account covers the oil markets from a global perspective, real-time and in-depth. They can also be found at: http://www.platts.com/NewsandAnalysis/Oil

9

@NewsBase

News Base twitter account tweets news from global independent energy researchers. They can also be found at: http://www.newsbase.com

10

@EY_OilGas

Ernst & Young Oil and Gas twitter account shares information across the upstream, midstream, downstream and oilfield services sectors from Ernst & Young’s Global Oil & Gas Centre. They can also be found at: http://www.ey.com/GL/en/Industries/Oil-Gas

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

29

PBE NEWS BRIEFS Watching the basin

PERMIAN BASIN PETROLEUM MUSEUM - A NEW EXHIBIT...

Oxy has pledged $500,000 to the Permian Basin Petroleum Museum for a new exhibit on enhanced oil recovery. On April 18, Bill Albrecht, president of Oxy Oil & Gas – Americas, toured the museum and presented Oxy’s letter of commitment to Museum Executive Director Kathy Shannon.

The Permian Basin Petroleum Museum is the largest of its kind in the United States and a resource for science-based education for thousands of visitors each year, mostly schoolchildren. The renovations will begin in 2014.

Watching the GOVERNMENT

TEXAS OIL ON THE RISE In a recent news release from the Railroad Commission of Texas, Commissioner Christi Craddick noted that with Texas Oil production on the rise, this state is helping to pave the path towards U.S energy independence. Craddick’s comments follow the Railroad Commission’s release of the most recent production numbers indicating Texas is producing almost 1.5 million barrels of oil per day – a nearly 50 percent increase in crude oil production since 2011. Texas now represents almost a fourth of total crude oil produced in the United States.

“It’s exciting,” said Railroad Commissioner Christi Craddick to members of the Texas Independent Producers and Royalty Owners Association at its annual meeting in Austin.

“It’s evident not just in the production numbers, but in the jobs that are being created and the taxes this industry contributes to our state’s coffers. Last year, oil and gas energy sectors were responsible for 427,761 jobs in Texas and the industry paid $9.25 billion in state taxes in 2011,” Craddick said.

30

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

Watching the STATE

TOP 10 CITIES FOR BUSINESS GROWTH, AUSTIN #1 In Market Watch’s most recent ranking of the top 10 cities for business growth, several cities in Texas made the top of the list with Austin taking the top spot at 1st!

Houston came in 3rd and Dallas was just a few notches down at 14.

Not surprisingly given the importance of technology, both San Jose and San Francisco made the top 10.

Yet they were outranked by Houston, where energy has a massive presence and biotechnology firms are multiplying each year.

Using a variety of economic data to evaluate business conditions in the nation’s 100 largest metro areas, the recent MarketWatch survey not only ranks the top and bottom locations, it illuminates the business climate, what powers growth and how well companies are increasing sales, profits and stock prices.

Go to marketwatch.com to view the full list.

It shows that metro areas with strong ties to technology and energy fared well during the year — and those areas building up a presence in the biotechnology and pharmaceutical space are getting a bonus in jobs and general wealth.

MarketWatch divides the data into three main categories looking at business environments, the performance of publicly traded companies located within the metro areas and the resulting effects on their economies over the past year. Twenty metrics gathered from government agencies, stock exchanges and, in some cases, privately conducted studies were used to develop the criteria.

photograph by LUKE PAWLISZYN MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

31

Watching the Nation

OTHER NATIONS ARE INVESTING BILLIONS IN U.S. TO LEARN SHALE EXTRACTION Photograph by The Washington Times/Associated Press

By Patrice Hill Oil companies from China, Norway, Japan and other nations are investing billions of dollars in U.S. shale projects so they can learn how to extract oil and gas from bedrock and use those technologies to tap into the large and mostly undeveloped shale deposits outside the U.S. China’s Sinochem Group petrochemical company was the latest to buy into a partnership with American company Pioneer Natural Resources, paying $1.7 billion for a stake in the Wolfcamp shale play in West Texas. That January transaction is under review in Washington for compliance with national security laws.

Source: The Washington Times Sunday, April 28, 2013

Watching the WORLD

SOUTH SUDAN AND SUDAN REACHED AGREEMENT ON OIL TRANSPORT South Sudan is a big producer of oil (almost 350,000 barrels a day) but the country depends on its neighbour Sudan’s pipelines to reach the Red Sea port of Port Sudan and export the black gold.

finally agreed to resume transfers of oil across the border to avoid a potential bloody war. The first oil is expected to reach Sudan’s ports by the end of May, according to the state news agency (SUNA).

In 2011 the two countries officially split but they did not manage to agree on how much South Sudan should pay Sudan to access its pipeline and ports.

The deal will bring many benefits for both countries. On one side, South Sudan should manage to get billion of dollars in revenue from its oil sales; on the other, Sudan would collect up to $1.2 billion in transit fees and other payments in 2013.

After 15 months of negotiations, the two countries 32

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

Watching Offshore

PREMIER OIL MAKES NORTH SEA DISCOVERY Premier Oil has announced a discovery at its Bonneville exploration well and its side track in the North Sea, more than 150km offshore from Aberdeen.

The company said the reservoirs were of “excellent quality”.

It estimated that the discovery contained approximately 30 million barrels of oil, which was in line with pre-drill predictions.

In addition, Premier said it had discovered gas in the Matang well in Indonesia.

It also said that testing of its Luno discovery in Norway had started.

Simon Lockett, chief executive of Premier, said: “We are delighted with the strong start to our 2013 exploration drilling programme with the previously announced discovery at Luno II and now the discoveries at Bonneville and Matang.”

Premier has a 50% interest in the Bonneville well.

Edinburgh-based Cairn Energy has a 30% stake and German oil and gas firm Wintershall has a 20% share.

Source: www.bbc.co.uk

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

33

RESTAURANT basin burger house

In honor of May being National Burger Month, we thought this month’s bite should quench your quest for a good burger. Here’s the story behind Midland’s newest burger joint, The Basin Burger House.

This tasty tale begins about year ago when business partners Aron Marquez and Duke Edwards noticed a for sale sign on a dilapidated 1930’s house that was situated right in the heart of Midland. Having discussed the possibility of opening a restaurant and/or bar for a couple of years, they made an offer. In January of 2012, the offer was accepted and the duo broke ground on their dream to build a restaurant. In the planning stages, they decided to preserve some of the historical character by keeping as much of the original house as possible.

The interior of the old house was turned into an oldfashion styled diner, while the new addition of 4,000 sq feet was designed to be a more contemporary bar lounge. With the nice summer evenings in Midland, they wanted to add an outdoor area as well which was accomplished through the addition of garage doors to parts of the building. When the garage doors are open, this area can seat over 75 people, perfect for special events and private parties. The history of Midland and the oil business is the prevailing theme throughout the restaurant as seen in the decorations and historic photos that adorn the walls. Completing this theme are the “yard arts” placed in the gardens of the building and a 1941 red and black Dodge pickup. The Wildcat Oil 34

Tools pickup is a favorite of all who arrive at the Basin Burger House. Beyond the allure of the restaurants character, the menu consists of much more than burgers.

Chef Gabe Gutierrez is professionally trained and comes with a team of exclusive culinary techs, bringing his many talents to Basin Burger House. All of the items are made in house from the freshly made buns, to homemade desserts, fresh cut fries and onion rings and of course their special house blend of meat including brisket, chuck and short rib. Daily dinner specials, summer produce salad specials and a rib eye steak are also available on the menu. With a fully stocked bar and an exceptional mixologist, their happy hour summer specials are sure to impress. They offer an interesting variety of drinks from homemade sangria to jungle juice and even adult spiked milkshakes, sure to quench your thirst along with your appetite.

Join Basin Burger House this summer for party on the patio weekends, featuring live entertainment.

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

Basin Burger House Aron Marquez & Duke Edwards - Owners 607 N. Colorado St. Midland, TX 79701 Phone: (432) 687-5696 www.basinburgerhouse.com

Inspires Rediscover the Reason

The following is a prophetic word spoken by Pastor Jim Laffoon during a recent Wednesday night church service at MidCities Church, in between Midland and Odessa.

Losing the Reason: I was twenty-six years old, been married for five years, and had fivemonth-old twin boys when I was asked to lead the congregation I served in as a youth pastor. With new responsibilities at work as well as on the home front, my life was filled with staff meetings, early mornings, late nights, and boxes and boxes of Huggies. Needless to say, life got busy…quick.

Funerals, weddings, messages, hospitals, vision retreats, conferences, doctor’s appointments, and Baby Einstein DVDs filled my day.

I discovered quickly that the reason I said yes to leadership could get lost if I let it.

The Trap: It’s a trap leaders fall into all the time. You saw a need, you were filled with vision and you felt drawn, called to respond. So you say yes.

Yes to the job, yes to the promotion, yes to the board position. Soon the daily responsibilities, emails, phone calls, complaints, outside pressures, politics, conflicting personalities, miscommunication, and misunderstanding can drown out the reason you said yes. Truthfully, it’s easy for anyone in a leadership role to get so caught up in the daily activities and responsibilities that over time the WHAT replaces the

WHY. Somewhere along the way, the reason we said yes, the reason we signed up, the reason we raised our hand is under a stack of papers, people, & pressures.

Confessions of a Pastor: When I say it happens to every leader, I’m including myself. I know, I know, pastors are not supposed to struggle with the WHY question. Yet, there have been a number of times in my life, where I looked up from my iPhone or walked away from a day so entangled with the WHAT, that I hadn’t considered the WHY. It can happen to anyone. The guy who volunteeres to serve on the board at his local little league because he wants his kids to experience the joy of a great game and the fun of competition, yet the conflict with another board member causes them both to get lost in the what and jettison the why.

Rediscover The Reason: One day I was reading in the book of Luke and I ran across a verse that caused me to pause and evaluate my life. “But Jesus often withdrew to lonely places and prayed.”1 If leadership is measured by influence and impact, there is no leader that compares to Jesus of Nazareth. This first century preacher, teacher, and

Daniel Stephens is the Senior Pastor of Mid-Cities Community Church, since 2006. He is the honored husband to Kayla Stephens, a proud father of twin sons Jonah & Jude, daughter Kampbell, and a precious foster daughter. miracle worker was constantly busy.

If you read the stories of His life in the four gospel accounts, he was constantly surrounded by people who wanted him to do something for them. They wanted Him to heal their loved one, meet their family member, and further explain his teachings.

Yet in the middle of His crazy paced life, Luke says that Jesus “often” got alone and prayed. In this “more is better” culture we exist in today, you can’t help but think that Jesus could have better used his time. Why is he in the boat, on the mountainside, or kneeling in the garden when there are people who need to be healed?

There are more sermons that need to be preached. There are more problems that need to be solved.

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

35

Yet, the Bible says on numerous occasions that Jesus got alone and retreated to prayer.

1 The Holy Bible: New International Version. 1984 (Lk 5:16). Grand

Rapids, MI: Zondervan.

Here’s What I Know: I know that people can be draining. Whether you are the CEO of an oil and gas company, an administrative assistant, or a pastor of a local church. I think Jesus knew something when he withdrew to lonely places to pray. I think it was through prayer, conversation with the Father that Jesus was filled with compassion and strength to continue on in his leadership role. I think this is true of us too. If we are leading others, it is in rediscovering prayer, quietness before God, that He can re-birth His vision in us. It is through getting alone with the Father on a long walk in the neighborhood or finding a quiet corner of the house, or turning off the ringer for the first few moments at work that reminds us of the reason we said yes. Not simply Yes to your leadership role at

work, but your leadership role with your family, with your community, with your church. C.S. Lewis in his book Mere Christianity sums up the difficulty and the needed regularity of rediscovering prayer: “All your wishes and hopes for the day rush at you like wild animals. And the first job each morning consists simply of shoving them all back: in listening to the other voice, taking that other point of view, letting that other larger, stronger, quieter life come flowing in. And so on all day. Standing back from all your natural fussings and frettings; coming in out of the wind. We can only do it for moments at first. But from those moments the new sort of life will be spreading through our system, because now we are letting Him work at the right part of us.”

Take a moment this week and find a lonely place to rediscover the reason, through prayer.

$12.

00

PER PERSON

316 N Big Spring St Midland, TX 79701

(432) 683-4581 36

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

---------

--------FREE

cobbler with the purchase of an entree

exp.

12/31/13

B B Q & D I N E R

Top 10 to

things

know

about

shale

by World Oil and Gas

photograph by ROBERT FLAHERTY

What are the most important things to know about shale gas?

Here we show you the top 10.

1. Shale gas provides great economic benefits and creates thousands of direct and indirect jobs.

2. There are already numerous shale gas environmental regulations to control fracking operations. They include every aspect of exploration and production such as well design, water use and disposal, air emissions, safety location etc.

3. The industry is looking for continuous improvement to develop the process and help shale to grow safely.

4. Careful well supervisions are done to keep the groundwater safe.

5. Good water management measures allow preventing spills.

6. Fracking liquids mainly include water (90%) not chemical components.

7. Wastes are conscientiously managed. Fracturing fluid is recovered and recycled for re-use or disposal.

8. It has been confirmed by numerous organizations that shale gas is not the main cause of earthquakes.

9. Air emissions are carefully controlled and respect the limits to protect the environment and the community.

10. The industry is constantly looking for new technologies and invests a lot in research and development.

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

37

BY THE NUM83RS

April 26, 2013

U.S. RIG COUNT - TEXAS

States &

BAKER HUGHES RIG COUNT

RIGDATA RIG COUNT

Four Week Average 2012

Four Week Average 2013

Last Week

This Week

Four Week Average 2012

Four Week Average 2012

Last Week

This Week

Waiting to Spud

Texas RRC District 1

135

135

134

132

145

128

132

128

15

Texas RRC District 2

93

83

86

87

89

90

91

95

6

Texas RRC District 3

36

42

38

42

44

46

44

48

2

Texas RRC District 4

52

36

36

37

44

32

32

33

0

Texas RRC District 5

31

14

14

13

30

14

11

14

0

Texas RRC District 6

40

26

26

27

40

24

23

23

0

Texas RRC District 7B

14

16

18

13

27

21

21

19

3

Texas RRC District 7C

83

81

82

82

82

80

79

83

1

Texas RRC District 8

305

275

275

279

302

259

258

257

5

Texas RRC District 8A

31

38

36

36

32

32

33

30

0

Texas RRC District 9

26

25

26

24

42

29

30

28

8

Texas RRC District 10

73

64

64

60

79

67

68

63

4

Texas Total

919

835

835

832

956

822

822

821

44

U.S. Totals

1,966

1,762

2,173

1,920

1,921

1,907

91

Districts

1,758 1,754

COPYRIGHT Š 2013 RIGDATA P.O. Box 820547 Fort Worth Texas 76182-0547 1-800-627-9785 | www.rigdata.com This report is protected under United States and international copyright laws and is intended for the exclusive use of the subscriber. Any unauthorized reproduction, retransmission, distribution, publication, broadcast or circulation of this report to anyone, directly or indirectly, without the express prior written consent of RIGDATA is prohibited. To order additional report copies at a reduced rate or for a corporate site license, please contact: 1-800-627-9785 38

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

through May 1, 2013

Top 35 Drillers Rankings

Each month we track the activity of all the drillers and compile the results into a report that identifies the top 35 out of 100 drillers based on their footage drilled. Updated monthly, these reports also detail the number of well starts and the number of directional wells drilled by each of the top 35 out of 100.

Company

Footage Drilled

% of Total

Average Footage

Well Starts

% of Total

Directional Wells

1

Helmerich & Payne, Inc.

15,093,509

15.80%

9,996

1,510

12.10%

1,325

2

Patterson-UTI Drilling Company, LLC

9,532,496

9.90%

9,619

991

8.00%

833

3

Nabors Industries, Ltd.

7,786,134

8.10%

7,352

1,059

8.50%

921

4

Precision Drilling Trust

4,339,558

4.50%

9,060

479

3.80%

418

5

Ensign Energy Services, Inc.

3,803,535

4.00%

5,754

661

5.30%

336

6

Nomac Drilling, LLC

3,524,842

3.70%

9,252

381

3.10%

381

7

Trinidad Drilling, Ltd.

2,681,058

2.80%

11,265

238

1.90%

206

8

Pioneer Energy Services Corp.

2,591,127

2.70%

9,526

272

2.20%

186

9

Savanna Energy Services Corp.

2,408,880

2.50%

11,309

213

1.70%

82

10

Cactus Drilling Company, LLC

2,271,444

2.40%

10,614

214

1.70%

199

11

Unit Drilling Company

2,239,346

2.30%

7,440

301

2.40%

294

12

Capstar Drilling, LP

2,144,505

2.20%

6,985

307

2.50%

29

13

Xtreme Drilling and Coil Services Corp.

1,344,336

1.40%

9,742

138

1.10%

136

14

Desoto Drilling, Inc.

1,332,712

1.40%

4,398

303

2.40%

301

15

Complete Production Services, Inc.

1,188,958

1.20%

10,522

113

0.90%

40

16

Sendero Drilling Company, LLC

973,995

1.00%

11,595

84

0.70%

0

17

CanElson Drilling, Inc.

919,090

1.00%

9,778

94

0.80%

9

18

Lariat Services, Inc.

885,063

0.90%

6,367

139

1.10%

76

19

Orion Drilling Company, LLC

809,203

0.80%

11,085

73

0.60%

71

20

Robinson Drilling of Texas, Ltd.

804,985

0.80%

11,027

73

0.60%

0

21

Union Drilling, Inc.

793,083

0.80%

10,300

77

0.60%

30

22

Latshaw Drilling & Exploration Company

767,736

0.80%

7,109

108

0.90%

105

23

Sidewinder Drilling, Inc.

751,528

0.80%

5,871

128

1.00%

128

24

Scandrill, Inc.

718,333

0.70%

12,175

59

0.50%

47

25

Big Dog Drilling Company

692,817

0.70%

11,743

59

0.50%

3

26

Lewis Petro Properties, Inc.

664,500

0.70%

12,538

53

0.40%

53

27

Bison Drilling and Field Services, LLC

622,916

0.70%

11,753

53

0.40%

5

28

Cyclone Drilling, Inc.

611,037

0.60%

4,020

152

1.20%

140

29

Basic Energy Services, Inc.

584,984

0.60%

6,724

87

0.70%

21

30

SST Energy Corporation

564,154

0.60%

9,562

59

0.50%

48

31

Silver Oak Drilling, LLC

496,041

0.50%

8,001

62

0.50%

23

32

Ringo Drilling I, LP

487,037

0.50%

6,958

70

0.60%

0

33

Aztec Well Servicing Co.

469,118

0.50%

6,426

73

0.60%

31

34

Murfin Drilling Company, Inc.

452,310

0.50%

4,663

97

0.80%

0

35

J.B. Hunt Gas & Oil Drilling, LLC

451,200

0.50%

11,005

41

0.30%

0

Total Top 100 for year 2013

95,827,946

100.0%

---

12,464

100.0%

---

RANK

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

39

Top 35 Operators Rankings Updated every month, we track and rank the top

through May 1, 2013

35 out of 100 operators based on their footage drilled.

Keep track of the most active operators with details on their number of well starts.

RANK

Company

Footage Drilled

% of Total

Average Footage

Well Starts

% of Total

Directional Wells

1

Anadarko Petroleum Corporation

5,224,920

5.50%

10,408

502

4.00%

493

2

Chesapeake Energy Corporation

4,193,927

4.40%

10,229

410

3.30%

410

3

EOG Resources, Inc.

3,551,737

3.70%

10,446

340

2.70%

320

4

Devon Energy Corporation

3,391,693

3.50%

9,167

370

3.00%

336

5

Apache Corporation

3,086,414

3.20%

9,051

341

2.70%

141

6

BHP Billiton

2,975,469

3.10%

12,993

229

1.80%

226

7

Occidental Petroleum Corporation

2,841,673

3.00%

6,072

468

3.80%

222

8

Pioneer Natural Resources Company

2,805,544

2.90%

13,360

210

1.70%

114

9

Marathon Oil Corporation

1,952,150

2.00%

13,944

140

1.10%

140

10

Shell Exploration & Production Co., Inc

1,934,817

2.00%

14,332

135

1.10%

134

11

Concho Resources, Inc.

1,924,562

2.00%

10,403

185

1.50%

68

12

Encana Corporation

1,893,660

2.00%

10,699

177

1.40%

167

13

ExxonMobil Corporation

1,817,226

1.90%

6,781

268

2.20%

179

14

Chevron Corporation

1,634,100

1.70%

4,267

383

3.10%

143

15

Southwestern Energy Company

1,621,583

1.70%

4,687

346

2.80%

344

16

ConocoPhillips Company

1,563,690

1.60%

7,665

204

1.60%

143

17

QEP Resources, Inc.

1,223,966

1.30%

8,743

140

1.10%

137

18

Whiting Petroleum Corporation

1,206,684

1.30%

9,073

133

1.10%

103

19

SandRidge Energy, Inc.

1,177,017

1.20%

5,278

223

1.80%

177

20

Energen Resources Corporation

1,119,300

1.20%

8,954

125

1.00%

15

21

Noble Energy, Inc.

994,658

1.00%

10,470

95

0.80%

95

22

Newfield Exploration Company, LLC

968,008

1.00%

6,411

151

1.20%

137

23

CrownQuest Operating, LLC

967,500

1.00%

12,094

80

0.60%

0

24

EP Energy E&P Company, LP

888,535

0.90%

9,984

89

0.70%

79

25

Murphy Oil Corporation

866,285

0.90%

9,625

90

0.70%

88

26

Oasis Petroleum North America, LLC

749,458

0.80%

9,861

76

0.60%

76

27

Linn Energy, LLC

706,508

0.70%

9,175

77

0.60%

27

28

Cimarex Energy Co.

696,323

0.70%

11,053

63

0.50%

58

29

Parsley Energy Operations, LLC

675,000

0.70%

12,981

52

0.40%

0

30

Lewis Energy Group, LP

673,500

0.70%

12,472

54

0.40%

54

31

SM Energy Company

670,626

0.70%

7,535

89

0.70%

84

32

Plains Exploration & Production Company

666,527

0.70%

6,535

102

0.80%

47

33

BP America Production Company

642,355

0.70%

9,587

67

0.50%

65

34

WPX Energy, Inc.

635,803

0.70%

6,764

94

0.80%

93

35

Continental Resources, Inc.

613,510

0.60%

2,827

217

1.70%

216

Total Top 100 for year 2013

95,827,946

100.0%

---

12,464

100.0%

---

40

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

May 1, 2013

Absorbing Increases in U.S. Crude Oil Production U.S. crude oil production has been rising in recent years following a decline from 9 million barrels per day (bbl/d) in 1985 to 5 million bbl/d in 2008 (Figure 1). Production was 6.5 million bbl/d in 2012 and EIA’s latest Short-Term Energy Outlook forecasts production of 8.2 million bbl/d by the end of 2014, driven by the continued rapid pace of tight oil development that almost exclusively produces light crude.

While long-term projections are inherently uncertain, reflecting assumptions about hydrocarbon resources as well as advances in technology, U.S. crude production in the High Oil and Gas Resource case of EIA’s Annual Energy Outlook 2013 averages 10 million bbl/d over the 2020 to 2040 period (Figure 2), with light grades of crude oil providing the bulk of output growth.

Some recent commentary has suggested that it was likely or even inevitable that the growth in U.S. oil production from tight resources would be significantly curtailed unless there was a relaxation of current U.S. policies toward crude oil exports. However, this is likely an overstatement of the actual situation, because there are several other midstream and downstream

adjustments that could help to accommodate changing production patterns.

Recent Developments The growing supply of domestic light crude oil in the mid-continent that has traditionally moved through the Cushing, Oklahoma, market hub has already prompted both midstream and downstream changes.

Pipelines like Seaway that were once used to carry imported oil up from Gulf Coast ports to reach Midwest refiners have been reversed and are moving inland crude oil down to the Gulf, and their capacity is being dramatically expanded. New pipeline infrastructure is also

under construction, including the southern portion of the Keystone XL project, which is slated to be in operation by year-end, and more has been proposed.

There have also been major developments in rail transport, where shipments of crude increased dramatically in 2012 compared to 2011. Rail is generally more costly than pipelines for crude oil transport, but unit train loading and unloading facilities, which can often be built quickly and without many regulatory hurdles, can help to narrow the gap between rail and pipeline shipment costs. Rail also can provide greater flexibility in destination points. For example, while most of the major pipelines that are under discussion focus on linking inland crude streams with the U.S. Gulf

MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

41

Coast, home to about half of the nation’s refining capacity, some of the less-complex refineries on the East Coast and in the Northwest that have historically run imported light sweet crude provide attractive opportunities for switching to domestic light tight oil. Rail shipments to take advantage of these opportunities have already begun, and are likely to increase significantly in the near future.

Even with these midstream adjustments, continued strong growth in U.S. production of light crude oil from tight resources raises the prospect of a quality mismatch between domestic crude supplies and refinery capabilities. Many Gulf Coast refineries, and increasingly those in the Midwest and West Coast, have invested in secondary upgrading units that are used to convert heavy sour crudes into high-margin petroleum products.

Heavy sour crudes are very attractive to these refiners, both because they yield slates rich in diesel and other distillates that are in high demand and because heavy crudes typically sell at a discount to light sweet grades on world markets. For this reason, refiners with upgrading capability are very interested in increasing their runs of heavy crude, including that produced from Canadian oil sands.

At the same time, U.S. refinery closures in recent years, largely concentrated along the East Coast, have reduced the amount of capacity optimized to run light sweet crude. To date, the increase in U.S. light sweet crude production has been accommodated by displacing imports. However, with light sweet crude imports (35 degrees API or higher and sulfur under 0.5 percent) to the Gulf Coast in February 2013 (the latest data available) running at 80,000 bbl/d, and total U.S. light sweet crude imports at only 500,000 bbl/d, the opportunity for likefor-like displacement of light sweet imports is running out (Figure 3). If imports of light, higher-sulfur crude oil are also replaced by domestic light production, an additional 440,000 bbl/d of imports could be displaced.

the common understanding has been that crude oil export licenses would be hard to come by. On the other hand, the United States generally allows exports of petroleum products without a license.1 There are market reasons that make it attractive to both import foreign-produced crude oil and export domestically produced crude oil in order to maximize the value of crude production and refining capabilities.

For example, the United Kingdom is a net crude oil importer, but is also an exporter of Brent crude. While a change in export policy is one option, some combination of the following outcomes could occur in a hypothetical situation with high production growth of domestic light tight oil and no changes in current export licensing policies: • Exports of light sweet crude oil to Canada, which trade press reports indicate are already up, could continue to rise. However, depending on how greatly light, tight production grows, the markets that can be reached under current export licensing policies may be too small to alleviate the impending mismatch.

• U.S. light sweet crude could be priced at a sustained discount relative to comparable international seaborne crudes by an amount sufficient to encourage its use in refineries along the Gulf Coast that are optimized for heavier crudes. This possibility, which was mentioned in an April 24, 2013, TWIP article that addressed pricing differentials between Louisiana Light Sweet and Brent crudes, would imply lower wellhead prices for domestic light crude streams. Depending on the level of world oil prices and the size of differentials between global and domestic crude prices, lower prices could reduce the level of domestic production.

Future Options Under current law and regulations, crude oil produced in the United States requires a license to be exported.

Exports to Canada for processing or consumption in Canada, as well as certain specific U.S. crude streams (such as California heavy crudes), are presumed to automatically qualify for export licenses, subject to meeting specific restrictions such as volume limitations.

Beyond these established and well-known exceptions, 42

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | MAY 2013

• In the short-run, U.S. refiners that switch from heavy to light crude may need to reduce their total volume of refinery runs given operating constraints that limit their ability to handle light fractions. Over time, these refineries may invest capital to increase the capability to run light crudes. For example, they may increase capacity to process light ends from distillation to avoid reducing crude input volume when running light crudes.

• Complex refineries in the United States may idle or cut back the use of cokers and other secondary processing units designed to support heavy crude processing. This could create processing bottlenecks and/or shifts in product slates.

• Markets for diesel fuel and other distillates could tighten if the switch from heavy to light inputs at complex refineries reduces the share of distillates in the output slate. Conversely, supplies of gasoline, which are currently in surplus in world markets, could rise.

• Refiners or other processors may elect to partially process some domestic light crude to produce material that could be classified as a petroleum product or feedstock rather than as crude oil. Since such products are generally not subject to export licensing requirements, they could be exported under the current policy regime.

As television announcers used to say, “Stay tuned.”

is $3.81 per gallon, all down four cents from last week.

Declining three cents, the Midwest price is $3.84 per gallon.

Propane inventories gain Total U.S. inventories of propane increased 1.5 million barrels last week to end at 40.5 million barrels, but are 8.0 million barrels (16.6 percent) lower than the same period a year ago. The Midwest region led the gain with 0.9 million barrels, while Gulf Coast stocks increased by 0.4 million barrels. East Coast inventories increased by 0.2 million barrels, and Rocky Mountain/West Coast inventories gained 0.1 million barrels. Propylene nonfuel-use inventories represented 9.5 percent of total propane inventories.

1 Petroleum products produced or derived from the Naval Petroleum Reserves require a license from the Bureau of Industry and Security (BIS).

Source: U.S. Energy Information Administration www.eia.gov

Gasoline and diesel fuel prices down for a ninth consecutive week The U.S. average retail price of regular gasoline decreased two cents to $3.52 per gallon as of April 29, 2013, down 31 cents from last year at this time. Prices were lower in all regions of the nation except the Midwest, where the price increased less than a penny to remain at $3.55 per gallon. The largest decrease came on the West Coast, where the price declined four cents to $3.80 per gallon.

Dropping three cents, the Gulf Coast price is $3.30 per gallon. On the East Coast the price is $3.46 per gallon, two cents lower than last week. Rounding out the regions, the Rocky Mountain price decreased less than one cent to $3.48 per gallon.

The national average diesel fuel price decreased four cents to $3.85 per gallon, 22 cents lower than last year at this time. The largest decrease came on the Gulf Coast, where the price decreased five cents to $3.76 per gallon.

The West Coast price is $3.95 per gallon, the East Coast price is $3.89 per gallon, and the Rocky Mountain price MAY 2013 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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