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VOLUME 2 NO. 11

The Power of

NOVEMBER 2014

TEXAS

Reigning Events 8

Manufacturing Success in Texas A History of Character: The Story Of Midland, Texas • U.S. RIG COUNT • TOP 35 Drillers & Operators

Industry Data

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News

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Baker Hughes, Halliburton

stockpile sand to meet demand

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Events

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Auctions

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Calendar

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RESTAURANT BITES

Travel

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Tips

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Energy

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Tech

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NOVEMBER 2014

contents 8

Pbe Features 8

Reigning Events - Insuring the Future for Midland's Events

12 Manufacturing Success in Texas 18 Midland Author Publishes,

“A History of Character: The Story Of Midland, Texas” 36 Baker Hughes, Halliburton Stockpile Sand to Meet Demand

Other Editorials

17 Calendar of Events 22 PBE Profiles: Charlie McCoy

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26 Conferences in November - December 27 Upcoming Auctions

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28 Advice for Mineral Owners from Permian Basin Land Girl 31 Safety Tips - Don’t Wait Vaccinate!

33 Top 5 Questions About Ebola 38 Festivals and Events in Texas 40 PBE Cares - Industry Leaders Chip in for Breast Cancer

Education and Support 42 Tech Bites - The Eagle has Landed: Nasa Launches Free

Sound Library 44 PBE News Briefs:

Basin, Shale, State, Government, Nation, Offshore & World 50 Restaurant Bites - Buddy's Drive In Inc. 52 PBE Inspires - Feeding the Body and Soul at Oil Show 54 By The Numbers: Texas Rig Count, Top Drillers, Top Operators 57 This Month in Petroleum

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LETTER FROM

THE EDITOR I've had a lot of worries in my life, most of which never happened.

- Mark Twain

Although this is typically a time of year that most people look forward to, there seems to be a lot of anxiety in our region right now around the recent drop in oil prices. For those of us who have lived in this area for any length of time, we all know this market has its peaks and valleys and it's very cyclical. But even with the knowledge that the valleys will eventually come, it still doesn't seem to sting any less when they do.

In this issue of Permian Basin Energy, you' ll read about how one local organization tried to step back from the hustle and bustle of these profit driven times, and bring a new dynamic and new perspective to this years oil show. You'll get even more perspective of what really matters in this months PBE Cares as you hear about how local companies have made a point to pour into the community and help fund critical health services to women in need.

You'll also read about how a local event center is preparing for an ever growing community and planning to meet the entertainment needs of the people in a unique and all new way.

Manufacturing growth and the increase need for sand are also among this months topics as well as all the usual updates around the state, nation and world.

I hope that as you and your family prepares to head into this holiday season, the worries of oil prices, and business in general are able to fade out, if only a little so you can find some peace and rest in a season that's all about family and reflection. If we are all honest, I'm certain there are many things we can find to be thankful for this Thanksgiving. Here's to celebrating what's really important this holiday with those you love.

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

/PBENERGYMAG @PBENERGY

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EDITORIAL CONTRIBUTORS

PBE MAGAZINE CONTACTS VOLUME 2 NO. 11

Taryn SnideR FREELANCE WRITER tarynsnider@gmail.com

EDITOR IN CHIEF/PUBLISHER Carlos Madrid sales@pbemag.com 432. 559. 5886 ART DIRECTOR/LAYOUT & GRAPHICS Luke Pawliszyn Lukasz Design Studio West Hollywood, CA luke@lukaszdesign.com ADVERTISING For advertising info call 432. 559. 5886 or email sales@pbemag.com

AUDRIE PALMER FREELANCE WRITER audrierpalmer@gmail.com

ACCOUNT EXECUTIVE Dominique Brown dominique@pbemag.com 432. 599. 3127 SUBMISSIONS Submit story ideas & other news to marcy@pbemag.com PUBLISHED BY: PBE Magazine, LLC. Permian Basin Energy Magazine 4500 Erie Drive Midland, TX 79703 Main Phone: 432. 559. 5886

MORRIS BURNS FREELANCE WRITER morrisburns@sbcglobal.net

www.PBEMag.com

/PBENERGYMAG

@PBENERGY

Copyright © 2014 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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Jimmy Patterson AUTHOR historyofcharacter@gmail.com

Kimberly Smith CEO Development Resources, Inc.

Shawn Todd American Safety Services, Inc.

The Power of

TEXAS

www.PBEMag.com

To Advertise call

(432) 559 - 5886 or email

sales@pbemag.com

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If you build it, they will come

by Audrie Palmer

They had always planned to have a complex of this size. The megastar – if you will – of the county.

In January, Midland County is set to open the Horseshoe Pavilion, a new entertainment and meeting venue with space for trade shows up to 52,000 square feet and major regional conventions.

The adjunct venue, the Amphitheatre, will also add floor and lawn seating for up to 4,500.

It’s something that is desperately needed. The event load that the current Midland County Horseshoe Arena Complex is carrying has grown over the years and many events have had to be turned away due to a lack of space.

Tammy Dooley, who along with her husband Mike manage the Horseshoe for Midland County through their company Dooley Management and have for the past nine years that the Horseshoe has been open and operational.

In the past year, the Horseshoe has held 165 events with 220 event days -- some of the events were held on multiple-day events -- over the course of the year.

Still, in the last 12 months, they’ve had to turn down approximately 300 events, Dooley said, simply because there were no dates available or the dirt in the main arena was either in or out and conflicted with what the event needed.

Getting the dirt in is something unique to the venue but also quite an ordeal for staff. Using dump trucks to haul in the dirt for the flooring at rodeos and livestock 8

shows, after the event is finished, staff must paint, wash and sanitize the arena and can turn around the main building in as little as four days.

But Dooley can’t stress it enough, the Horseshoe is the community’s event center. While operating costs are completely covered by event fees, the community also gets to utilize the building for their own special events.

“It’s your wedding, your quince-era, your rodeo or family reunion,” she says of the many community events that have taken place over the years.

And with the new pavilion, it will only add to the facilities that the Horseshoe can offer.

“We’ve had success at what we’ve done, so we’re taking it to the next level,” she added.

The new megastar will also serve as the largest concert venue in Midland, offering both indoor and outdoor concerts seating for up to 6,000 patrons based on the set up.

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Dooley and the Horseshoe staff also offer full-service booking, ticketing and assist in marketing. Through the years, they’ve seen a growth in returning events either through sponsorships and attendance numbers.

The Horseshoe event staff work around the clock, maximizing the use of the current facility to its fullest potential, and it’s not unusual to have a wedding, livestock show and rodeo all taking place at the same time, Dooley said.

Along with the full-service management services offered, the Horseshoe has concessions, food service, and assistance in catering and event planning that they can offer to organizers. Many of their staff also serve on numerous committees and boards, as advisors helping to plan events and making sure that they all run smoothly.

Those services will also be carried over to the new pavilion once it is completed, and Dooley said construction on the site is ahead of schedule and they plan to make a big announcement and have a celebration

honoring the community’s patronage after the first of the year.

“Through the years, we’ve had really great community support,” she said.

There are two showcase events that the Horseshoe is proud to have and honor each year. The first is the Midland County Fair, which just celebrated its fifth year, and has grown from 4,500 guests the first year to 16,000 in 2014. With the new pavilion, Dooley hopes the fair will be able double its footprint in the county and what it can do.

This past August, fair organizers sold out venue space and maximized the use of the Horseshoe grounds. In 2015, they plan to have more entertainment, vendors, attractions and educational components at both the Horseshoe Arena and Pavilion with hopes of seeing up to 20,000 visitors on the grounds.

Sticking with a traditional family fair, staff have embraced the educational, agricultural and

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creative arts aspects and hope to address technological components for fair-goers to enhance their experience.

The other showcase event at the Horseshoe is the Professional Armed Forces Rodeo Association’s World Finals event that moved from Glen Rose to Midland four years ago and recently announced they’ll return over Veterans Day weekend in 2015.

November is Patriotic month at the Horseshoe and with that event and the Show of Support program slated, Dooley said the center is so pleased to show off their red, white and blue during that month. They even light the building in the colors. It’s large events such as these two that echoed the need for the new pavilion, said Midland County Commissioner Jimmy Smith.

exciting thing for Midland because larger events that may have once been out of reach may possibly come to Midland County.

And the new events will help booster the economy even more. Those coming in from out of town stay in hotels or at RV campsites, buy groceries and gas and eat out. Dooley estimates that the economic impact the Horseshoe has had on the area in 2014 is $7.6 million with an annual approximation of 120,000 coming through the building.

“It’s a great benefit for businesses and for us to better serve the community,” Smith said. “There’s just a need for this.”

The Midland County Fair is one event that he said gets better and better each year and that he would love to see it become a two-week event at some point to help the economy.

While the pavilion will provide a multi-use space, the new larger facility will have the ability to hold three events at the same time. The facility is also completely paid for by the county and did not require a raise in taxes or bond indebtedness to complete construction.

Dooley echoed Smith, add that the new facility is an 10

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Manufacturing Success in

Texas Source: The Texas Economy

Texas Economy (TE) recently spoke with Tony Bennett (TB), president of the Texas Association of Manufacturers, about the business environment in the state and various issues affecting the vitality and future of our manufacturing sector.

Texas Economy: How would you characterize the current state of our Texas manufacturing sector?

Tony Bennet: Tony Bennett: For many years now, Texas has had the reputation of being heaven on earth for manufacturers. We have inexpensive energy. We have very efficient access to global markets. We've got the ports along the Texas coast to help us get our products anywhere in the world.

Texas is located in the center of the country and that brings efficiency to logistics and supply chain issues. We still have low taxes and we have sensible regulation.. Our Texas Universities have strong graduation rates, which is encouraging for our workforce needs. We do see some gaps in workforce demands and are working closely with community colleges, for example, to help prepare the future workforce for the high-quality jobs manufacturers have to offer.

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And it appears that we're going to have pro-business politics we can look forward to for many years to come. Last session was very indicative that both Republicans and Democrats today know that we have a very choice situation here in the state of Texas and our business environment has become the envy of other states and many countries around the world. We certainly don't need to do anything to mess that up.

TE: You alluded to the Texas geographic advantage.

Can you talk a bit more about what that means for Texas manufacturing businesses?

TB: Tony Bennett: It costs money to move parts to a plant for manufacturing and final assembly. And it costs money to take that product and deliver it to the customer. Texas has a geographic advantage because we're not only located in the center of the United States, we're in the center of North America. Our state's number one trading partner is Mexico.

And Canada is second. So you can see very quickly what an

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advantage it is to be located in the middle of the best market in the world. Manufacturers and suppliers can deliver goods and supplies to one of many airports (like For example, parts come into Alliance Airport where manufacturers are making new phones (like they're going in north Fort Worth.), We have access to ports in Corpus, Houston, and Beaumont and can set products anywhere in the world. Location is everything.

TE: A great deal of manufacturing today is done internationally. How does that play into the success of the Texas manufacturing sector?

TB: The maquiladora factories in the El Paso area and in the Rio Grande Valley are an integral part of a lot of industries in the United States, and Texas in particular. The electronics industry gets a lot of benefit from these plants on the other side of the border. A great deal of our chemical and petroleum final assembly also is done there.

We're also seeing more of what they call re-shoring or on-shoring – bringing back jobs that used to be in China and other places overseas. We're seeing a lot of those jobs come back to North American and to Texas.

TE: Manufacturing isn't just about making widgets anymore. How has the sector evolved in recent years and what types of innovative 'things' are being made in Texas today?

TB: You're right. Today, the term advanced manufacturing is probably more appropriate. Advanced manufacturing technologies have found their way into just about every process you can think of today. For example, I used to work for the forest products industry, and the old sawmills that you might remember have changed dramatically. Now, when a log comes into the processing table to be sawed up, operators use laser technology to inspect it. They use computer analytics to examine the log in milliseconds and decide what products are best suited for that log, what boards are going to be made out of that particular log, calculating the curves, the diameter, the species. That's just one example of how advanced manufacturing has become. In Texas today, we have robotics.

We have nanotechnology. You've got micro-electromechanical systems out there. 3-D printers. Stealth technology. All of these sciences and advancements are being found in nearly every sector and region of our state's manufacturing economy.

For example, in the aerospace industry, fighter jets are being built in Fort Worth. And obviously, the high-tech industry is still growing and going at a fast clip, with advanced plants in Dallas and Austin. One of our members here at TAM manufactures the equipment that make silicon wafers, and I am being told that there will be a retrofitting of fabrication plants all over the world. And all of the equipment in that particular fabricating industry will have to be modernized.

TE: And how has all that new activity changed what manufacturers look for in employees?

TB: Our manufacturers need every kind of skill imaginable.

We need the engineers. We need the welders. We need electrical engineers that work in the aerospace industry. We need folks that put together final assembly of helicopters, for example, in Fort Worth. We just need every kind of skill imaginable.

That's why the community colleges in Texas are partnering with the industries located in the various regional sectors of the state ­­– and different regions have different clusters of manufacturers – and they are assessing what types of skills need to be taught and what kinds of openings will be available in those various manufacturing plants in their regions in the years to come. So they're developing the classrooms, the apprentice programs, all the things necessary to put the new skills in the hands of Texans, whether it's a person who has lost his job in one industrial sector and wants to be retrained in another one … or a young high school graduate who wants to get an internationally-recognized skill certificate that she can use to make a living and maybe advance their education later by going on to a four-year college. Texas community colleges and universities today are beginning to realize that they play a huge role in workforce skills training and retraining in collaboration with our manufacturers.

The Eagle Ford and the other oil field activity is producing surplus petroleum liquids that are eventually going to result in an estimated $50 billion to $100 billion worth of new manufacturing plant construction, modernization and expansion. A lot of this activity is going to be in the petrochemical industry. And there are not enough skilled workers to assemble these plants and then once they're built, not enough skilled workers to operate these plants.

We have a lot of steel plants in Texas. And they're busy right now making oil field pipe and various products associated with the oil production, but when the expansion starts, you will have every need for any kind of steel made, from rafters and girders to components for the liquefied natural gas terminals and ships that will be needed to export LNG all over the world, to the ports that will house those ships, etc., etc. There's a never-ending litany of needs for resources and people that will be required.

So, men and women of all ages and all skill sets are going to be needed. That is a huge task that we're undertaking here and we're mixing it in with a retiring workforce as baby boomers – and it's already started –retire in big numbers over the next five to 10 years.

TE: What is your level of confidence in the state's power grid and its ability to provide reliable and affordable electricity for Texas manufacturers as the state's population continues to grow?

TB: We're very confident. TAM has worked for many years on electricity policy, from the standpoint of affordability,

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reliability and competitive rates. Our members get very large electricity bills; they use a lot of energy. And they certainly do not want a grid that might go down.

So we spend a lot of time and a lot of expense to make sure that the energy sources feeding the Texas grid are diversified.

Meeting our needs in Texas requires an all-of-the-above approach.

We believe that the policies the Public Utility Commission of Texas has recently enacted will encourage more generation.

We're going to somewhere between 2K and 3K new megawatt sources coming online in the coming year. So the grid is, indeed, growing. It's growing using free market principles.

The technology that surrounds the conservation of energy is actually adding to our ability to ensure that we have a reliable grid. It's just incredible what kind of conservation technology is being created. Many of those ideas are coming from our own TAM member companies.

We have some of our members here at the association actually operating as "load acting resource", which means they can switch from making their own electricity for internal manufacturing purposes to stopping that and switching their power onto the Texas grid. That makes them some money and also provides a level of insurance that the power grid stays ready for a hot summer or cold winter day.

area. So we're working with our lawmakers and our regulators to make Texas more competitive on this front. We're not trying to change any regulations, it would be the same limits and the same regulatory environment would still be there, but we're talking about looking at ways to cut the clock-time it takes to get the permit.

And then there's transportation. I think most of our members would agree that we need sustainable revenue sources for all aspects of transportation in the state. We are not doing the best job we can there. We're going to have to have more than what we've had in the past to fund transportation needs – we are the fastest growing state. We'll need funding particularly for our highways, but also for our ports, both air and sea. All modes of transportation need funding as Texas grows. We currently have insufficient funds earmarked for that important role of state government. We're going to have to do a much better job there.

The cost of doing nothing should be studied. Because if we're doing nothing, it's going to cost every family, every worker that's trying to get to work or trying to get home. It's going to cost employers for late worker arrivals. It's going to cost in logistics and supply chain. The bottom line is it's costing us billions of dollars while we ignore the problem. Texas can't afford that.

TE: The other resource-related concern, of course, is water. How has the Texas drought conditions affected your membership?

TB: Obviously, manufacturing processes can't do without water. We are just as concerned as anybody that we have adequate supplies. We also see technology answering that call as well, and we're excited about some of the ideas that we're hearing about. There are opportunities to perhaps pair the need for other energy generation sources with a desalination plant. If you're doing both, you can lower the production cost for both of those resources.

Many of our TAM members are looking at ways to conserve water in the manufacturing process, particularly in the food and beverage industry, the pulp and paper industry, the chemical industry. Water is going to be more expensive, and so new technologies we believe will come to pass to ensure that we can make more efficient use of our resources.

TE: And finally, what do you think Texas can do to improve its business environment for manufacturers?

TB: One area we need to work on is the amount of time it takes to get an environmental permit. We are a little bit behind the curve on that compared to our neighboring states. Time is money, and if it takes a Texas manufacturer a year longer to get an environmental permit and they can go to Louisiana or any other surrounding state with the same plant, and this happens quite often, then we may be non-competitive in that 14

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OBSERVANCES AND CELEBRATIONS

NOVEMBER 2014 Birthstone: Topaz, Citrine Flower: Chrysanthemum

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National: Aviation History Month, Child Safety Protection Month,

DAYLIGHT SAVINGS TIME ENDSGAIN 1 HOUR OF SLEEP

Adoption Awareness Month, American Heritage Month,

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Peanut Butter Lovers Month

MERRY MARKETPLACE

Sponsored by the Junior League of Odessa, this four-day marketplace turns the Ector County Coliseum into a winter wonderland. The early November event gives shoppers a head start on Christmas shopping with vendors selling gifts, unique crafts, accessories and decorative holiday items. Ector County Coliseum.

432-332-0095 www.jloodessa.org

15 TEXAS RECYCLES DAY

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Community Wide Recycling Event - 9 am Odessa Recycle Time Machine 816 W. 42nd Street Odessa, TX 79764

VETERAN’S DAY

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CHILDREN’S DAY

BLACK FRIDAY

THANKSGIVING DAY

DECEMBER 2014 Birthstone: Turquoise Flower: Narcissus

PEARL HARBOR DAY

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21 CHRISTMAS DAY

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WINTER SOLSTICE NOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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Scharbauer Hotel Real Photo Postcard c. 1930s

Midland author publishes, “a history of character: the story of midland, texas”

by Jimmy Patterson

People ask me frequently about my inspiration for the book, “A History of Character: The Story of Midland, Texas.” Judge John Hyde championed Midland like few others and his passion for our past was a clear starting point for me in the beginning. A series of conversations I had with Judge Hyde made possible this new book on Midland’s history, and his continual encouragement made the book what it is today.

Judge Hyde once told me, “Of all the stories about Midland I have either read, heard or told, the one constant thread that runs through them all is the high quality of character of the people.” It was with that statement that not only a title, but a very direction for the book, was born.

People ask me, too, what some of the high points of researching and writing the book were. That, too, is fairly easy.

Almost three years ago, walked into my office to begin the day’s work and turned on my iMac. Up popped an email.

It was from the office of President George W. Bush. The 43rd president and former Midlander had taken the time to address five pages of questions that I had written him over a year earlier. The time he took and the gesture he 18

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made in helping was typical of the kind of stories of kindness I experienced throughout the research journey for the book.The people of Midland have a passion for their town and its history, an easy statement to make given the fact that over 1,300 copies of “A History of Character” were purchased in just the first month of the book’s release. We are quickly moving toward

30s

g, c. 19

an Bld se, Hog

u

o Courth

Forces bombardiers who trained in Midland during World War II, many of whom returned to call Midland home after the end of the fighting.

Courthouse-Petroleum Bldg

exhausting the first printing of 2,500, thanks no doubt to many of you.

We have so many stories worth remembering and sharing in Midland, and I hope “A History of Character” has captured a good sampling of the best of those stories. The book is not limited just to our finer moments. Included also are are occurrences that we should not be so proud — the segregation of ours schools, our treatment of minorities in the 1950s and 1960s, and the at-times dark aftermath of the rescue of Jessica McClure.

— The rise and fall of a legendary bank that never said no to local people needing loans.

— And a remarkable African American woman from Louisiana who practiced medicine in Midland and later helped integrate its schools and hospital.

As blessed as I am to have had President George W. Bush’s participation in this book, I am also fortunate to count more than 30 Midlanders among the project’s co-writers.

The second part of the book contains profiles of more than 60 residents of Midland, many of whom Also included in the book are stories such as: have been written by friends or — The pioneer whose horse saved his life, and acquaintances who the man who built a working airplane out of have known buggy and windmill parts in 1912. the person — Why a major oil well was named for a saint, about whom and how Midland became the oil capital of they are West Texas. writing for Midlan d N — The huge landmark hotel many years at'l B First N at'l Bk k & Llano H otel at & Ever of Llan where ranchers and oilmen and know what rig ybody's o. n o d Store t ht. ate o left made millions of dollars’ worth makes them of deals (and where the owner’s special, what son sometimes snuck his pony up makes them to the penthouse). tick. Using other — The medical history of Midland, voices in this book makes from the days when surgery the history all the more was done on kitchen tables to special, I believe. The 85 18 c. e) on the recent expansion of Midland t people profiled are not rs Llano Hotel (fi Wall & n ai M of er Memorial Hospital. necessarily wealthy, or on NW corn — The thousands of U.S. Army Air members of any exclusive NOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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club in town. They are people you see on the street or in church or at the supermarket. Regular people who represent who we are.

This book became my passion over the last several years.

It was a story worth telling that needed to be told. Many people contributed, many historical sources were cited.

Special thanks goes to the Midland Reporter-Telegram.

Editor Stewart Doreen and former publisher David Wedel allowed me access to volumes of information.

Midland’s newspaper is an extensive research tool of our town’s history and this book could not have been completed without this fine publication.

“A History of Character: The Story of Midland, Texas,” was also made possible by seventeen underwriters, all of whom had faith in this process, and all of whom have a deep appreciation for what this town is about. Most of them are deeply rooted here and whose families reach back for generations.

Thanks to Scott and Sherry Atkinson, Jim and Paula Henry, Patty and Tevis Herd, Craig and Katie Hubbard, Mike and Madolyn LaMonica, Jon Morgan, Wes and Roni Perry, Clarence Scharbauer III and Kerry Scharbauer, and Todd and Karen Sparks, for your financial support for the research of this effort.

I hope you enjoy what you read.

“A History of Character: The Story of Midland, Texas” (c. 2014, The Abell-Hanger Foundation and The Permian Basin Petroleum Museum) is available at the Permian Basin Petroleum Museum Store, Hastings, The Ivy Cottage and the George W. Bush Childhood Home Store.

Also purchase online at petroleummuseum.org/ shop. Volume discounts for orders of 50+ and 200+ are available.

Retail price: $25.00.

Pre-order for Christmas by November 10, 2014.

For more information: Contact Channon Gregg, bookstore manager, Permian Basin Petroleum Museum, 432-683-4403, or Jimmy Patterson, author, 432-889-6640, or email historyofcharacter@gmail.com.

Finally, a big thanks to the Abell-Hanger Foundation and the Permian Basin Petroleum Museum, two of Midland’s most storied non-profits.

Both organizations helped finance the publication of the book, and I am grateful to David Smith, Kathy Shannon and the respective boards of directors of both organizations.

I wrote this not just for longtime Midlanders, but for people who have recently moved to town and are perhaps unaware of what we are all about. Certainly anyone with either a passing interest in Midland or a long-standing love for it will benefit from reading this book.

So, encourage your employees, your family, friends, people you see at church, in the store or on the street to ask where they can obtain a copy of “A History of Character: The Story of Midland, Texas.”

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PR O FILES Charlie McCoy

by Morris Burns

How does a successful Dallas restaurateur get into the oil patch?

Well let’s start at the beginning. Charlie McCoy grew up in Texarkana, Texas but graduated from Arkansas High School in Texarkana, Arkansas. After high school he went to work for Arkansas Louisiana Gas as a kiln burner making cement. At age 21 he was elected president of the union, he says because he could read and write. He married AnnElise, his wife of over 50 years, right out of high school, but knew he wanted to go to college. He took a leave of absence from Arkansas Louisiana Gas and he and AnnElise, along with their two young children, went to Louisiana Tech in Ruston, LA where he studied mechanical engineering and business while AnnElise studied Art. Charlie ran an executive search company for a while after college and did a lot of recruiting for the restaurant business. That led to his next venture into the restaurant business in Dallas. While operating his restaurant he met several people in the oil business, which led him to the Permian Basin in 1979.

Charlie invented and patented the Beam Gas Compressor using his knowledge of piston driven pump jacks which were in use on low producing oil wells and in agricultural fields where low profile oil wells pumps were required to operate under circular irrigation systems. He was looking at the principles of the piston drive units and instead of using produced gas to drive the pumping unit he used the walking beam of the pumping units for power to drive his gas compressors.

He put one together and talked to Gulf Oil Company about using it to reduce the pressure of casing head gas 22

at the well head in order to increase oil production by reducing the gas interference in their Down Hole Pump.

The folks at Gulf told him he could use the McKnight well number 70 in the sand hills south of Penwell, to research his new compressor but with no obligation to buy if it worked. The test increased the oil production from 20 barrels a day to 27 barrels and the natural gas from 27 mcf a day to 48 mcf a day. Gulf bought the unit and became his first customer. An article in the Gulf Oil Company magazine led to placing units around Goldsmith, Hobbs and other areas so his business was off and running. This was about 1981, the peak of the “oil boom.”

Charlie and his company, Permian Production Equipment, Inc. was the Permian Basin distributor for McMurray Hughes, the artificial lift division of Hughes Tool Company. McMurry Hughes soon became the worldwide distributor for his Beam Gas Compressors. As the Oil

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | NOVEMBER 2014

Industry declined in the mid 80’s McMurry Hughes merged with a much larger division of Hughes Tool and Hughes Tool lost interest in the artificial lift division and most of the people were laid off or transferred to other divisions. Charlie then turned to LTV Energy as his distributor, which had been the old Continental Emsco group. LTV went under during the mid 80’s oil bust just like a lot of other companies related to the oil and gas industry. This put Charlie’s company in danger since their total distribution was through LTV. Charlie struggled to hold on through the downturn that lasted until the mid 90’s. His perseverance paid off and when the industry came back Charlie’s company began selling units not only in the Permian Basin but all over the world.

Presently he has units in Indonesia, Kuwait, Peru, Colombia, Mexico, Argentina, Venezuela, Canada and Trinidad. Also several European countries including England, Germany, Russia and Austria have Beam Gas Compressors working in their oil fields. This makes Charlie’s passport have a lot of countries stamped on it and its cover is well worn.

Most oil companies outside the United States are government owned. In Kuwait Chevron operates the wells but the field is owned jointly by Kuwait and Saudi Arabia. Chevron recommends projects to the Joint Operators and the decisions to purchase equipment falls to the government committees.

Another problem encountered in many countries outside the United States is that patent protection does not exist. In Canada Charlie installed some units and when he called back to see if he could do some more business with them he was told that they were manufacturing units there now and did not need his services. China wanted to purchase one unit for their oil fields. After his experience in Canada he told them that the minimum overseas order was 100 units. They have not called back.

When an oil company in Indonesia bought several units they did not want to pay Charlie’s travel expenses to properly install the units, opting instead to install them with their personnel. When the units did not work properly they sent Charlie a first class ticket and lodging to come straighten out the problems. Seems they had installed one of the units backwards where instead of reducing gas pressure in the well they increased it. After reversing the check valves the unit worked like it was supposed to. On the second well they took

him to had lost production since the compressor was installed. Charlie found that the sucker rod string had parted leaving the pump on the bottom of the hole not pumping anything even though the pump jack was going up and down. Any pumper in the Permian Basin would have immediately recognized the problem and reported it for proper repairs. They had Charlie look at some other applications and get the kinks worked out.

Then they tried to hire him as a consultant to work on other problems they had in their oil and gas production, which he declined.

Permian Production Equipment manufactures Beam Gas Compressors at their local plant located near the airport and enjoys loyal employees some with over 20 years with the company.

While Charlie is widely credited with inventing and owns the patent on the beam gas compressor a funny thing happened to him a few years ago in Kilgore. Charlie was making his pitch to an older gentleman who listened quietly to his explanation about how he invented the compressor. With a twinkle in his eye he asked, “So you invented it did you?” Charlie replied in the affirmative and the gentleman told him to come along.

He took Charlie to an oil field museum of sorts and there on an old pump jack was a rudimentary fore runner of his own compressor with the name Gas-O on it. The gentleman told Charlie, “You must have invented it when you were about one or two years old.” Since then Charlie has talked to a couple of more old timers who were familiar with the Gas-O unit. Obviously the Gas-O was never patented, but this supports the old adage, “There is nothing new under the Sun.”

About the Author Morris Burns: From December 1997-October 2006, Morris served as the Executive Vice President for the Permian Basin Petroleum Association. Since retiring from the PBPA in 2006, Morris opened a public relations and safety consulting firm doing safety classes and public relations for many firms both in and out of the petroleum industry. Morris is also a frequent contributor to local TV news concerning the oil and gas industry in the Permian Basin, as well as a weekly radio show participant since 1998 on KWEL 1070 AM from 8:00 am to 9:00 am Tuesdays talking about oil and gas issues. morrisburns@sbcglobal.net

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Conferences in NOV - DEC 2014 Energy Process Excellence Conference 11/04/2014 - 11/05/2014 Houston TX, USA www.oilandgasiq.com/events.cfm?p=3 Deepwater Operations Conference & Exhibition 11/04/2014 - 11/06/2014 Galveston TX, USA www.deepwateroperations.com/index.html#showcase_3 World Shale Oil & Gas Summit 11/04/2014 - 11/07/2014 Dallas TX, USA www.world-shale.com Annual World Refining Technology & Shale Processing Summit 11/05/2014 - 11/06/2014 Houston TX, USA www.refining-technology.com Eastern Unconventional Oil & Gas Symposium 11/05/2014 - 11/07/2014 Lexington KY, USA www.euogs.org GPA North Texas Annual Meeting 11/06/2014 - 11/06/2014 Dallas TX, USA www.gpaglobal.org API Fall Refining and Equipment Standards Meeting 11/10/2014 - 11/12/2014 Denver CO, USA www.api.org/events-and-training/calendar-of-events/2014/ fallrefining API Fall Operating Practices Symposium 11/11/2014 - 11/11/2014 Denver CO, USA www.api.org/events-and-training/calendar-of-events/2014/ fallops Annual API Cybersecurity Conference & Expo 11/11/2014 - 11/12/2014

Houston TX, USA www.api.org/events-and-training/calendar-of-events/2014/ cybersecurity Global Trade Flow to 2020: Gasoline, Naphtha & Distillate Event 11/12/2014 - 11/12/2014 Houston TX, USA www.esai.com/tradeflows2020 FPSO Vessel Conference 11/12/2014 - 11/13/2014 Houston TX, USA www.wplgroup.com/aci/conferences/eu-mfp5.asp IADC Annual Meeting 11/12/2014 - 11/14/2014 New Orleans LA, USA www.iadc.org/event/annual-mtg-2014 AFPM International Lubricants and Waxes Meeting 11/13/2014 - 11/14/2014 Houston TX, USA www.afpm.org/conferences AIChE Annual Meeting 11/16/2014 - 11/21/2014 Atlanta GA, USA www.aiche.org/conferences/aiche-annual-meeting/2014 AIChE Annual Meeting 11/16/2014 - 11/21/2014 Atlanta GA, USA www.aiche.org/conferences/aiche-annual-meeting/2014 America's Natural Gas Alliance's (ANGA) Natural Gas Operations Event 11/17/2014 - 11/17/2014 Houston TX, USA www.anga.us/ngos Deloitte Oil & Gas Conference 11/18/2014 - 11/18/2014 Houston TX, USA www.deloitte.com World Energy Trilemma 11/24/2014 - 11/24/2014 Washing DC, USA www.usea.org/event/world-energy-trilemma-2014 Oil and Gas Safety Conference 12/02/2014 - 12/03/2014 Houston TX, USA www.oshasafetyconference.org/Events/ugm/Osha2012/default. aspx PIRA Natural Gas Markets Conference 12/08/2014 - 12/09/2014 New York City NY, USA www.pira.com

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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

www.tradequip.com

SOUTHCENTRAL

Support Equip.

AUCTIONS

COMPANY

DATES

LOCATION

Pipe & Equipment Sealed Bid

Network International Inc

November 5, 2014

Houston, TX

Big Trucks, Trailers, Construction & Oilfield

Machinery Auctioneers of Texas

November 5, 2014

Longview, TX

OILFIELD EQUIPMENT TRUCKS & TRAILERS

Kruse Energy & Equipment LLC

November 5-6, 2014

Odessa, TX

Dynamic Industries Yard Closing - Public Auction

Myron Bowling Auctioneers

November 6, 2014

New Iberia, LA

OILFIELD EQUIPMENT TRUCKS & TRAILERS

Kruse Energy & Equipment LLC

November 18, 2014

Pittsburgh, PA

INVENTORY

No Lots are Currently Posted for this Auction

INTERNET AUCTIONS

COMPANY

DATES

LOCATION

Pipe & Equipment Sealed Bid

Network International Inc

November 13, 2014

Internet

Pipe & Equipment

Network International Inc

November 19, 2014

Internet

INVENTORY

NOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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ADVICE for Mineral Owners from a Permian Basin Land Girl Investing in Oil and Gas Properties 101 Thank you for our radio listeners and the PBE community who follow our important public information. Readers may ask, why does Development Resources, Inc. share this information? The reason is simple- we speak with many parties & individuals throughout the nation who have a multitude of questions about oil and gas exploration. It is an industry that requires immersion, education, and mobility. As consultants, we are always educating our clients, so they can make the decision that fits their interest. Weekly, we interact with mineral and royalty owners, operators, and oil and gas investors.

Individuals and Companies can become oil and gas investors in 2015!

1) Invest in minerals and royalties. Throughout the nation, investors can buy minerals and royalties. There are still reasonable opportunities, even in the Permian Basin. We can also create the opportunities in a targeted county to begin or build your mineral estate. Make sure you understand the difference between minerals, royalties, overriding royalties and non-participating royalties. Development Resources, Inc. has minerals for sale in Culberson County, Texas, Borden County, Texas, and Henderson County, Texas. (See permianlandgirl.org) 2) Invest in wells by joining with other investors as a working interest owners. This kind of investment helps an operator with capital to drill or continue well operations. This is an expensive venture, as the operator maintains the wells, the investors pays the bills. The working interest owners must trust the operator to know reasonable drilling and maintain operations. If you have

several million dollars, you can drill your own well, if you don’t you can join with other investors and “participate in a well.” We have several operators that we trust who have working interest opportunities in wells.

3) Invest in leases. When you invest in leases, you want to see the geology and understand the geological zone and position, and success of other operators within the region. Such investors are looking for leases for three to five years, or three years and two year options. This allows time to further attain geological studies, seismic, engineering, legal and additional investors or drilling partners. One of the first steps of the exploration team is to identify open acreage either prompted by a geologist, engineer, landman or a mineral owner.

Development Resources, Inc. has several opportunities to lease properties in the following counties. Yoakum, Lynn, Scurry, Culberson, and Borden. We are always building properties for our investors.

4) Invest in growing companies. Use your financial resources & business knowledge and strengthen a growing consulting firm, land company or service industry. Many businesses are growing quickly in the Permian Basin! New demands and the need for capital are common issues. Consider helping another company with mentoring and supporting business growth and structure.

Truly yours, Kimberly Smith, CEO Development Resources, Inc. can also help retrieve and inventory your mineral estate. @permianlandgirl on twitter or landmaam.com

Operators and other oil field service companies can invest in our prospects! Development Resources, Inc. thrives on connecting investors to opportunities in the West Texas or throughout the United States. Get to know us through our radio show Ask the Permianlandgirl on KWEL AM 1070, FM 107.1 or kwel.com. On the weekly radio show, each Saturday at 1 PM. Call us and join us a radio listener and an investor. 432-352-6649 or permianlandgirl@gmail.com Wishing you a happy holidays as you begin planning to have joy with your family!

Let your minerals be a joy in your life…. Contact us to help us inventory your minerals. Permianlandgirl.org 28

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SAFETY TIPS

Don’t Wait Vaccinate!

As much as 20% of the U.S. population will contract the flu virus this year. Consequently the number of people who die each year from flu-related causes in the U.S. ranges from 3,000 to 49,000. As many as 200,000 Americans on average are hospitalized each year because of flu complications, but it's possible to reduce that number through preventive steps.

5. Know the difference between the cold and the flu.

Flu generally comes on strong with severe symptoms, including fever, sore throat, chills, body aches, cough, runny/stuffy nose, diarrhea, vomiting, headache and fatigue. Although colds can exhibit some of the same symptoms, they usually are not as severe and often do not last as long as flu. If unsure, ask your doctor.

1. Cough or sneeze into your elbow.

6. Everyone 6 months and older should get a flu shot. Children younger than 2 years old, or children with health problems like asthma, diabetes or chronic conditions of the brain, are at highest risk of severe complications of the flu and should get the flu shot.

The best time to get the vaccine is October through December. There are two types of vaccinations available: the regular needle shot and the nasal vaccine. Ask your physician which is best for you and your children.

2. Wash hands often, especially after blowing your nose or coughing. Proper washing consists of using warm water and soap, and scrubbing for at least 20 seconds. Dry with a single-use towel.

3. Regularly disinfect the common surfaces in your home that your family touches every day, including countertops, telephones, computer keyboards, faucets and doorknobs. Viruses can survive on these surfaces for several hours, so regular cleaning is a must.

4. Make sure your family eats a balanced diet rich in fruits and vegetables, gets plenty of rest and exercises regularly to keep their immune systems in tip-top shape.

7. The best way to protect infants under 6 months old is to have the people around them vaccinated against the flu.

Shawn Todd Safety Manager, American Safety Services, Inc.

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TOP

Questions

About Ebola

Source: Wall Street Journal

The spread of Ebola, including several cases diagnosed in the U.S., continues to raise alarm among health officials globally. For those concerned or confused about the disease’s presence in the U.S., here are the answers to some common questions.

1

How do scientists know that Ebola is only contagious once someone shows symptoms?

Scientists have a great deal of experience with Ebola from previous outbreaks in Africa. The virus first emerged in 1976, and there had been more than 2,000 cases between then and 2012. This latest outbreak has resulted in more than 4,000 deaths. Health officials are certain that a person infected with Ebola isn’t contagious until they show symptoms, such as fever, severe headache, vomiting, diarrhea, stomach pain and muscle pain.

2

Ebola spreads if you come in contact with blood, saliva, sweat and other bodily fluids of a sick person. But what about sneezes or sweat left on a door handle?

Ebola spreads through direct contact with the bodily fluids of patients, such as through broken skin or the eyes, nose or mouth. It can’t be transmitted through the air like the flu or measles. However, the CDC explains: “If a symptomatic patient with Ebola coughs or sneezes on someone, and saliva or mucus come into contact with that person’s eyes, nose or mouth, these fluids may transmit the disease.” Infection can also occur if a person has direct contact with things that have an Ebola patient’s infectious fluids on them, such as soiled clothing, bed linen, or used needles, according to the World Health Organization. Most of those who get infected are family members or healthcare workers who aren’t properly protected while caring for patients.

3

Can someone who has survived the disease spread it?

No. Once infected Ebola patients recover, they

can’t spread the disease. However, the CDC warns that Ebola has been found in semen for up to three months, so it recommends that those who have survived use condoms and take other precautions.

4

How much are people screened at U.S. airports?

Health officials emphasize that it’s extremely unlikely that someone with Ebola could spread the disease to other airline passengers. Enhanced Ebola screenings in the U.S. began on Saturday at New York’s John F. Kennedy International Airport for travelers coming from the most-affected West African countries. Washington Dulles International Airport, Newark Liberty International Airport, Chicago O’Hare International Airport and Hartsfield—Jackson Atlanta International Airport will also begin screening passengers this week. Those five airports account for 94% of all the 150 travelers who on average arrive daily from those most affected countries. Officials question passengers to find out if they have possibly been exposed to Ebola, take their temperatures and check for other symptoms.

5

How do I protect myself against Ebola?

The most obvious step is to avoid travel to areas where the disease has spread rapidly, namely the West African countries that are home to the current outbreak. However, if you do travel to one of those areas, health officials urge caution and say to practice careful hygiene, such as washing your hands frequently and avoiding contact with blood and bodily fluids.

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Baker Hughes, Halliburton buy more sand, railcars as demand piles up Source: Reuters

As fracking accelerates in North American shale fields, oilfield services providers Halliburton Co and Baker Hughes Inc are stockpiling sand to protect themselves against rising costs and are buying more railcars to transport the haul.

Halliburton, the world's largest provider of fracking services, is more than doubling its railcar fleet and capacity for sand terminals - where sand is stored and transferred to truck from rail. It had about 3,500 railcars under management as of June 30.

Baker Hughes, the world's No.3 oilfield services provider, said at the Barclays CEO Energy Power conference last month that it had "significantly" increased the number of its railcars and is buying more sand under contract, which helps buffer it against price rises. Companies are pumping in as much as a trainload of frac sand into a single well to coax more oil and gas from shale rocks.

But the shale rush, especially in Texas and North Dakota, coupled with a rail jam that began after last year's severe winter has resulted in shortage of sand at drilling sites.

"We did experience some disruptions early in the third quarter, where work was delayed because we were waiting on sand deliveries," Halliburton's Chief Executive David Lesar said on the company's post-earnings call on Monday. Halliburton has committed about $100 million this year to upgrade its infrastructure to move frac sand.

The company signed up 30 additional trucking companies this year to transport sand, Jeffrey Miller, Halliburton's president, said on Monday. It has also opened a center in Houston to monitor supply and track its rail and trucking fleets, he said.

Halliburton is also buying more sand under contract, which it said helped shave 15-20 percent off spot sand costs.

"Halliburton has probably been the most proactive in establishing a 'just-in-time' inventory system for most of their frac sand products because it is becoming such a logistical game," said 36

Societe Generale analyst Edward Muztafago, who has a "buy" rating on the stock.

Halliburton and Baker Hughes are beefing up their transportation networks to also shield themselves from the increase in costs to move sand, which is adding to already high sand prices.

Prices for various grades of sand increased by between 5 percent and 20 percent past year, said Taylor Robinson, president of commodity logistics consulting firm PLG Consulting. For example, Robinson said, sand delivered from Illinois to the Eagle Ford shale field in Texas costs $127 per ton on average, with transportation and warehousing accounting for nearly twothirds of that.

"I think there's going to be a limit to how much of these additional cost escalations our customers are prepared to take, given their free cash flow situation and also given the drop in oil prices," Schlumberger Ltd CEO Paal Kibsgaard said during the company's earnings call on Friday.

The world's largest oilfield services company said last week that oil and gas spending would increase in 2015 as global oil demand was poised to rise, downplaying fears of an investment slowdown due to weak crude prices. Several sand miners are also stepping up investments in their transportation networks, which they use to deliver sand to companies such as Halliburton.

U.S. Silica Holdings Inc, which has about 30 transloading terminals for transferring sand from railcars to trucks, plans to invest about $300 million to expand its logistics network by 2020, CEO Bryan Shinn said. U.S. Silica is constructing "one of the largest transloading facilities in the country" in the Permian Basin, he said, and expects to add another 15-20 locations in the next few years.

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | NOVEMBER 2014

polos

t-shirts

koozies

pens

business cards

caps

flashlights knives

misc.

Promotional Products • TV/Video Production • Graphic Design • Photography

432-559-5886 promoitems@mad-ads-media.com

NOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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NOVEMBER & DECEMBER

TOP

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

HERITAGE CELEBRATION November 1 San Felipe-The San Felipe de Austin State Historic Site presents a birthday celebration for Stephen F. Austin, “The Father of Texas”. Enjoy heritage programs, reenactments, entertainment and food. 9am-5pm.

Call for more information: (979) 885-2181, (877) 558-7245 www.visitsanfelipedeaustin.com WINGS OVER HOUSTON AIRSHOW November 1-2 Houston-The 30th Annual CAF Airshow features US Navy Blue Angels, MV-22 Osprey, US Navy “Fat Albert” C-130, Vietnam demos, Tora! Tora! Tora!, F-86, Shockwave Jet Truck, skydiving, CAF & current military demos/displays and much more!

Ellington Airport. See display ad for code to scan and see performers in action.

(713) 266-4492 www.wingsoverhouston.com 21st ANNUAL WORLD’S CHAMPION - SHIP SHRIMP COOK- OFF November 2 Port Isabel-Sunday. Awards in both professional and amateur divisions with contestants from both sides of the border. Also in conjunction, a Folk Art Festival & Mini Carnival with all types of arts & crafts for sale & fun for all.

(800) 527-6102

Merry Marketplace November 6-9 Sponsored by the Junior League of Odessa, this four-day marketplace turns the Ector County Coliseum into a winter wonderland. The early November event gives shoppers a head start on Christmas shopping with vendors selling gifts, unique crafts, accessories and decorative holiday items. Ector County Coliseum.

432-332-0095 www.jloodessa.org 48th ANNUAL SUTTON COUNTY GAME DINNER November 8 Sonora-Come to the “Trail Head to West Texas”, and enjoy exotic game at this annual game dinner spectacular with over $50,000 in door prizes! Held at Sutton County Civic Center, 6pm.

(888) 387-2880 www.sonoratexas.org VETERAN'S DAY CELEBRATION November 8 San Marcos-The community of San Marcos pays tribute to military war heroes with a parade & celebration through the streets of downtown. Admission is free and the parade starts at 10:00 am.

For more information call (512) 393-8400 www.toursanmarcos.com AUSTIN TOWN HISTORICAL RE - ENACTMENT November 8 Angleton-Celebrating the lives of those pioneers who settled Colonial Texas. The fictitious “Austin Town” features interpreters, period craft demonstrators, sutlers, militia drill units, historical reenactments, and period games. Presented by Brazoria County Historical Museum. In its 18th year!

(979) 864-1208 www.bchm.org

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31st ANNUAL TOUR DE GRUENE BICYCLE CLASSIC November 8-9 Gruene Historic District / New Braunfels. Participants enjoy a leisurely ride through the Texas Hill Country or competitive time trials with prizes for the best course records. Also free live music at Gruene Hall in Gruene Historic District.

To register: (210) 862-3524 www.tourdegruene.com

CELEBRATE THE WORLD AT BRAZOS VALLEY WORLDFEST November 21-22 College Station-Enjoy culture displays, salsa judging contest, storytelling, international cuisine, arts/crafts, demonstrations, live performances, vendors, Latin music & dance lessons on Friday 6pm & more. 10am-5pm. Wolf Pen Creek Park. www.brazosvalleyworldfest.org HOLIDAY HOME TOUR November 22 Brenham-Tour historic homes beautifully decorated for the holidays, and shop for holiday gifts. Shopping hours are 10am-6pm. Home tours 1pm-4pm both days. Giddings Stone Mansion, 2203 Century Circle, Brenham.

1-888-BRENHAM or (979) 836-1690 www.giddingsstonemansion.com Tejano Super Car Show November 22-23 Ector County Coliseum. 4201 Andrews Hwy. Odessa, Texas

17th ANNUAL HILL COUNTRY ARTS & CRAFT FAIR November 8-9 Georgetown-Sat 9am-4pm & Sun 11am-4pm. Over 100 booths of juried artists that hand craft and home make all their art, perfect for holiday giving. For seventeen years, the crowds have come to enjoy some of the finest shopping in Central Texas. #2 Texas Drive, Georgetown TX (5 miles west of I-35 on Williams Drive/FM 2338).

For inquiries: (512) 948-7393 Tis Christmas Holiday Craft Show November 18-19 10 AM. Ector County Coliseum. 4201 Andrews Hwy. Odessa, Texas Wagner Noel Presents An Irish Christmas November 20 7:30 PM - 9:30 PM “An Irish Christmas” celebrates Christmas in Ireland with glorious music, traditional step dance, storytelling, laughter and plenty of Irish soul. Yarns are spun, songs are sung and music is played, all in the traditional Irish holiday style. Along with uilleann pipes, flutes, fiddles, accordions and bodhráns, you can expect lots of Irish dancing over brooms, on half doors, around butter churns, into the world of mythology and out again and Irish singing that spins itself out of the mists and into familiar holiday tunes like “Silent Night” and “Carol of the Bells.” This is a performance for the entire family.

Wagner Noel Performing Arts Center. 1310 N FM 1788.

TWILIGHT FIRELIGHT AT FANTHORP November 29 Anderson-Celebrate the holiday season with a journey back to the 1850s! Enjoy the ambiance of the candlelit inn, period music, living history, poetry, stagecoach rides, and holiday fare.

4:30-7:30pm. Tickets sold in front of Courthouse 4:30-7:30pm.

Fanthorp Inn State Historic Site.

(936) 878-2214 www.birthplaceoftexas.com FESTIVAL OF LIGHTS & PARADE November 30 Hallettsville-Saturday. An “elegantly awesome” lighting extravaganza illuminates Lavaca County’s Courthouse and features a Lighted Christmas Parade highlighting the luminescent evening. Visit with Santa & Mrs. Claus, and browse Market Days booths with arts/crafts & food. Also enjoy Saturday & Sunday’s “live” Christmas Pageant.

For more info call (361) 798-2662 www.hallettsville.com

ALPINE ARTWALK November 21-22 Alpine-Free public arts celebration features artworks and galleries throughout downtown. Live music and entertainers, plus open-air art and food market.

(432) 837-3067 www.artwalkalpine.com NOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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Cares Industry Leaders Chip in for Breast Cancer Education and Support

With breast cancer being such a widespread disease effecting so many women locally, it's no surprise that several local oil and gas companies stepped up and showed support for awareness and education during breast cancer awareness month.

Among the efforts were a fundraising campaign by the employees of Baker Hughes making up The Women's Resource Group - Community Impact Committee.

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They decided to make t-shirts and raise money to help support education in the community about the importance of mammography. $5,700 was raised in total and a check was given to Midland Memorial Hospitals breast imaging team to be used in their new community education campaign addressing the large percentage of eligible Midland women who don't get their annual mammogram.

In another attempt to raise awareness for this deadly disease, a pink bit was built and put into service by Ulterra, H&P and Oxy. Ulterra was also a sponsor in the 3rd annual Saving True Pairs clay shoot produced by Jakes Clays.

The event was held on October 17, at Jake’s. In its third year, the event was more successful than ever hosting 450 shooters and raising over $130,000 this year. All the funds raised will support a free mammogram program for low income women in the Permian Basin through the non-profit, Pink the Basin, Inc.

P.O. Box 62122

Contributions may be mailed to: Pink the Basin, Inc. Midland, Texas 79711 432-940-7465 (PINK) www.pinkthebasin.com

Please contact us for sponsorship information at info@pinkthebasin.com

NOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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Tech

Bites

Source: BBC

The Eagle has landed: Nasa launches free sound library Historical audio from Nasa missions has been uploaded to a free sound library.

More than 60 samples have been added to the agency's new dedicated Soundcloud account, but listeners are unable to leave comments underneath the files.

Astronaut communications, including "Houston, we've had a problem" and "the Eagle has landed", can be heard - as well as some more abstract noises made by working spacecraft and debris.

In space itself, sound is unable to travel as there is no air.

"You can hear the roar of a space shuttle launch or Neil Armstrong's "one small step for [a] man, one giant leap for mankind" every time you get a phone call, if you make our sounds your ringtone," the space agency said.

"Or, you can hear the memorable words 'Houston, we've had a problem,' every time you make an error on your computer."

The sound library goes alongside Nasa's extensive picture library, which is also available free.

The space agency launched its account at the same time as Twitter enabled users to embed audio into tweets.

Go to www.nasa.gov/connect/sounds/ to search the site.

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43

PBE NEWS BRIEFS Watching the basin

Permian Basin contract driller, Nabors' revenue rises on U.S. shale spending Contract driller Nabors Industries Ltd (NBR.N) reported a 17 percent rise in revenue, its highest increase in nine quarters, as it benefited from strong spending in U.S. shale fields. The company, owner of the world's largest land-drilling rig fleet and a major provider of fracking services, said the recent fall in oil prices could affect customer spending but it was well positioned to weather any downturn.

"We are acutely aware of the potential for further weakness in crude oil prices and the associated impact on our customers' spending plans, particularly in North and Latin America," Chief Executive Tony Petrello said.

However, he said Nabors was "much better positioned" to deal with - and even capitalize on - any cuts in spending after undertaking cost-cutting initiatives of its own.

Onshore drillers such as Nabors are expected to be less affected by falling oil prices than offshore drillers, whose customers need higher prices to break even.

Nabors said its adjusted income from drilling and rig services in the United States rose about 26 percent to $117.2 million in the quarter, thanks to higher activity in the Bakken shale field in North Dakota and Permian Basin in Texas.

Its U.S. business also benefited from the receipt of a previously announced $30 million contract termination payment.

The increased drilling activity also boosted demand for pressure pumping, a market that is recovering after being oversupplied over the past two years.

Pressure pumping is used in hydraulic fracking for extraction of oil and gas from the shale wells.

Nabors' revenue rose to $1.81 billion from $1.55 billion a year earlier, beating the average analyst estimate of $1.72 billion, according to Thomson Reuters I/B/E/S. Source: Reuters

44

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | NOVEMBER 2014

Watching THE SHALE

Some Appalachian natural gas spot prices are well below the Henry Hub national benchmark Some natural gas prices at trading hubs in the Appalachian Basin's Marcellus Shale play are trading well below the national benchmark spot price at the Henry Hub in Louisiana. Over the past month, spot prices at many Appalachian hubs have dropped below $2 per million British thermal units (MMBtu) on days of low demand, while spot prices at Henry Hub and throughout much of the United States have traded near $4/MMBtu. However, prices at one Appalachian hub, the TCO Pool, which has the ability to back out deliveries from Gulf Coast sources and has pipeline connections that provide access to multiple markets, has maintained close parity to Henry Hub prices.

Since the summer of 2012, rising growth in natural gas production in the Marcellus has outpaced growth in the region's available pipeline takeaway capacity. As a result, the Marcellus region's natural gas prices have declined.

Price hubs in the central and northeast portions of the Marcellus region, where natural gas production has been higher, and pipeline capacity to bring it to other markets has been more limited, have seen lower prices compared to hubs around southern and western portions of the Marcellus. The large amount of backed-up supply also makes Appalachian spot prices more volatile, and can cause them to drop by as much as $1/MMBtu on moderate temperature days when Northeast demand is low.

Several pipeline projects are underway to move additional Marcellus gas production to markets in the Northeast as well as to other parts of the United States.

These expansions of takeaway capacity should alleviate the supply backup that has kept prices low at many Marcellus trading points.

Source: www.eia.gov

NOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

45

Watching the STATE

Gov. Perry Announces North Texas Ebola Treatment and Infectious Disease Bio Containment Facility Gov. Rick Perry announced the creation of a state-of-the-art Ebola treatment and infectious disease bio containment facility in North Texas. Creation of such facilities was among the first recommendations made by the governor's recently named Texas Task Force on Infectious Disease Preparedness and Response in order to better protect health care workers and the public from the spread of pandemic diseases.

In addition to the North Texas facility, The University of Texas Medical Branch at Galveston has also been designated an Ebola treatment and infectious disease bio containment facility.

"In the event of another diagnosis this facility will allow us to act quickly to limit the virus' reach and give patients the care they need in an environment where health care workers are specially trained and equipped to deal with the unique requirements of this disease," said Gov. Perry. "We are fortunate to have such talented and dedicated leaders here in North Texas, and at UTMB Galveston, who are willing to step forward during a time of need."

Three of the region's leading health care providers, UT Southwestern Medical Center, Methodist Hospital System and Parkland Hospital System, will partner to set up and operate the North Texas facility. The facility and equipment are being provided by partner hospitals, and staffing will be moved to the facility on an as-needed basis if the unit is activated. Source: Press Release; Office of the Governor.

46

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | NOVEMBER 2014

Watching the GOVERNMENT

Congressional study questions embargo-era oil policies Lifting restrictions on U.S. crude oil exports could actually lower fuel prices for U.S. motorists and other consumers by contributing to a drop in world oil prices, according to a report from an influential congressional watchdog released in late October.

The Government Accountability Office (GAO) also recommended that the U.S. Department of Energy review the size of the Strategic Petroleum Reserve (SPR) to ensure it remains appropriate as net oil imports fall.

Without a comprehensive re-examination, the Department cannot be sure the SPR is holding the right amount of crude and giving taxpayers good value for money, according to the GAO. By focusing on the effectiveness of the export ban and the strategic reserves, congressional investigators have called into question the relevance of two major programs introduced in response to the 1973 Arab oil embargo.

GAO's report will help strengthen an emerging consensus among policymakers in Congress and the Administration about the need to adjust embargo-era policies in an era of fast-rising domestic oil output.

producing state of Alaska, has been a strong supporter of lifting the export restrictions. She is already an influential leader on oil export policy and is in line to become the next committee chair if the Republican Party secures a Senate majority following mid-term elections this month.

GAO's study is part of an emerging consensus that lifting the ban would not increase fuel bills and might actually reduce them if it results in a worldwide drop in crude oil prices.

None of the technical studies reviewed by GAO showed an end to the export ban raising fuel prices for U.S. motorists. Instead, each of the studies showed that ending the ban would reduce pump prices, though the projected fall was marginal and ranged from just 1.5 to 13 cents per gallon.

If control of the Senate passes to the Republicans in January, which seems likely, Murkowski will use GAO's findings to intensify the pressure on her congressional colleagues and the White House for a change in policy.

Source: By John Kemp, Reuters

GAO is one of three specialist nonpartisan agencies which report to Congress and carry great weight with lawmakers and their staff as a source of impartial technical advice (the others are the Congressional Research Service and the Congressional Budget Office).

GAO's enormous influence and professional prestige is most likely the reason it was asked to do the study by Senator Lisa Murkowski, the top-ranked Republican on the Senate's Energy and Natural Resources Committee.

Murkowski, who represents the energyNOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

47

Watching the Nation

North Dakota aims to reduce natural gas flaring About one-third of the natural gas North Dakota has produced in recent years has been flared rather than sold to customers or consumed on-site. The rapid growth in North Dakota oil production, which rose from more than 230,000 barrels per day (bbl/d) in January 2010 to more than 1,130,000 bbl/d in August 2014, has led to increased volumes of associated gas, or natural gas that comes from oil reservoirs. These increased volumes require additional infrastructure to gather, process, and transport gas volumes instead of flaring them. These additions can take time to build, and well operators are often reluctant to delay production. In an effort to reduce the amount of natural gas flared, North Dakota's Industrial Commission (NDIC) established targets that decrease the amount of flared gas over the next several years.

The first target of 26% flared is set for fourth-quarter 2014, with continued decreases in flaring reaching 10% by 2020.

Natural gas is flared, or burned directly to the atmosphere, rather than being vented without combustion because methane, the primary constituent of natural gas, has much higher global warming potential than carbon dioxide, the main component of combusted gas. By law, North Dakota prohibits natural gas venting.

The NDIC seeks to reduce the volume of flared gas, even if it means cutting back production at its largest oil production areas (the Bakken and Three Forks formations). The NDIC's order issued on July 1 said it will "consider amending...field rules to restrict oil production and/or impose such provisions as deemed appropriate to reduce the amount of flared gas." Recognizing the difficult economics of dealing with rapidly declining production from newly drilled wells, the NDIC's order allows for exemptions on a case-by-case basis.

The North Dakota Pipeline Authority estimates that more than one-third of the flared gas results from a lack of gathering pipelines. Infrastructure buildouts can cause delays in realizing the value of crude oil and other liquids that motivate drilling in North Dakota, and are uneconomic when natural gas volumes there are too low.

The largest challenge, according to the NDIC, is securing 48

landowner permission for connection activities, which can delay projects half a year or longer. Other obstacles include zoning and permitting delays, harsh weather, and labor shortages. The remaining flared gas results from challenges to existing infrastructure, including the need for additional gathering-line pressure to offset higher pressure from newly drilled wells, additional gathering-pipeline capacity at high-pressure wells, and additional clearing of existing lines to remove natural gas liquid volumes.

Increased capacity to process and transport natural gas also contributes to higher volumes of natural gas that are sold rather than flared. By the end of the year, expected completions of natural gas processing plant projects would increase North Dakota's natural gas processing capacity to 1,454 MMcf/d, or 440 MMcf/d more than last year. ONEOK, Inc. plans to add another 400 MMcf/d of natural gas processing capacity by the end of 2016. Capacity to move this additional gas on pipelines would also increase as a result of the Northern Border Pipeline Company's 55-mile Bakken Header pipeline (400 MMcf/d as early as 2016) and WBI Energy's 375-mile Dakota Pipeline (between 400 and 500 MMcf/d by the end of 2017).

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | NOVEMBER 2014

Source: www.EIA.gov

Watching Offshore

UK North Sea asset sales stall as money goes elsewhere A lack of buyers willing and able to take on ageing oil rigs in Britain's North Sea has stalled deal flow this year, creating a headache for North American firms who are under pressure from shareholders to sell. Marathon, Conoco and Talisman have all put North Sea assets on the block, but the bigger packages are slow to change hands due to wrangling over decommissioning costs, financing problems for smaller buyers, and the fact that some rigs have very little time left on the clock. In the first three quarters of 2014 there were only 19 deals in the offshore UK market, compared with 63 for the whole of 2013, according to data from Deloitte.

Just four deals were announced in the third quarter, although large packages continued to come to market including Conoco's 24 percent stake in the Clair oilfield. "Everyone is cutting costs, cutting capital expenditure, trying to sell down assets at the same time and there is a paucity of buyers," said Stephen Murray, a partner at law firm Herbert Smith Freehills.

"The balance between sellers and buyers is out of kilter." "It's a buyers' market for exploration and development projects," agreed Jon Clark, a partner at Ernst & Young. "They can be relatively choosy." The smaller, non-operated stakes are still able to find buyers, with Premier selling stakes in three fields to Hungary's MOL in the summer, but the bigger, more complex assets are a problem to get away.

This is partly because previously active buyers with deep pockets, such as the Chinese, have tightened the purse strings.

It is also a reflection of the fact that the North Sea is seen as less attractive when compared with other opportunities around the globe in Mexico, South East Asia and Africa. It all adds up to a major frustration for North American energy firms being pushed by shareholders to scale back their international exposure and focus on opportunities at home. For example, Apache, which is the third largest oil producer in the North Sea and has spent billions of dollars upgrading the Forties complex, is under pressure from activist investor Jana Partners to restructure its business. "Our biggest challenge in the North Sea is competing for capital," said Jim House, managing director, Apache North Sea, speaking at a conference in Aberdeen in the summer.

In July Apache said it had plans to sell or spin off its international properties to focus on drilling higher-margin shale wells in places like the Permian Basin in Texas.

It has denied press reports that it is looking to quit the North Sea, but over the last year it has put a whole range of assets on the block.

"Companies are prioritizing - many U.S. firms feel they are getting more value in the market for what they are doing in U.S. unconventionals than they are for their international assets. Why deploy $1 overseas if you get less value than deploying it domestically?" said E&Y's Clark. Source: Reuters

Watching the WORLD

Kazakh oil output to rise with Kashagan after 2020 Kazakhstan expects annual oil output to reach as high as 100 million tons after 2020 when the giant Kashagan oilfield resumes pumping, a senior energy official said, compared with less than 82 million this year.

Kazakhstan, already the second-largest oil producer after Russia among the former Soviet states, aims to produce 90 million to 100 million tons of oil starting in the third decade of this century, Kazakh Deputy Energy Minister Magzum Mirzagaliyev told Reuters in October.

The Kazakh government expects output to total 81.8 million tons this year and next. Kazakhstan produced 81.7 million tons in 2013. For January to September, output fell to 60 million tons from 60.5 million in the same period of 2013, official data show.

Production at the Kashagan reservoir, the world's biggest oil find in recent times, started in September last year but was halted just a few weeks later after the discovery of gas leaks in the pipeline network of the $50 billion project.

Replacing the pipelines at the oilfield, which lies in the Caspian Sea off western Kazakhstan, will cost another $1.6 billion to $3.6 billion, the Kazakh Energy Ministry said in a document obtained by Reuters.

Mirzagaliyev confirmed earlier official estimates that Kashagan's production could restart in the second half of 2016.

He said Kazakhstan also hoped to boost production at the Tengiz oilfield, developed by a Chevron-led consortium, by 12 million tons to around 38 million tons by 2019-20. This month Kazakhstan gave the go-ahead to an expansion project at Tengiz, the nation's biggest oil producer to date, despite higher costs than originally estimated.

The expansion project at Tengiz had originally been estimated to cost $23 billion. But due to higher prices charged for services, pipes and various equipment, the price tag has now risen to around $40 billion, Kazakh Energy Minister Vladimir Shkolnik said at the time.

Source: Reuters

NOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

49

RESTAURANT

by Marcy Madrid

BITES

Buddy's Drive In Inc.

What started out as a dream for two best friends has now grown into one of the most well-known and popular steak finger restaurants in the Permian Basin. Buddy’s Drive In was opened in 1969 by Minnie Coleman and Floy Robertson. The dynamic duo worked for Days Drive in at the time but when the owner decided to close down, Minnie and Floy took the loss of their jobs as an opportunity to start a new chapter in their lives.

They gathered up some of their own personal recipes and opened up Buddy’s with a full, drive-in style menu. Although they offered several delicious dishes, it was the made from scratch steak fingers that began to grow into a fan favorite. Mary Anderson started working for Minnie and Floy as soon as they opened and remembers the ladies as being so kind and wonderful and always willing to give back to their community.

One unique tradition the ladies started that still carries on today is the support of local families after the loss of a loved one. Mary says whether they knew the family or not, Minnie and Floy would call the funeral

50

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | NOVEMBER 2014

home when a local passed away and offer food for the grieving family at no charge. Mary and her family took over the restaurant in 2005 when both ladies passed away and she said she continues this tradition as well as many others started by Minnie who loved sports and always was willing to sponsor the local teams.

Mary says they were such great ladies and the restaurant was such an important part of the Andrews culture she thought it was only right for her to carry on the tradition. She credits the great food and consistent quality with what keeps not only locals but even those coming in from out of town, always coming back for more. And they will always be able to come back for more because Mary says when she’s gone, the Buddy’s Drive In that people know and love will be carried on through her kids for years to come.

Buddy's Drive In Inc. Buddy ’s is open 10am - 9pm 7 days a week and only closed for major holidays 106 E Broadway S t, A ndrews, TX 79714 ( 432 ) 523 - 4890 NOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

51

Feeding the body and soul

at Oil Show

by Taryn Snider Every other year, many locals look forward to the arrival of the Permian Basin International Oil Show. The Oil Show brings a lot of people to the area and during the week there are sky rocketing hotel charges, busier restaurants and always something fun to do.

Although such activity isn’t beyond the realm of possibility on a normal day around here, it’s definitely magnified during the Oil Show. While the Oil Show gains notoriety all over the world as the event where industry leaders can learn about the newest technology and celebrate the past in this chosen line of work, Oil Show week has also garnered a reputation of being a time plagued with debauchery. That’s one of the reasons why the Permian Basin chapter of Oilfield Christian Fellowship (OCF) saw an opportunity to focus its ministry where it could really have an impact.

being handed out to the Oil Show vendors and attendees, and people coming from all over to attend the event, OCF and SBTC were really able to spread The Word miles beyond what they’ve been capable of in the past.

Oilfield Christian Fellowship didn’t just limit itself to working outside the Oil Show. They could also be found inside the

Since initial planning months ago, OCF has raised over $120,000; money that was donated by individuals, churches and companies – large and small. Each day of the Oil Show, Tuesday through Thursday, from 10:30 am to 2:00 pm, volunteers with the organization gathered at the Jesus Connection Baptist Church parking lot across Andrews Highway from the coliseum.

That’s where Jesse Gore of First Baptist Church in Odessa served fajitas and asado while the Horizon Mud Company Chefs served gumbo. After being served their free lunch, people lined up to watch a three minute testimonial video by rodeo cowboy turned evangelist, Ronnie Hill. Those who watched the video were eligible to have their names entered into a drawing for a shot gun, rifle or a Harley Davidson. OCF is a nondenominational ministry but for this event they partnered with Southern Baptists of Texas Convention and together they made the event what it was. With upwards of 20,000 bibles 52

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | NOVEMBER 2014

coliseum at the Rig Works booth where a GigaMaxx Robot presentation attracted a crowd to whom the OCF volunteers could distribute even more free bibles.

The Harley Davidson sat on display as the volunteers handed out “free lunch” cards that dubbed as the drawing ticket. One passerby said, “What y’all are doing here is great. I’ve been in this business and been a Christian for thirty years and we needed this back then. It’s just great that you’re doing it now.” Most everyone was quite taken with the bibles. Some volunteers found it easier to pass out the free bibles than the free tickets for the Harley drawing.

When OCF first set out to minister to the Oil Show it was a quite a project but one that they tackled with enthusiasm. Damian Barrett, director of the Permian Basin chapter said, “The great group of people that God gathered together for OCF, here in Midland and Odessa, decided to get involved in the Oil Show.

This was a huge undertaking for us but it has been very simple for God to open doors and provide resources that we could never have done. It has been amazing to be able to watch and see His handiwork with all of this. It’s going to be really exciting to see the results. We may never know all the stories

and things that happen as a result of it until we get to heaven.”

Oilfield Christian Fellowship has brought people in the oil industry together in ways that was never thought possible before. They saw an opportunity and a need for ministering so they jumped in not knowing quite what to expect and it was a huge success.

OCF meets the 3rd Friday of each month at 6:30 am at Rock the Desert

NOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

53

U.S. RIG COUNT - TEXAS

States &

through November 3, 2014

BAKER HUGHES RIG COUNT

RIGDATA RIG COUNT

Four Week Average 2013

Four Week Average 2014

Last Week

This Week

Four Week Average 2013

Four Week Average 2014

Last Week

This Week

Waiting to Spud

Texas RRC District 1

130

126

125

133

124

133

129

137

12

Texas RRC District 2

84

81

80

80

82

90

89

92

9

Texas RRC District 3

50

69

72

71

49

80

84

81

2

Texas RRC District 4

34

28

26

25

28

21

23

22

1

Texas RRC District 5

12

10

9

9

10

11

11

9

1

Texas RRC District 6

28

31

30

29

27

35

36

36

0

Texas RRC District 7B

14

11

11

12

20

23

24

22

3

Texas RRC District 7C

69

96

95

98

72

105

106

107

8

Texas RRC District 8

267

336

340

340

266

335

330

332

17

Texas RRC District 8A

37

31

30

29

38

35

35

36

2

Texas RRC District 9

22

13

13

14

39

22

20

21

6

Texas RRC District 10

70

66

65

64

77

71

70

71

2

Texas Total

817

898

896

904

832

961

957

966

63

U.S. Totals

1,751

1,929

1,945

2,225

2,214

2,234

107

Districts

1,918 1,927

COPYRIGHT Š 2014 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 54

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | NOVEMBER 2014

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. through October 31, 2014 Company

Footage Drilled

% of Total

Average Footage

Well Starts

% of Total

Directional Wells

1

Helmerich & Payne, Inc.

47,500,049

17.8%

10,518

4,516

13.6%

4,069

2

Patterson-UTI Drilling Company, LLC

28,477,725

10.7%

10,694

2,663

8.0%

2,421

3

Nabors Industries, Ltd.

23,669,091

8.9%

7,738

3,059

9.2%

2,759

4

Chesapeake Energy Corporation

11,662,401

4.4%

9,858

1,183

3.6%

1,183

5

Precision Drilling Trust

10,983,170

4.1%

8,922

1,231

3.7%

1,171

6

Ensign Energy Services, Inc.

10,301,172

3.9%

6,339

1,625

4.9%

933

7

Unit Corporation

8,805,796

3.3%

10,204

863

2.6%

816

8

Pioneer Energy Services Corp.

7,422,544

2.8%

10,425

712

2.2%

547

9

Trinidad Energy Services Income Trust

6,454,541

2.4%

9,706

665

2.0%

534

10

Cactus Drilling Company, LLC

5,556,151

2.1%

10,327

538

1.6%

529

11

Oil States International, Inc.

5,349,042

2.0%

6,213

861

2.6%

224

12

Xtreme Drilling and Coil Services Corp.

3,844,748

1.4%

10,505

366

1.1%

353

13

Sidewinder Drilling, Inc.

3,824,063

1.4%

8,873

431

1.3%

403

14

Savanna Energy Services Corp.

3,737,562

1.4%

8,878

421

1.3%

147

15

Latshaw Drilling & Exploration Company

2,649,896

1.0%

8,660

306

0.9%

305

16

Superior Energy Services, Inc.

2,500,946

0.9%

10,004

250

0.8%

121

17

Frontier Drilling, LLC

2,331,809

0.9%

8,604

271

0.8%

236

18

SandRidge Energy, Inc.

2,196,469

0.8%

6,697

328

1.0%

119

19

Cyclone Drilling, Inc.

2,169,251

0.8%

4,606

471

1.4%

454

20

Robinson Drilling of Texas, Ltd.

2,156,264

0.8%

11,058

195

0.6%

5

21

CanElson Drilling, Inc.

2,063,838

0.8%

8,782

235

0.7%

103

22

Scandrill, Inc.

1,923,760

0.7%

11,802

163

0.5%

144

23

Orion Drilling Company, LLC

1,833,268

0.7%

11,178

164

0.5%

151

24

SWN Drilling Company

1,754,644

0.7%

4,476

392

1.2%

391

25

Pinnergy, Ltd.

1,692,502

0.6%

9,198

184

0.6%

183

26

Cade Drilling, LLC

1,618,884

0.6%

11,731

138

0.4%

138

27

Precision Drilling (US) Corporation

1,604,464

0.6%

9,065

177

0.5%

106

28

Bison Drilling and Field Services, LLC

1,594,468

0.6%

11,811

135

0.4%

49

29

SST Energy Corporation

1,553,201

0.6%

10,021

155

0.5%

150

30

Basic Energy Services, Inc.

1,523,733

0.6%

7,433

205

0.6%

57

31

Lewis Energy Group, LP

1,507,100

0.6%

10,183

148

0.4%

147

32

ProPetro Services Incorporated

1,388,500

0.5%

11,571

120

0.4%

0

33

Murfin Drilling Company, Inc.

1,262,685

0.5%

4,712

268

0.8%

0

34

Big Dog Drilling

1,257,900

0.5%

11,867

106

0.3%

7

35

Sendero Drilling Company, LLC

1,220,960

0.5%

11,201

109

0.3%

3

Total Top 100 for year 2014

267,189,054

100.0%

---

33,104

100.0%

---

RANK

NOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

55

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

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.

through October 31, 2014

RANK

Company

Footage Drilled

% of Total

Average Footage

Well Starts

% of Total

Directional Wells

1

Anadarko Petroleum Corporation

12,808,992

4.8%

10,397

1,232

3.7%

1,222

2

Chesapeake Energy Corporation

10,970,299

4.1%

10,233

1,072

3.2%

1,072

3

EOG Resources, Inc.

8,710,885

3.3%

10,495

830

2.5%

796

4

Pioneer Natural Resources Company

8,531,499

3.2%

12,946

659

2.0%

479

5

Occidental Petroleum Corporation

8,224,239

3.1%

6,188

1,329

4.0%

700

6

Apache Corporation

7,421,526

2.8%

8,942

830

2.5%

579

7

Marathon Oil Corporation

6,478,342

2.4%

15,031

431

1.3%

430

8

BHP Billiton Limited

5,241,707

2.0%

13,794

380

1.1%

379

9

Devon Energy Corporation

5,196,100

1.9%

9,262

561

1.7%

521

10

ConocoPhillips Company

4,934,697

1.8%

8,940

552

1.7%

468

11

QEP Resources, Inc.

4,701,073

1.8%

11,871

396

1.2%

354

12

Chevron Corporation

4,537,534

1.7%

5,070

895

2.7%

386

13

Encana Corporation

4,142,434

1.6%

12,184

340

1.0%

328

14

Exxon Mobil Corporation

3,922,405

1.5%

5,525

710

2.1%

343

15

Noble Energy, Inc.

3,763,927

1.4%

9,853

382

1.2%

380

16

Concho Resources, Inc.

3,527,968

1.3%

10,956

322

1.0%

243

17

Whiting Petroleum Corporation

3,520,798

1.3%

10,235

344

1.0%

309

18

Oasis Petroleum North America, LLC

3,431,449

1.3%

10,305

333

1.0%

333

19

Linn Energy, LLC

2,845,129

1.1%

5,668

502

1.5%

238

20

Laredo Petroleum, Inc.

2,804,300

1.0%

11,217

250

0.8%

106

21

Southwestern Energy Company

2,753,658

1.0%

4,529

608

1.8%

604

22

SandRidge Energy, Inc.

2,697,413

1.0%

5,352

504

1.5%

369

23

EP Energy E&P Company, LP

2,595,174

1.0%

9,756

266

0.8%

237

24

WPX Energy, Inc.

2,452,619

0.9%

6,851

358

1.1%

354

25

Continental Resources, Inc.

2,379,214

0.9%

4,159

572

1.7%

572

26

Antero Resources Corporation

2,296,375

0.9%

11,312

203

0.6%

203

27

CrownQuest Operating, LLC

2,257,100

0.8%

11,942

189

0.6%

0

28

Murphy Oil Corporation

2,204,715

0.8%

10,499

210

0.6%

210

29

Newfield Exploration Company

2,184,293

0.8%

6,205

352

1.1%

340

30

Ultra Petroleum Corp.

2,139,364

0.8%

11,952

179

0.5%

179

31

Penn Virginia Corporation

1,970,000

0.7%

14,485

136

0.4%

136

32

Cimarex Energy Co.

1,809,258

0.7%

10,458

173

0.5%

167

33

Energen Resources Corporation

1,716,062

0.6%

9,919

173

0.5%

113

34

Parsley Energy Operations, LLC

1,639,250

0.6%

11,709

140

0.4%

16

35

SM Energy Company

1,629,380

0.6%

9,311

175

0.5%

175

Total Top 100 for year 2014

267,189,054

100.0%

---

33,104

100.0%

---

56

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | NOVEMBER 2014

Source: www.eia.gov

Crude exports and re-exports continue to rise; some volumes sent to Europe and Asia The United States exported 401,000 barrels per day (bbl/d) of crude oil in July 2014 (the latest data available from the U.S. Census Bureau), the highest level of exports in 57 years (Figure 1) and the second highest monthly export volume since 1920, when EIA’s published data starts. Recent crude oil exports are also noteworthy for both their origins and destinations.

Typically, crude exports are sourced domestically and are sent only to Canada. However, since April, crude exports have included modest amounts of Canadian-produced barrels that were moved through the United States and re-exported to Switzerland, Spain, Italy, and Singapore (Figure 2).

agreements; exports of foreign-origin crude; exports of California Heavy crude up to an average of 25,000 bbl/d; and temporary exports or exchanges. Licenses for other exports of U.S.-origin crude are considered on a caseby-case basis. For such other exports, the regulations describe the characteristics of transactions that will generally be approved as in the national interest.

Separate legislation passed in 1996 permits the export of Alaska North Slope (ANS) crude oil. The recent shipments to Switzerland, Spain, Singapore, and Italy were small volumes of permitted re-exports of Canadian crude oil that were not commingled with U.S.-produced barrels.

As is the case in the United States, some of the growth in Canada’s crude oil production is taking place in areas with limited infrastructure to bring the crude to refineries for processing. With limited pipeline and rail takeaway capacity, some Canadian producers are testing the economic viability of moving crude oil to the Gulf Coast for re-export to other markets.

It is unclear if this recent trend of Canadian re-exports from the Gulf Coast will continue, and if so, for how

To export crude oil from the United States, a company must obtain a license from the Bureau of Industry and Security (BIS) of the U.S. Department of Commerce. Pursuant to Section 754.2 of the BIS export Administration Regulations which codifies the export licensing requirements, the following kinds of transactions will generally be approved: exports from Alaska's Cook Inlet; exports to Canada for consumption or use therein; exports in connection with the refining or exchange of strategic petroleum reserve oil; exports that are consistent with international energy supply NOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

57

day of crude distillation unit capacity at the Flint Hills refinery in North Pole, Alaska, which had been running ANS crude, means that ANS producers may consider sending additional volumes to export markets.

GASOLINE PRICES FALL TO LOWEST LEVEL SINCE 2011, DIESEL FUEL PRICES DECREASE

long. Several proposed Canadian pipeline projects may provide producers with alternative routes for delivering crude to markets beyond North America, but the timing of each of them is uncertain (Figure 3). Enbridge Inc.’s Line 9 reversal project is in its second phase, which is expected to be in service next month. The first phase, which began eastward flows earlier this year, currently enables shipment of crude from Sarnia, Ontario, to North Westover, Ontario. When completed, the second phase will expand capacity to 300,000 bbl/d and continue on from North Westover to Montreal, Quebec, where the crude could access refineries in Montreal or global markets via the St. Lawrence Seaway. A separate project proposed by TransCanada, called Energy East, would move 1.1 million bbl/d from Alberta and Saskatchewan to refineries in eastern Canada. This plan includes conversion of an existing natural gas line to crude service and construction of new pipe on both the gathering and terminal ends. The company submitted a project description to Canada’s National Energy Board in March but has yet to file an official application, meaning this project is several years away from being operational.

Additionally, both TransCanada and Kinder Morgan are seeking approval for projects that would carry barrels from Alberta west to the Pacific Coast in British Columbia. But both of those projects face resistance along the pipeline siting routes, so the outcome of these options remains to be seen.

Another development in U.S. crude oil exports is the recent shipment of Alaska North Slope (ANS) crude to South Korea, the first export of ANS in more than 10 years. ANS barrels were loaded for export in late September and delivered earlier this month. ANS shipments abroad must use U.S. coastwise-compliant ships for transport, and market analysts estimate that ANS would need to trade at a discount of $5/bbl to Brent to make such a movement economical. Although Alaskan crude production has recently been declining, the recent retirement of the remaining 79,000 barrels per calendar 58

The U.S. average price for regular gasoline fell nine cents from the previous week to $3.12 per gallon as of October 20, 2014, 24 cents lower than the same time last year, and the lowest average price since January 31, 2011. The West Coast had the largest decrease, down 11 cents to $3.42 per gallon. The East Coast and Gulf Coast prices were each down 10 cents, to $3.13 per gallon and $2.91 per gallon, respectively. The Rocky Mountain price decreased nine cents to $3.25 per gallon, and the Midwest price fell six cents to $3.03 per gallon. The U.S. average diesel fuel price decreased four cents to $3.66 per gallon, down 23 cents from the same time last year.

The biggest price decline was on the West Coast, down six cents to $3.84 per gallon. The East Coast and Gulf Coast each fell five cents, to $3.67 per gallon and $3.59 per gallon, respectively. The Midwest decreased three cents to $3.61 per gallon, and the Rocky Mountain price fell a penny to $3.74 per gallon.

PROPANE INVENTORIES RISE

U.S. propane stocks increased by 0.2 million barrels last week to 81.6 million barrels as of October 17, 2014, 15.6 million barrels (23.7%) higher than a year ago. Gulf Coast inventories increased by 0.2 million barrels and East Coast inventories increased by 0.1 million barrels. Rocky Mountain/West Coast inventories remained unchanged while Midwest inventories decreased by 0.2 million barrels. Propylene non-fuel-use inventories represented 2.8% of total propane inventories.

RESIDENTIAL HEATING OIL AND PROPANE PRICES DECREASE

As of October 20, 2014, residential heating oil prices averaged $3.48 per gallon, almost 5 cents per gallon lower than last week, and 38 cents less than last year’s price of $3.86. Wholesale heating oil prices averaged nearly $2.65 per gallon, 2 cents per gallon lower than last week and nearly 46 cents lower when compared to the same time last year. Residential propane prices decreased by less than one cent last week to $2.37 per gallon, half a cent less than the price at the same time last year. Wholesale propane prices averaged nearly $1.08 per gallon, 4 cents lower than last week’s price and just under 20 cents per gallon lower than the October 21, 2013 price.

PERMIAN BASIN ENERGY MAGAZINE | www.PBEMag.com | NOVEMBER 2014

NOVEMBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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