PBE Magazine October 2014

FREE

VOLUME 2 NO. 10

The Power of

OCTOBER 2014

TEXAS

Insignia Hospitality Group 8

Midland International Airport 18

Permian Basin Oil Show PREVIEW 12

Receives Historic Spaceport License • U.S. RIG COUNT • TOP 35 Drillers & Operators

Industry Data

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News

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Flooding in the Basin 50

www.PBEMag.com

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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OCTOBER 2014

contents

Pbe Features 8

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Insignia Hospitality Group

12 Permian Basin International Oil Show continues

the Tradition of Oil and Gas Industry Education 18 Midland International Airport Receives Historic Federal

Aviation Administration Spaceport License Approval 34 Flooding in the Basin

Other Editorials

17 Calendar of Events 22 PBE Profiles: Don Sparks

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26 Conferences in October - November 27 Upcoming Auctions

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28 Advice for Mineral Owners from Permian Basin Land Girl 31 Safety Tips - Flood Safety Tips 38 Festivals and Events in Texas 40 PBE Cares - Casa de Amigos • Fifty Years of Service to the

Midland Community – 1964-2014

42 Tech Bites - 6 Must Have Apps for the iPhone 6 44 PBE News Briefs:

Basin, Shale, State, Government, Nation, Offshore & World 50 Restaurant Bites - Keith’s Hamburger Station 52 PBE Inspires - Tonya Harding, Unbelief & Faith 54 By The Numbers: Texas Rig Count, Top Drillers, Top Operators 57 This Month in Petroleum

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LETTER FROM

THE EDITOR If there is no struggle, there is no progress. Those who profess to favor freedom, and deprecate agitation, are men who want crops without plowing up the ground, they want rain without thunder and lightning.�

- Frederick Douglass What an exciting month it is for all of us involved in the oil and gas industry here in the center of the action; the Permian Basin. Being an even numbered year, it’s our turn to play host to one of the worlds largest oil and gas education expos, The Permian Basin Oil Show. As you'll read about in this issue of PBE, for those involved in this event either on the planning side or the participation side, preparations began over a year ago for the bigger than ever event this year. One of the main ways people had to start planning a long time ago was for a place to stay if they were coming in from out of town. Due to the thousands of people this event brings to the Basin, the already hard to come by hotel rooms are even more impossible to find if you didn't book them months ago.

One local hotel chain tells our readers this month how they are dealing with the influx and how they are planning to meet the ever growing need for temporary housing in our area, in the years to come. Another exciting development for locals that you'll read about in this issue is the recent, history-making, spaceport license awarded to the Midland/Odessa International airport, the first commercial airport to receive such a license from the FAA. If you happen to be in the area around the oil show this month, we'll tell you about a popular lunch spot you can visit that has been serving coliseum guests for years. And as always, don't forget to take a moment to get encouraged with this months PBE Inspires and PBE Cares features. If you're a local reading this I'm sure you feel the energy and excitement that many in the area are experiencing as the community thrives and continues to make history.

And if your one of those passing through on business, or visiting family, hopefully you'll get a little sense of what all the fuss is about while you're making stops around town and even as your skimming through the Power of Texas, PBE Magazine. If you're lucky, maybe even some of the energy and pioneering spirit that makes this part of the world so great, will rub off on you!

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

/PBENERGYMAG @PBENERGY

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EDITORIAL CONTRIBUTORS

PBE MAGAZINE CONTACTS VOLUME 2 NO. 10 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

AUDRIE PALMER FREELANCE WRITER audrierpalmer@gmail.com

ADVERTISING For advertising info call 432. 559. 5886 or email sales@pbemag.com ACCOUNT EXECUTIVE Dominique Brown dominique@pbemag.com 432. 599. 3127 SUBMISSIONS Submit story ideas & other news to marcy@pbemag.com

MORRIS BURNS FREELANCE WRITER morrisburns@sbcglobal.net

PUBLISHED BY: PBE Magazine, LLC. Permian Basin Energy Magazine 4500 Erie Drive Midland, TX 79703 Main Phone: 432. 559. 5886 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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DANIEL STEPHENS SENIOR PASTOR Mid-Cities Community Church • Midland, TX daniel.stephens@midcities.org Kimberly Smith CEO Development Resources, Inc. Shawn Todd American Safety Services, Inc.

New customers mention code WINCHWRENCH1 to receive 15% discount Wanted: VP of Operations for SWD Company Responsible for managing all aspects of operations.

Profit Incentives.

A ground-up opportunity with a well-capitalized and newly formed Private Energy Company, focused on operations in the Permian Basin.

Dan Guy, President 310-550-5793

www.AragonEnergy.com

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

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Insignia Hospitality

GROUP

by Taryn Snyder

The market for hotels has played a significant role in the oil and gas industry in Midland and Odessa.

Last year in Midland alone, hotels became a hundred million dollar industry. This synergistic relationship between the oil and hospitality industries has helped make Midland International Airport currently the ninth busiest airport in Texas and our hotels have become service companies in the oil industry.

Midland and Odessa have both seen a dramatic increase in our hotel accommodations in recent years. While the oil industry made it possible, the result has benefited us all. Ten years ago, modern hotels in the Permian Basin were few and far between. One local company has played a major role in, not only building, but managing many of the new hotels around the region today. Darpan Bhakta, President of Insignia Hospitality Group, a Midland based company that develops and manages hotels, opened his first hotel in Midland in 1998. Bhakta said, “The day we opened, a multinational oil company announced they were laying off jobs and then oil dropped to $10 a barrel but we had a great first year.” His goal was to open and operate Marriott properties, a difficult niche to penetrate in the hotel industry. Now with fifteen hotels currently open and five more under construction, most of their hotels are operating right here in the Permian Basin which is comforting to those who like to keep their spending local.

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As a company who considers its employees to be its biggest assets and who practices philanthropy on both the corporate and employee levels, Insignia Hospitality Group prides itself as a company who practices its business activities based on eleven core characteristics or what they refer to as their “eleven stars theory”: teamwork, leadership, vision, perseverance, tradition, integrity, values, character, commitment, ethics and honesty.

It’s also important to Bhakta that the working parents at Insignia Hospitality Group are involved in every aspect of their children's lives even during office hours; therefore they experience a very close knit, family oriented office culture. Bhakta’s dad started a tradition, twenty-two years ago, of feeding the associates once a month. Today Bhakta is continuing that tradition except he has taken it a

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

step further and now they do it twice a month. “Every payday, lunch is on the hotel.” In addition to feeding their employees lunch on paydays, they also treat their managers to birthday and work anniversary gifts every year.

While there is no question that we all love what oil has done for Midland and Odessa, we still strive for economic diversification. Insignia Hospitality Group provides an avenue in that direction. Rachel Overman, VP of Sales and Marketing, describes the opportunities in the industry, “We believe in promoting from within our organization. The majority of our managers started in a line-level position and have worked their way up as the organization grows its portfolio. As we’re opening more hotels, we have more opportunities. There’s food and beverage coordinator, sales, operations, development.

There’s so much to do within this industry that people don’t even realize.” Bhakta and Overman are both pushing for local educators to create a curriculum that facilitates awareness of the potential for careers in the hotel industry and it doesn’t necessarily have to be a degree in hotel and restaurant management. They’re interested in the right people who fit their culture.

The corporate employees at Insignia Hospitality Group are especially looking forward to the opening of their new corporate building. Located near the Sports Complex, the new facility will be 10,600 square feet and will be

able to house 40 employees. The design is going to be a modern, open concept with a fitness room and a space for associates’ children to occasionally pass time when the need arises.

The lodging industry in the Permian Basin is unique compared to other areas. Many hotel communities cater to the tourism industry where their rates peak during the weekend. With our hotel community being business driven, the rates here are higher during the work week and lower for the less competitive weekend travelers.

Because Insignia Hospitality Group manages its hotels locally, they understand the unique trends and needs of our local industry. With 300 of their 400 employees and their headquarters based in the Permian Basin, Insignia Hospitality Group has rooted itself here. Darpan Bhakta says it best, “We’re a home grown company. Everything literally started from scratch here.”

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To Advertise call (432) 559 - 5886 or email

sales@pbemag.com

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Permian Basin International Oil Show continues the tradition of

oil and gas industry education

by Audrie Palmer

Show returns this month with latest technology, more than 100 new vendors.

What started in 1940 as a “Little International Oil Show” is now one of the premier oil and gas shows in the world.

At a time when the oil rich Permian Basin was just a blip on a few radars, 35 vendors came together in a local Odessa park to showcase their wares and abilities.

That’s because the non-profit organization that organizes and manages the show has worked with the county to pave and fence in property on the Coliseum grounds that they’ll be able to utilize, opening up 39 new exhibition spaces for vendors.

This month, when the 2014 Permian Basin International Oil Show opens its doors at the Ector County Coliseum for the three-day event, 685 vendors will occupy more than 1,100 exhibition spaces to an anticipated crowd of at least 50,000.

And because of the rich and booming area economy that is rightly based on oil and gas, Fry said more area businesses are coming out the show for the first time.

Approximately 110 vendors will be first-time exhibitors at this year’s oil show.

“Of course, every year we say it will be bigger and better. But this year it is,” said Tony Fry, Executive Director of the Oil Show.

“The oil show gives companies the true opportunity to showcase their products and services,” he said.

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The Odessa industry trade show has become one of the largest petroleum expos in the world today, attracting personnel from around the globe to learn about the newest and greatest technology and equipment on the market today. The show is not opened to the public but only to those personnel associated with the oil, gas and energy industries.

From an educational standpoint, Fry added that the oil show gives attendees a glimpse at what’s new in the industry and being an on-shore type show, he said those attending will be able to see what’s new with shale plays, horizontal drilling, hydraulic fracturing and secondary recovery.

“Anybody coming, regardless of what phase of the industry they are in, will get to see exhibits and what’s of interest to them,” he said.

The oil show will run each day beginning at 10 a.m. from Tuesday, October 21, to Thursday, October 23. Held every even-numbered year, the show is a tradition that has spanned more than seven decades, including times when the boom was as big as it currently is. Closed during World War II, the show was revived in 1950 and given the PBIOS title in 1994.

Held each time on the grounds of the Ector County Coliseum, show staff will set up a working cable tool rig, equipment, and oilfield trucks from the 1930s, that takes center stage and honors the industry-rich, local oil history of the Permian Basin.

The attraction and appeal of the show hails from all around the world. While many hotels have already filled up in both Midland and Odessa, accommodation

packages are being offered through the oil show website for hotels in Lubbock, Hobbs and Iraan.

In 2012, the event was just shy of 40,000 attendees. With the one of the state’s oldest oil fields, the Permian Basin, booming again and the oil output showing no signs of slowing down, show organizers are estimating they’ll see at least 10,000 more in attendance this year.

The oil show is planned a full two years out and is unique in that the organization is run by volunteers. The Board of Directors, Fry said, are they themselves in the industry.

“This event is for oil and gas personnel put on by oil and gas people,” he said.

“We’re striving to make it the best experience for both the attendee and the exhibitor.”

For more information or to register online, visit pboilshow.org

Know before you go: • Fry says one of the best kept secrets is the free parking in the overflow parking lot north of 42nd Street at Golder. The oil show even runs shuttle buses to the expo free of charge. “Many don’t know it’s there and it saves the hassle of trying to find a place to park,” he said.

• Plan to make a day of it. Even if there are certain exhibitors you want to see or a certain phase of industry exhibitions that you’re interested in, it will take you at least a half day. To see the whole show, come early because it’ll take an estimated full day.

• Bring your business cards. You never know what connections you might make just walking through and talking to the different vendors.

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OBSERVANCES AND CELEBRATIONS

OCTOBER 2014

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Birthstone: Opal, Tourmaline Flower: Calendula

Permian Basin Health Fair

We are "Pumping Better Health to the Permian Basin" at the 31st Annual Permian Basin Health Fair brought to you by Medical Center Health System.

8 am - 2 pm at the Ector County Coliseum Barn G. Join us for health screenings, health information and fun!

National: Diabetes Month, Breast Cancer Awareness Month, Pizza Month, Popcorn Month, Seafood Month

7 Caregiver Support Group Meetings

As a caregiver, you will learn about and gain access to programs and services, and you will be provided with educational opportunities to assist you in making decisions and solving problems relating to you caregiver role. 10am. Memorial Health Care Center, Seminole, TX.

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Caregiver Support Information Meeting

As a caregiver of 60 or older individuals, you will learn about and gain access to programs and services, and you will be provided with educational opportunities to assist you in making decisions and solving problems relating to your caregiver role. 2pm. Midland Lutheran Church, The Patio.

NATIONAL CHILDREN’S DAY

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AIRSHO

2014 Commemorative Air Force AIRSHO, presented by Frost. The Best Warbird Show in America! A great family event for all ages. This year featuring Franklin's Flying Circus, Dracula, Mig 17, Flashfire Jet Truck, Jan Collmer's 300L, Tora! Tora! Tora!, and our own B-29 Superfortress FIFI... and much more! Commemorative Air Force. 9600 Wright Drive. Midland, TX.

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3rd Annual Sporting Clays Event

Saving True Pairs, one Mammogram at a time. Jakes Clays-13301 FM 1379 Midland, TX 79706. All proceeds stay in the Permian Basin for mammography or mammography-related services. Phone: 432-570-0290.

For directions & sponsorship info: www.jakesclays.com, info@jakesclays.com or www.pinkthebasin.com

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Permian Basin International Oil Show

UNITED NATIONS DAY HALLOWEEN

COLUMBUS DAY

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Ector County Coliseum. 42nd & Andrews Hwy. Odessa, TX. Trade show for all of the Oil and Gas industry featuring over 1100 exhibit spaces and 700 exhibitors. Contact Anthony Fry at 432-367-1112. www.pbioilshow.org

NOVEMBER 2014 Birthstone: Topaz, Citrine Flower: Chrysanthemum

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Daylight Saving Time Ends

27 THANKSGIVING DAY OCTOBER 2014 | www.PBEMag.com | PERMIAN BASIN ENERGY MAGAZINE

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Midland International Airport

Receives Historic Federal Aviation Administration Spaceport License Approval Source: Excor and Midland International Air and Space Port joint press release.

In a joint release, the Midland International Airport, Midland Development Corporation, XCOR Aerospace and Orbital Outfitters announced the Federal Aviation Administration (FAA) approval of a Commercial Space Launch Site License (Spaceport) for the Midland International Airport (MAF).

Midland International Airport is the first primary commercial service airport to be certified by the FAA under the Federal Aviation Regulation (FAR) Part 420 as a spaceport and will furthermore be referred to as the Midland International Air & Space Port.

allow Midland to attract additional aerospace companies to the community,” he said. As a region with a strong history in oil and gas productions, the pre-existing workforce skills are easily transferable to aerospace, aviation and their supporting industries.

“It’s an important day for not only Midland, but the nation, as we see the private space sector becoming a vital part of our future economy,” said the Midland Development Corporation Board Chairman Robert Rendall. “The spaceport is co-located with our commercial airport which will 18

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XCOR President Andrew Nelson commented that, “For over a century Midlanders have been challenging frontiers and conquering world-changing innovations: the original Midland wildcatters to the now high-tech horizontal drillers; Jim Hall who revolutionized the automobile

industry with his ground-breaking aerodynamic designs; and Leo Windecker who produced the first FAA-certified all-composite aircraft that influenced the way most aircraft are designed today.” The Midland International Air & Space Port is a significant part of that history and is home to many unique aviation and aerospace assets.

Midland Mayor Jerry Morales said he is certain that, “The aerospace industry is critical to our economic diversity – innovation and breaking the mold have been, and will always be, embedded in our culture. Midland’s next frontier is space!”

The Midland International Air & Space Port worked closely with the FAA’s Office of Commercial Space Transportation to obtain the spaceport License. Marv Esterly, Director of Airports, said, "The proximity of the airport to the spaceport allows us to take advantage of existing infrastructure which in turn lowers cost to the operators and offers us a competitive advantage over operations at remote locations.” The spaceport business model is to start small and expand as needed while leveraging existing facilities before building new ones in order to keep costs low for commercial space companies.

Over the next few years Midland will work to adapt the current spaceport concept to accommodate other types of launch vehicles and the needs of aerospace companies as they arise.

The growth of the new spaceport is already underway.

Orbital Outfitters, a space suit manufacturing company with a secondary line of business focusing on the production of full-scale space vehicle mockups, is the latest company to announce their move to the Midland International Air & Space Port. “Orbital Outfitters is extremely excited to see the Midland spaceport achieve this milestone,” said Orbital Outfitters Chief Executive Officer Jeff Feige. Orbital Outfitters’ new spacesuit manufacturing and altitude chamber complex will be located on the field adjacent to XCOR and will be one of the premier facilities of its kind in the world.

Midland is poised to be an incubator and a collaborative environment for the aerospace community and looks forward to welcoming new companies to town.

XCOR Aerospace® was a pivotal partner in securing the spaceport License. The XCOR® Lynx®, a piloted, twoseat, fully reusable liquid rocket-powered spacecraft that takes off and lands horizontally, will rocket customers to space and back. XCOR’s Commercial Spaceflight Research and Development Center Headquarters will be one of the first tenants at the Midland International Airport & Space Port pending the renovations of an existing hangar. “When we began this process we knew that integrating spaceflight activities with scheduled air service was unprecedented. Given our experience in air and space integration in Mojave, CA, we were confident it could be done. Because everyone on the team has been careful to hold the process to a high standard, it has taken a lot of time and effort to get here—we knew that might happen, which is why this was the first thing we started when we made the decision to locate our research and development center in Midland. Now that the license has been issued we can get on with the next steps of completing the hangar renovations and developing all the procedures we will need to integrate spaceflight into airport operations and airspace,” said XCOR Chief Executive Officer Jeff Greason.

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PR O FILES DON Sparks

by Morris Burns

Panhandle boy makes Permian Basin a better place...

Don Sparks graduated from Amarillo High School after spending his childhood in several smaller towns in the Texas Panhandle. Following high school he earned a degree in petroleum engineering from the University of Texas. He worked for Pioneer Natural Gas and Shell Oil Company while he was in college and went to work for Shell after graduation. Like most young men at that time Uncle Sam called him into the armed services.

After completing Officer Candidate School, he served three and a half years in the U.S. Navy. Following his discharge from the Navy he returned to work for Shell in Midland as an exploitation engineer. Shell had exploitation engineers pick locations for wells, supervise drilling, conduct drill stem tests and generally oversee the well from choosing the site, drilling the well, and following through to completion. He was assigned new duties as a reservoir engineer planning water flooding and overseeing the production at the Flanagan unit in Gaines County.

they first opened up the test tool they got a good flow. They shut it in for a few hours then reopened the tool. This time the flow started good but dropped rapidly, causing the investor to become very upset thinking it was a dry hole. Don said the investor stomped about for a while cursing their luck got in his Cadillac and drove off in a huff. Just as he got out of sight the well began to return the lost circulation material and then a very good flow. Don was unable to contact the gentleman and since he did not return to Midland that night he was the last person to know they had made a very good well.

In 1968 Don left Shell and went to work for Louisiana based Freeport Oil Company where he was in charge of all their operations west of the Mississippi River. Still located in Midland, he drilled in New Mexico and west Texas. He found and drilled the WBD Field in Yoakum County and the West Garrett (Devonian) Field in New Mexico. He was in charge of drilling a field south of Fort Stockton about 25 to 30 miles down a dirt road in an area where there were many problems encountered like gas kicks that were not from productive zones to losing circulation of the drilling fluid. One of his investors drove down from Midland to watch a drill stem test on a well they were drilling where they had lost circulation and spent a lot of time and money trying to get the well drilled. When

In 1971 Don went to work as a consultant for the firm of Bailey, Sipes, Williamson and Runyan evaluating properties.

They did estate and reservoir evaluations, but no fieldwork. In 1973 Don and former Midland mayor Ernest Angelo formed Discovery Operating. Don, Ernest and Webb Farish formed Discovery Exploration the same year. In 1975 Don bought Ernest out of Discovery Operating and in the mid 1980’s Ernest and Webb bought Don out of Discovery Exploration.

Don collaborated with Midland geologist Jerry Pitts and landman, Bob Monaghan to drill a number of natural gas wells in Schleicher County. Bob and Jerry worked up the prospects, brought them to Don who would then secure investors to finance the ventures.

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Don brought his three sons into Discovery Operating as they finished college and were ready to enter the world of work. Jeff graduated from the University of Texas with a degree in petroleum engineering and joined the firm in 1983. Kevin earned a degree in business management also from the University of Texas and joined the firm in 1985. His youngest son Todd joined the company in 1990 after securing his bachelors degree from Baylor and a Masters in Business Administration from Texas A&M. Don teases Todd that a Masters degree from Texas A&M is an oxy moron. Discovery Operating buys very little production choosing instead to increase production the old fashion way, by drilling for it.

Don had an international experience in the Ukraine when he was contacted by Fred Brown asking him to help evaluate oil and gas production after the fall of the Iron Curtain. Fred had a micro-bacteria business and asked Don to join with him in the Ukraine venture because of his experience in oil and gas. They had a 10 million acre area to evaluate and develop under contract with the President Leonid Kuchma of the Ukraine. They formed the West Ukraine Exploration Group but ran into problems with the political climate. Additionally, the Ukraine used 50-year-old technology in seismic, drilling and production.

The way the Soviets explored was to drill a circle of wells around a discovery well to define the boundaries. This was very inefficient and resulted in drilling a large number of test holes. Don and Fred looked at what were referred to as passports, better known as well files in the U.S. The first thing they tried to do was evaluate the data in the files.

Under the Communist system no one group had all of the data and it was kept secret from other groups involved which caused Don and Fred a lot of problems as they attempted to gather information. One example was that all seismic data was controlled by the KGB and they would not share it with anyone else.

Another strange quirk was they were not able to sell their natural gas. Instead they had to trade it for chicken parts or steel and then sell those for cash. Don and Fred had Halliburton contracted to come in with modern equipment to drill wells and had Citibank as their financial backer. Their contact to President Kuchma was a former champion race car driver who invited Don to ride in some races with him. Don declined since he said the drivers had about the same amount of alcohol in them as the race car did! The driver was killed in an auto accident so Don and Fred lost their contact within the Ukrainian government. They eventually sold out and came back to Midland to work in the friendly confines of the Permian Basin.

Don was recently honored as a Distinguished Engineer by the University of Texas, an honor only bestowed on about 225 engineers who have graduated from the school since its inception. In 2003 the Independent Petroleum Association of America, IPAA, honored Don for his work as regional governor.

The honor was presented at the IPAA meeting in Boca Raton, Florida. The entire Sparks family was secretly brought in for the award presentation. Discovery was drilling a well at the time and there had been several problems with the well. Don would call Jeff for a report on how things were going thinking he was in Midland. Angela Deaver, Don’s Girl Friday at Discovery, was connecting Don and Jeff together by phone with Jeff in the same hotel all the time. After a video presentation, the three Sparks sons along with their wives were called to the stage. Todd said the table where they were sitting was right next to the door leading to the restrooms and they were all afraid Don would have to go to the restroom and spot them.

When Senator Teel Bivins resigned his seat to become the Ambassador to Sweden, Don threw his hat into the ring for the open seat. He has always felt a strong loyalty and allegiance to west Texas and wanted to give something back. With experience running for and being elected to the Midland Independent School District Board and his ties to the Panhandle he felt he had a chance to be elected to the Texas Senate. That was not to be and he is very happy doing what he does now, going to the office every day and working with his three sons to find and produce oil and gas. Don continues to serve on a number of committees and boards at both the state and regional levels as well as being active in the First Baptist Church where he and his wife Gwyn sing in the choir.

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 OCT - NOV 2014 MEXICO UPSTREAM: Contracts & Deepwater Summit 10/06/2014 - 10/09/2014 Mexico City, Mexico www.cwcmexicooilgas.com

Shale Water Expo 10/14/2014 - 10/15/2014 Houston TX, USA www.shaleplaywatermanagement.com/shale-water-expo

SPE Artificial Lift Conference and Exhibition 10/06/2014 - 10/08/2014 Houston TX, USA www.spe.org/events/calendar

IADC Contracts and Risk Management Conference 10/14/2014 - 10/15/2014 Houston TX, USA www.iadc.org/event/contracts-risk-management-2014

AFPM Question and Answer and Technology Forum 10/06/2014 - 10/08/2014 Denver CO, USA www.afpm.org/conferences

IOGCC Annual Conference 10/19/2014 - 10/21/2014 Columbus OH, USA www.iogcc.publishpath.com/events

API Fall Committee on Petroleum Measurement Standards Meeting 10/06/2014 - 10/10/2014 Westminster CO, USA www.api.org/events-and-training/calendar-ofevents/2014/fall-copm

AFPM Environmental Conference 10/19/2014 - 10/21/2014 San Antonio TX, USA www.afpm.org/conferences

AIChE Southwest Process Technology Conference 10/09/2014 - 10/10/2014 Galveston TX, USA www.aiche.org/conferences/southwest-processtechnology-conference/2014 PIRA New York Annual Conference 10/09/2014 - 10/10/2014 New York NY, USA www.pira.com API Tank, Valves, Piping and Pumps Conference and Expo 10/13/2014 - 10/16/2014 Las Vegas NV, USA www.api.org/events-and-training/calendar-ofevents/2014/tvp

Gasification Technology Conference 10/26/2014 - 10/29/2014 Washington DC, USA info@gasification.org SEG International Exhibition and Annual Meeting 10/26/2014 - 10/31/2014 Denver CO, USA www.member.seg.org/Calendar/tabid/319/ModuleID/944/ ItemID/348/mctl/EventDetails/Default.aspx Annual Oil & Gas Pipeline Conference & Exhibition 10/28/2014 - 10/30/2014 Houston TX, USA www.oilandgaspipelineevent.com/index.html#showcase_3 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

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

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

INVENTORY

Pipe & Equipment Sealed Bid

Network International Inc

October 16, 2014

Houston, TX

Fishing & Rental Tools

Kruse Energy & Equipment LLC

October 21, 2014

Fairfield, TX

OILFIELD EQUIPMENT TRUCKS & TRAILERS

Kruse Energy & Equipment LLC

November 5-6, 2014

Odessa, TX

No Lots are Currently Posted for this Auction

OILFIELD EQUIPMENT TRUCKS & TRAILERS

Kruse Energy & Equipment LLC

November 18, 2014

Pittsburgh, PA

No Lots are Currently Posted for this Auction

INTERNET AUCTIONS

COMPANY

DATES

LOCATION

Pipe & Equipment Auction

Network International Inc

October 8-9, 2014

Internet

Construction & Vehicle Auction

Network International Inc

October 14, 2014

Internet

Pipe & Equipment Auction

Network International Inc

October 22, 2014

Internet

INVENTORY

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

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ADVICE for Mineral Owners from a Permian Basin Land Girl This month we want to thank all of our readers who appreciate better mineral experience on Ask the Permianlandgirl. We have had a commitment to bring solid information to mineral owners so they can continue their education about their mineral estates. Our company Development Resources, Inc. is incredibly busy with land projects and exploration projects.

We join our energy colleagues with gratitude that resources are being pulled from the Permian Basin ground, like the rain has come from the heavens over the last weeks of September.

Educating Yourself

As we move into this fall’s political season, we have a choice to vote for statewide leaders. We encourage PBE readers to educate themselves and vote. Campaigns can be lost when the public doesn’t take time to become educated and stop and vote during their business week. We have been fortunate to have had Ryan Sitton, Candidate for Railroad Commissioner and Attorney General and Candidate for Governor Greg Abbott, on Ask the Permianlandgirl FM 107.1. Both Ryan and Greg spoke to mineral owners about their position and how they advocate for mineral owners. When they spoke to KWEL audience, I was reminded how hard Ryan Sitton and Greg Abbott and their families have worked to represent potential voters and future constituents. Pray for their families. The least we can do is take time to become educated and vote this November.

Development Resources, Inc. thrives on perpetual education.

We enjoy learning and educating the public and our clients.

We thrive on finding solutions to achieve tasks for our clients more efficiently, and save clients’ money. While we have several landmen now working statewide, with nationwide clients, we have been busy looking for new prospects and solutions for effective exploration. If your company wants to invest in minerals in the Permian Basin, email us at permianlandgirl@gmail.com or visit permianlandgirl.org.

One of the reasons that professionals enjoy being a landmanager is because we are constantly learning and breaking down a logic model to determine mineral interests and exploration opportunities.

Our team spends time in abstract offices, courthouses and on the phone. Landmen have to have a wide variety of business skills. A good landmanager has to be able research title, understand the surface issues, and may visit with trust officers, attorneys and accountants. Our land colleagues are on a perpetual learning curve. My mentors pushed me to learn everything I could to become well rounded. I have been on drill sites, searched for leasing opportunities, put together lease packages, worked with geologists, and investors. It is a rigorous education and I have had some remarkable mentors.

We adhere to the standards of the AAPL (American Association of Petroleum Landmen).

Several years ago, I was fortunate to be on surface locations with mineral owners in five counties. Yes, this “suit” wore steel toe boots and joined the “boots in the field.” (I didn’t have to wear the fire resistant clothing at the time like many “boots” wear now.) Working with production managers in Howard, Martin, Ector, and Midland counties. The mineral owners were new families with first generation wealth and wells drilled on their land. However, they were looking for experts and understanding of the industry. When we began our radio show, Ask the Permianlandgirl, these were the families we perceived to be our target audience. They needed to understand how to manage their new oil and gas real estate with professional knowledge. Their understanding not only impacted their current life, but future generations.

Most importantly, both corporate and field landmen have to be able to work with people. The energy business is a people business. It involves legal issues, technology, engineering, geology and financing. The glue that ties every exploration deal together is trust – trust among the people who are your colleagues and investors.

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

This month on Ask the Permianlandgirl, we encourage mineral owners to continue their education about minerals on KWEL.com, AM 1070 and FM 107.1 - every Saturday at 1:00 p.m.

Call 432-620-8700 to ask questions! We envision the show to be like the radio show Car Talk that had an audience of listeners asking questions to mechanics. Weekly, we provide experts, or have our guests address mineral owners! ◆ This month will include Jami Owen from the Partners in Education and Community Outreach, Midland Independent School District, and Kimberly Smith, CEO of Development Resources, Inc. on Ask the Permianlandgirl.

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

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

$50 Million Available Now for Oil Producers in the Permian Basin Larry Clark, CEO (310) 550-5791

www.AragonEnergy.com

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

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SAFETY TIPS Flood Safety Tips

Floods are one of the most common hazards in the United States. Although it’s very rare, we all found out in September, the Permian Basin can flood too and it’s important for you to know what to do when it happens.

Flash floods can occur within a few minutes or hours of excessive rainfall, a dam or levee failure, or a sudden release of water held by an ice jam. Flash floods often have a dangerous wall of roaring water carrying rocks, mud and other debris. Overland flooding, the most common type of flooding event typically occurs when waterways such as rivers or streams overflow their banks as a result of rainwater or a possible levee breach and cause flooding in surrounding areas.

Be aware of flood hazards no matter where you live or work, but especially if you are in low-lying areas, near water, behind a levee or downstream from a dam.

Even very small streams, gullies, creeks, culverts, dry streambeds or low-lying ground that appear harmless in dry weather can flood.

If a flood is likely in your area, you should:

• Listen to the radio or television for information.

• Be aware that flash flooding can occur. If there is any possibility of a flash flood, move immediately to higher ground. Do not wait for instructions to move.

• Be aware of stream, drainage channels, canyons and other areas known to flood suddenly. Flash floods can occur in these areas with or without typical warnings such as rain clouds or heavy rain.

If you must prepare to evacuate, you should do the following:

• Secure your home. If you have time, bring in outdoor furniture. Move essential items to an upper floor.

• Turn off utilities at the main switches or valves if instructed to do so. Disconnect electrical appliances.

Do not touch electrical equipment if you are wet or standing in water.

The following are important points to remember when driving in flood conditions:

• Six inches of water will reach the bottom of most passenger cars causing loss of control and possible stalling.

• A foot of water will float many vehicles • Two feet of rushing water can carry away most vehicles including sport utility vehicles (SUV’s) and pick-ups.

• Do not attempt to drive through a flooded road. The depth of water is not always obvious. The road bed may be washed out under the water, and you could be stranded or trapped.

• Do not drive around a barricade. Barricades are there for your protection. Turn around and go the other way.

• Do not try to take short cuts. They may be blocked.

Stick to designated evacuation routes.

• Be especially cautious driving at night when it is harder to recognize flood dangers.

Shawn Todd Safety Manager, American Safety Services, Inc.

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

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Flooding in the Basin

by Taryn Snyder

Many West Texas businesses who have rigs and distribution sites in Pecos are still trying to add up just how much money was lost in what is now being called one of the worst floods ever.

On September 22nd and 23rd heavy rain from Hurricane Odile turned the desert town of Pecos, Texas into a muddy swamp and caused evacuations, flash floods and damaged equipment. Now that the flood waters have receded, those who responded to the situation are breathing easier, although a lot of work now lies ahead in the cleanup efforts. The unprecedented flooding caused the Pecos River to rise to historic levels and the Red Bluff Reservoir spilled over.

While the town continues to recover, it is still unclear what the damages to oilfield equipment will be since many reports were made of equipment being stuck or 34

not accessible in the high water levels. Eric Honeyfield, Interim City Manager of Pecos anticipated that any equipment parked in a low spot would be damaged or ruined. A large mud distributor in Reeves County reported that they experienced damage to their location from caliche being washed away, cosmetic damage to mobile homes on location and damage to their storage buildings although no product was affected. Freddie Moore, Assistant Superintendent at Big Dog Drilling has rigs from Reeves County to Martin County. He said he experienced flooding at a couple of his drilling locations from “a lot of water north of Stanton in Martin County.”

He said, “I had rigs shut down waiting on locations to dry

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

out so we could move them.” One of his rigs had been at a standstill for over a week due to the water levels which resulted in quite a bit of down time for the crews.

The drilling contractors are reported to be some of the most financially affected by the floods but it didn’t stop them from stepping up to the plate and providing relief.

Stephanie Murphree, Executive Director of the American Red Cross Permian Basin Area Chapter, was impressed with how eager businesses were to reach out. She said, “We had HEB, Concho Resources and BHP providing food and relief to those responding and to shelter evacuees.”

The Red Cross sheltered nine oilfield workers who were temporarily displaced by the floods. The Mayor of Pecos, Venetta Seals, was also touched by all those who responded to the crisis. She said, “The response was phenomenal. We had Texas Task Forces 1 and 2 show up who we weren’t even expecting. We had agencies taking the lead and contributing resources.”

has been cleared from Business 20 and Barstow Bridge and the river is flowing well.” The debris clogging the Pecos River was a big contributor to the flooding that took place. Before the rain began to fall, the river was pretty much dry and now is close to 100% full. Mayor Seals also said, “There is no way to know what the damages might be until the companies in the city and county do their own assessments. Then we will know the impact.”

In late September, Mayor Seals reported that, “All debris

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

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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

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

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OCTOBER & NOVEMBER

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.

SEAGOFEST October 2-3-4 Seagoville-Celebrate autumn with arts & crafts, carnival rides, parade, car show, food vendors, children’s activities, games, pet parade, National Beauty Pageant, great musical entertainers, and free concerts all three nights—Gospel, Rock & Country. Celebrate Autumn in Seagoville!

(972) 287-5184

36th ANNUAL FESTA ITALIANA October 9-12 Houston-Houston’s Italian Cultural Center brings culture to life at its weekend celebration of Italy! Enjoy music, homemade Italian food and wine, pasta-eating contest, bocce ball and I Madonnari competitions, wine tasting, grape stomp, kid’s events, cooking demos, arts & crafts & more. University of St. Thomas at Montrose Blvd. www.HoustonItalianFestival.com

POSSUM FEST October 3-4 Possum Kingdom Lake-Come cook at the 19th Annual Great Outdoors BBQ & Chili Cook-Off! Also enjoy Auction/Raffle items and Vendors.

(940) 779-2424 or toll-free (888) 779-8330 Email: pkchamber@possumkingdomlake.com www.possumkingdomlake.com

Oktoberfest October 10 7-10pm. Ellen Noel Art Museum. 4909 E. University. Odessa 432-550-9696

28th ANNUAL GRUENE MUSIC & WINE FEST October 9-11 Gruene-Historic District / New Braunfels. This Americana event benefiting local charities features the best in live Texas music and the best in Texas food and wines at Gruene Hall and The Grapevine.

All four days are filled with vintner and music events, wine, food & beer samplings and the Great Guitar Auction.

For tickets & info: (830) 629-5077 or toll free from San Antonio (830) 606-1601 www.gruenemusicandwinefest.org

25th ANNIVERSARY CONROE CAJUN CATFISH FESTIVAL October 10-12 Conroe-Three days of fun, music & food! Music on four stages includes Texas Music, Cajun, Zydeco, Blues & Country. Also enjoy a carnival, children’s village with pony rides, petting zoo, games & children’s stage. Come to the Downtown Square for great festival foods—catfish, fried alligator boudain, crawfish etouffee & more.

(936) 539-6009 www.conroecajuncatfishfestival.com BRAZORIA COUNTY FAIR October 10-18 Angleton-“The Largest County Fair in Texas” features live-stock exhibits, crafts, concerts, music, CPRA rodeo finals, contests, carnival , foods & much more! Live entertainment on Oct 11 includes Merle Haggard. Brazoria County Fairgrounds, Angleton TX 77515.

(979) 849-6416 E-mail: dwithers@bcfa.org www.bcfa.org AIRSHO October 11-12 2014 Commemorative Air Force AIRSHO, presented by Frost. The Best Warbird Show in America! A great family event for all ages. This year featuring Franklin's Flying Circus, Dracula, Mig 17, Flashfire Jet Truck, Jan Collmer's 300L, Tora! Tora! Tora!, and our own B-29 Superfortress FIFI... and much more!

Commemorative Air Force.

9600 Wright Drive. Midland, TX

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

COME AND TASTE IT Oct 16, Nov 20, Dec 18 Gruene Historic District / New Braunfels-Meet Texas’ best winemakers & craft brewers at The Grapevine in Gruene Historic District on the third Thursday each month. Complimentary tastings of craft beer & three select wines, plus samples of food offered for sale. Event features live music and prize giveaways.

(830) 606-0093 www.GrapevineinGruene.com TEXAS ROSE FESTIVAL October 16-18 Tyler-Come celebrate the Rose at the 81st Annual Texas Rose Festival. Ceremonial events include the Queen’s Coronation, Rose Show, Queen’s Tea & Rose Parade. In addition, there will be an arts & crafts fair, winery grape stomp, art show, nursery tours & more!

1-800-235-5712 www.VisitTyler.com www.texasrosefestival.com Def Con 1 Haunted Warehouse October 17, 18, 24, 25, 30, 31 7pm. 2215 W. 2nd St. Odessa, Texas www.bloodybill.com GREEK FUNSTIVAL October 17-19 San Antonio-Saint Sophia Greek Orthodox Church hosts its annual Greek festival with lively dancers, a colorful Greek marketplace, tasty Greek wines and a variety of sumptuous Greek dishes.

For more information: (210) 735-5051 10th ANNUAL COTTON HARVEST FESTIVAL October 18 Kerens-Enjoy country lifestyle foods, hot air balloons with night glow & tethered rides, arts & crafts, carnival, live entertainment, chili cookoff, mule wagon rides, cotton gin tours, unique vintage trailers tours, tractor pull, quilt show, classic cars & more! 9am-10pm. Historic Downtown. 14 miles east of Corsicana on Hwy 31.

(903) 396-2665 www.kerenscottonharvestfestival.com 49th ANNUAL PEANUT FESTIVAL October 18 Whitesboro-Celebrate 49 years of family fun in downtown Whitesboro.

Approx. 20,000 visitors visit the entertainment-filled day. Arts & crafts, food vendors, displays of all sorts, car show, musical entertainers, drawings and lots of fun. Free to public. Vendor space available.

Chamber of Commerce: (903) 564-3331

GYPSY TRAMPS JUNK REVIVAL October 24-25 Granbury-Discover booths of junk, treasures & flea market finds at Lake Granbury Resort & Conference Center (621 E. Pearl St.), plus a Friday dance & Early Bird Sale. Fri 12pm-9pm & Sat 9am-5pm.

Email: GypsyTrampsJunk@gmail.com, or follow on Facebook.com Gypsy Tramps.

33rd ISLAND OKTOBERFEST October 24-25 Galveston-Galveston’s premier family fall event featuring continuous live entertainment, kid’s activities, authentic German food & libations, events by Houston Livestock Show & Rodeo volunteers, quality arts/ crafts & more. German costumes encouraged. No pets. Held on the grounds & streets adjacent to First Lutheran Church, 24th & Winnie.

Free admission.

(409) 762-8477 www.galvestonoktoberfest.com PECAN FEST HERITAGE DAYS October 25 Seguin- Go nuts! It’s one big party including the Pecan Bake-off, a Hat Parade, turkey luncheon, Haunted House & trade booths, music, pumpkin patch, museum tours, quilt & pottery shows, theatrical performances, bike ride, golf tournament & more.

800-580-7322 or (830) 401-0810 www.VisitSeguin.com FRANK X. TOLBERT-WICK FOWLER ORIGINAL COOK- OFF / CASI TERLINGUA INTERNATIONAL CHILI CHAMPIONSHIPS October 27-November 1 Terlingua-For almost 50 years, thousands of chili cooks travel to the ghost town of Terlingua each autumn to compete! Also enjoy the Ugly Hat Contest, Last-Chance Cookoff, music, parade, CASI Olympics, horseshoe competition, and additional competitions for salsa, BBQ & margaritas.

Kookie Karnival October 31 6:30pm. Ector County Coliseum. 4201 Andrews Hwy. Odessa, Texas Halloween Tricks & Treats October 31 6PM-8 PM. The Petroleum Museum. 1500 Interstate 20 West. Midland, Texas 79701 Slimy Science Experiments, Creepy Crafts, Haunted House & Hayride through the Oil Patch!

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

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Cares Fifty Years of Service to the Midland Community

1964-2014

Fifty years ago, Casa de Amigos began as a small neighborhood center in east Midland founded by St. Mark’s Methodist Church. The congregation rented a 500 sq. ft. abandoned grocery store to begin their mission of bringing equality, opportunity and education to the Hispanic and African American population. Programs offered included, literacy classes, pre-school education, teen clubs for boys and girls and social get-togethers for neighborhood families. In 1973, Casa de Amigos became a United Way agency.

This year Casa de Amigos will serve 2,000 to 3,000 clients in four main areas: Senior Services, Health and Wellness, Social Services and Education.

Casa de Amigos maintains a 4,000 sq. ft. Senior Center where people can come together for a balanced program of social, educational, health and recreational activities.

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The Health and Wellness program provides various health screenings and a dental referral services.

The goal of the Social Services program is to address immediate needs including emergency food, holiday assistance and school supplies.

The Adult Education program includes GED, ESL, Financial Literacy, Chevron’s Take 2 Job Skills Training Program and Citizenship classes. The Education Station program provides children with homework assistance, tutoring and structured extra-curricular activities.

Casa de Amigos is funded by several energy companies. Chevron’s Take 2 Job Training Program has served more than 300 clients since 2011. The program helps participants break out of the cycle of poverty by gaining employment in high paying industries such as energy and nursing.

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

Jim Henry of Henry Oil was Board President from 1987 to 1989. Under Jim’s leadership, the Board successfully raised money to double the size of the facility. Henry Oil and The Henry Foundation continue to generously support Casa de Amigos.

The Fasken Foundation has funded Casa de Amigos’ Youth Education program since 2000. Other industry supporters include Apache Corporation and ConocoPhillips.

Speaking to the next fifty years, Paul Brooks, the current Interim Executive Director of Case de Amigos, who is also Adult Education Director and a past Board President states, “Technology will be a key factor in all of our education programs, from new ways to teach English and GED to dedicated computers for after school tutoring.

Our campus has room to grow to include a recreational area and community garden. The Health and Wellness program and Social Services continue to forge strong

partnerships with the business community to cosponsor Health Fairs and stock our emergency food pantry. We plan to renovate and maximize the use of space in our Senior Center to accommodate as many activities as possible. To make it look more like a Country Club without breaking the budget.”

As a respected and trusted community resource, Casa de Amigos is continuing its mission of helping people to achieve the highest level of self-sufficiency in the community. In other words, Casa de Amigos is ready to take on whatever challenges the next fifty years may bring.

Casa de Amigos Midland 1101 E. Garden Lane • Midland, TX 79701 Phone: (432) 682-9701 • Fax: (432) 682-3817 To find out more, become a volunteer or to donate, visit www.casadeamigosmidland.org

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

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Tech

Bites

Source: CNN.com

6 must have apps for the iphone 6 As millions of people get their hands on the new iPhone 6 and iPhone 6 Plus, many will no doubt be looking for new apps that take advantage of the new phones' capabilities.

Chief among them is a bigger screen. The iPhone 6 has a 4.7-inch display, while the 6 Plus checks in at a whopping 5.5 inches. But they'll also have better graphics and faster processors, as well as features that give app developers freedoms they've never had before. For the first time, Apple is letting developers create widgets, mini-programs that are often designed to be quick and easy to use. They can tinker with the iPhone's keyboard for the first time as well, giving iOS users access to some apps that Android users have enjoyed for the past couple of years.

A slate of those keyboard tools are ready to go now. But the front-runners in categories from productivity tools to photography tools to games are also raring to go.

Here's a look at some must-have apps for the new phones: While initially only for iPad, Vainglory, with its massively multiplayer gameplay designed specifically for touchscreens, will be a natural on the sizable iPhone 6 Plus when it rolls out. In fact, Apple used the forthcoming game to demo the iPhone 6's graphical capabilities at the rollout earlier this month. It will begin its rollout in October in Southeast Asia, New Zealand and Australia and is expected to be available globally by December.

1

The iPhone 6's 8-megapixel camera doesn't have the big numbers of some of its competitors, but it's getting high marks from early reviewers for new features like faster auto-focus and the ability to take high-resolution panorama shots. Snapseed is a great photo-editing tool. It has all the fun Instagram-style features like funky filters

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

and frames, but combines them with an extensive, easyto-use set of tools for brightness, sharpness, cropping and other editing.

OK, odds are you've already got the Kindle app for your phone and tablet book-reading. But Amazon has jumped on the iOS 8 bandwagon quickly with a list of new features. The Kindle Today widget lets you keep up to three books front-andcenter for easy reading. They also added the ability to copy and paste text from books you're reading and a quick translation app.

3

For the first time, Apple is allowing apps that retool the keyboard on the iPhone, and there are several good ones to choose from.

Among other customization tools, Swype is best known for letting users drag their finger from letter to letter to type instead of hunting and pecking, and it's been a big hit among Android users. Apps like Fleksy and Swiftkey also are worth a look -- all three are either free or offer free trial periods.

4

While you're waiting for Vainglory, you can get your gaming fix with the latest version of what's widely considered among the best mobile driving games around. Developers have already optimized "Asphalt 8" for iOS 8 (appropriately enough), taking advantage of the new phones' added graphics and processing power. It's mighty pretty and is going to look great on the bigger phones.

5

It's getting harder and harder to keep up with all our passwords, not to mention to ignore news about big data breaches by hackers.

1Password tries to help by creating really tricky passwords for your various accounts, then letting you access them with one, presumably simpler one, via the app. It's already been updated for the new iOS 8 operating system, including integration with Apple's Touch ID fingerprint security. The basic version is also free now.

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

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PBE NEWS BRIEFS Watching the basin

Rain Creates Record Inflow for Lake J.B. Thomas The recent rainfall caused a lot of headache for many areas across the Permian Basin, but just northeast of the metro, rain fell in the perfect spot. Lake J.B. Thomas, one of the Basin’s main water sources hasn’t had this much water in it since November of 1987.

It’s exciting news for officials at the Colorado River Municipal Water District, “you look outside now and everything is green, well that’s not normal,” said CRMWD General Manager John Grant. Grant has watched lake levels fall more than rise for the past 40 years. So when the rain came in late September and fell along the Colorado River he knew it was about to be good news for all of his district.

“This was the largest single inflow at Lake Thomas that we have ever seen,” said Grant. The rainfall added more than 82 thousand acre-feet of new water to the lake, a rise of 33 and a

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half feet. “It’s really neat to be able to sit back and see a lake fill up or at least halfway fill up in one rain storm, it’s kind of exciting.”

CRMWD services a region of 50 thousand people, before the rainfall the district only had enough surface water to last until next fall, a completely different story after late Septembers downpour. “This is going to extend that well into 2016, if not further than that,” said Grant.

Even though this is great news for the Permian Basin water supply, Grant says the drought’s not over and water conservation is still key to making sure we succeed in the future. As for the other lakes in our area, O.H. Ivey rose half a foot and E.B. Spence actually went down a little.

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

Source: Lauren Lanmon, CBS-7

Watching THE SHALE

Zombie' Hovensa refinery could live again due to shale The mothballed Hovensa refinery, once the largest in the Western hemisphere, could be the latest "zombie refinery" to come back to life, revived by the U.S. shale boom.

Hess Corp and Venezuela's state-run Petroleos de Venezuela (PDVSA) [PDVSA.UL] have found an interested buyer for their 350,000 barrel per day (bpd) Hovensa refinery in the Virgin Islands, sources close to the deal told Reuters in late September, confirming a local news report that said the plant would use U.S. crude.

Refining at the plant has been halted since 2012, but its owners have been using it as a terminal. The Virgin Islands government has sought a buyer who will return the plant to its former status as an active refinery, according to a person familiar with refinery sales.

The identity of the buyer was not known, but sources told Reuters it would be a private equity firm.

Cheap U.S. crude and natural gas, available because of the shale boom, have created an advantage for U.S. refiners who have access to relatively inexpensive feedstock needed to fill refineries and a cheap furnace fuel to power them.

A four-decade ban on exporting U.S. crude has made it lucrative to produce gasoline, diesel and other refined products domestically, which can then be exported legally.

Restarting Hovensa on an island considered to be part of the United States could be a bet on the law remaining in place, even as it is being hotly debated from Texas to Washington.

Several "zombie refineries" on the East Coast have been restarted or saved from shutdown, according to Paul Sankey at Wolfe Research who coined the term, since the start of shale revolution.

Zombies that have reopened include the Delaware City refinery, which PBF Investments bought and restarted in

2010 after Valero shut it down, and the idled 185,000 barrel-a-day Trainer, Pennsylvania, refinery rebooted by Delta Airlines in 2012.

Hovensa's ability to benefit from plum U.S. refining conditions might prove more challenging, according to industry analysts and consultants. Hovensa is oil-fired and does not benefit from vast U.S. gas fields.

Using cheap light sweet crudes from booming U.S. producing regions such as the Eagle Ford in Texas could be profitable, but also a challenge, because Hovensa was configured to run heavy Venezuelan and other foreign crudes.

"There's no technical reason why you couldn't process U.S. crude at that refinery," said Neil Earnest, president of consultancy Muse Stancil.

But the input to the refinery would be reduced by more than 10 percent, Earnest said. Additionally, he cautioned that there would be significant costs associated with purchasing enough oil to restart the refinery, restaff it, and address any issues that had cropped up at the shuttered facility.

The buyer would also need to sign agreements with several U.S. producers to guarantee a 200,000 to 300,000 bpd crude supply and meet the goal of reaching 350,000 bpd of processing, the same volume it was running when it was shut.

"I think the refinery can be profitable running cheap light crude, even if it operates at only 50 percent to 60 percent of its full capacity," said one person familiar with the plant.

Hovensa can process a maximum of 500,000 bpd.

And shipping the U.S. crude to the islands might be less costly than sending it to foreign plants.

Source: Reuters

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

45

Watching the STATE

Former Texas Tech Chancellor Named New Vice Chairman of the Board of Kiromic, LLC Kiromic, LLC, a Lubbock bio-pharmaceutical company, announced the addition of Kent Hance, the former chancellor of Texas Tech University, to its board as the vice chairman. Hance retired as chancellor in July 2014, after raising $1.2 billion for the university.

"Kiromic is pleased to announce that Kent Hance, the most successful chancellor in the history of Texas Tech University, has joined the Kiromic team not only as an investor, but also as our new vice chairman of the board. Kent will add immensely valuable experience in the political, commercial, legal, and regulatory arenas, as Kiromic continues to establish itself as one of the world's leading immunotherapy R&D firms," said Scott Dahlbeck,

MD, Pharm.D., CEO of Kiromic.

"Kiromic has a bright future. They are on the cutting edge of cancer research in immunotherapy. I am proud to work with some of the brightest scientists in the world," said Hance.

Hance, as chancellor, oversaw the administration of Texas Tech University, Texas Tech University Health Sciences Center in Lubbock, the Texas Tech University Health Sciences Center in El Paso, and Angelo State University in San Angelo, Texas. University regents voted to name him chancellor-emeritus upon his retirement.

Kiromic's mission is to restore the lives of cancer patients through the research and discovery of new diagnostic and therapeutic products.

Kiromic researchers have discovered a group of cancer-related proteins that are designed to safely awaken the body's immune system to effectively attack and remove cancer cells, and yet spare normal cells and tissues. In February 2014, the FDA gave approval to Kiromic to begin phase I/ II clinical trials of its DC vaccine platform, one of the many products in its large immunotherapy product pipeline.

Source: Kiromic, LLC, PR Newswire

46

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

Watching the GOVERNMENT

Boeing-Lockheed venture picks Bezos engine for future rockets United Launch Alliance (ULA), a Boeing Co and Lockheed Martin Corp joint venture, announced in September it would invest heavily in a new rocket engine being developed by Amazon.com Inc. founder Jeff Bezos and his company Blue Origin.

The new engine, called the BE-4, could be ready for use in four years, and would cost substantially less than the Russian-built RD-180 engine now used to power ULA's heavy-lift Atlas 5 rockets, officials from both companies told reporters.

The U.S. government is grappling with how to reduce its reliance on the Russian-built engines, a matter of growing concern this year after Russia' actions in Ukraine.

The announcement showed mounting pressure on ULA, the sole rocket launch provider for most U.S. military and spy satellites, to lower costs as it faces growing competition from another entrepreneur, Elon Musk, and his firm Space Exploration Technologies.

SpaceX is seeking Air Force certification of its Falcon 9 rocket, and plans to release its own heavy-lift rocket to compete with ULA's Atlas 5 next year.

"It's really time for our country to move toward an allAmerican launch vehicle, and I can't think of a better way to get on that path," said Tory Bruno, chief executive of ULA. Bruno told reporters ULA had a two-year supply of Russian engines, with 11 more to be delivered later this year and next. He said he did not expect problems with those deliveries, despite the company's decision to develop a U.S. alternative.

Bezos, a well-known technology entrepreneur, said he was excited to work on the project with ULA, which just carried out its 88th consecutive, successful launch.

He said the engine could pave the way toward a future in which "millions of people" lived and worked in space.

Pentagon acquisition chief Frank Kendall said he had not been fully briefed on the initiative, but called it an example of the innovative and creative ideas the military was seeking on how to end dependence on Russian-built engines.

General John Hyten, head of Air Force Space Command, welcomed news that the effort was privately funded, but stressed that any new engine would have to pass a rigorous certification process, like the one SpaceX is undergoing, before it could be used to launch expensive and critical satellites into space.

Bezos said ULA was making a significant investment in the development of the BE-4 engine, which would help accelerate the program, but gave no details. Bezos said only that it was possible to develop an engine for less than the standard estimate of seven years and $1 billion.

He said his company had been working for three years on the new liquid oxygen engine, which will deliver 550,000 pounds of thrust at sea level, and testing of various components was already under way at the company's new facility in West Texas.

Bezos said the engine could eventually be reusable, although ULA did not plan to recover them initially.

Blue Origin was continuing to work on plans for its own orbital vehicle, which would re-use the engines and should be ready later this decade.

ULA said it would use two BE-4 engines on each of its boosters, providing combined thrust of over 1 million pounds, more than the RD-180 engine now used on the Atlas 5 rocket. The engine will use liquefied natural gas.

Source: Reuters

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

47

Watching the Nation

New petroleum technology revitalizes Powder River Basin oil production The Powder River Basin, well known for its abundant coal supply, is experiencing a turnaround in oil production.

Production has rebounded from a low of 38,000 barrels per day (bbl/d) in 2009 to 78,000 bbl/d during firstquarter 2014. Although U.S. oil production growth is occurring primarily in the Bakken, Eagle Ford, and Permian Basins, the Powder River Basin is among other regions of the country that have also benefitted from the application of horizontal drilling and hydraulic fracturing.

The increase in Powder River Basin oil production is largely attributable to production growth in the Turner, Parkman, and Niobrara-Codell formations, which collectively increased from 4,700 bbl/d in 2009 to 36,300 bbl/d in first-quarter 2014, increasing their share of total Powder River Basin oil production from 12% to 46%. Three other formations—the Shannon, Sussex, and Frontier—also rose from 2009 to 2014, although to a lesser extent, rising from 8,900 bbl/d in 2009 to 17,000 bbl/d in first-quarter 2014, maintaining their share of total Powder River Basin oil production at around 23%.

The Powder River Basin encompasses more than 43,000 square miles and is located primarily in northeast Wyoming and southeast Montana, along with small areas

of South Dakota and Nebraska. The recent resurgence is occurring predominantly in the Wyoming portion of the basin, which is also the main source of the Basin's historical oil production. Since January 2009, more than 590 oil wells have been drilled and completed in the six select formations within the Powder River Basin, with this activity centered in Wyoming's Converse and Campbell counties.

In the past, oil production came from the higher-permeability portions of Wyoming's Turner, Parkman, Shannon, Sussex, and Frontier formations. With the application of horizontal drilling and hydraulic fracturing, larger portions of these formations have become profitable for commercial oil production. In contrast, the NiobraraCodell formation was not a significant oil producer in the Powder River Basin before 2009, and oil production from this formation is entirely reliant on the application of current petroleum technology.

Source: www.EIA.gov

48

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

Watching Offshore

Exxon winds down drilling as U.S. sanctions hit Russia Exxon Mobil said in late September it will wind down drilling in Russia's Arctic in the face of U.S. sanctions targeting Western cooperation with Moscow's oil sector, after the Obama administration granted a brief extension to safely mothball its operations.

Washington extended sanctions on Russia over its aggression in Ukraine. The new measures seek to stop billions of dollars worth of cooperation between Western and Russian energy companies on oil drilling in Russia's Arctic, in Siberia and offshore. Companies had until Sept. 26 to stop the work. The U.S. Treasury Department gave Exxon a short extension to wind down a rig, beyond the 14 days outlined in the sanctions, the Texas-based oil major said.

"Following the short time extension, the license is nonrenewable and no further work is permitted," Exxon spokesman Richard Keil told Reuters.

In July, Exxon began moving a rig called West Alpha from Norway to the Russian Arctic. The company is hoping for a

major crude discovery in the Kara Sea with Russian state oil company Rosneft, with which it signed a $3.2 billion agreement in 2011 to develop the region.

Exxon said the Treasury granted a license to it and other U.S. contractors and individuals involved with the University-1 well, where the rig was drilling, "to enable the safe and responsible winding down of operations" related to the well. The sanctions could affect other major oil companies, including BP Plc and Royal Dutch Shell.

An analyst said the move showed the Obama administration's willingness to tailor sanctions to accommodate challenges associated with complicated business projects in Russia.

Russia is one of the world's top crude producers and the biggest supplier to Europe, but its reservoirs are in decline and it must look to new sources to retain its positions.

Source: Reuters

Watching the WORLD

Despite decline in some regions, world oil consumption still seen rising The largest potential for growth in demand for liquid fuels lies in the emerging economies of China, India, and countries in the Middle East, according to EIA's recently released International Energy Outlook 2014 (IEO2014). In the Reference case projection, world liquid fuels consumption increases 38% from 87 million barrels per day (MMbbl/d) in 2010 to 119 MMbbl/d in 2040. China, India, and other developing countries in Asia account for 72% of the net world increase in liquid fuels consumption, with Middle East consumers accounting for another 13%. Most liquid fuel demand is for industrial uses and transportation.

In the United States, Europe, Japan, and other mature industrialized economies, liquid fuel demand has leveled off and is projected to slowly decline. The combined effects of several factors have slowed or even reversed the growth in liquid fuels use. These factors include sustained high oil prices, efficiency standards for vehicles and equipment together with high taxation of motor fuels, price-driven fuel switching towards non-oil fuels outside of transportation, vehicle saturation, as well as structural changes in factors such as demographics and consumer behavior.

IEO2014 projects that 33 MMbbl/d of additional liquid fuel supply will be needed in 2040 compared to 2010 to satisfy growing demand for liquid fuels. The Reference case assumes that Organization of the Petroleum Exporting Countries (OPEC) producers invest in incremental production capacity that enables them to increase

crude and lease condensate production by 14 MMbbl/d from 2010 to 2040 and that OPEC crude and lease condensate producers maintain a share of between 40% and 45% of total world liquid fuels production throughout the projection. The Middle East OPEC member countries alone account for 90% of the total growth in projected OPEC crude and lease condensate production.

Non-OPEC crude and lease condensate production is projected to increase by 10 MMbbl/d between 2010 and 2040. Much of this production is projected to come from areas previously considered uneconomical, as a combination of technological improvements and rising world oil prices attract additional investment. In addition, oil from tight and shale resources will help to meet growing demand.

Compared to previous reports, IEO2014 incorporates larger new supplies of tight oil from the United States and Canada; but other countries as well, including Mexico, Russia, Argentina, and China, begin producing substantial volumes of tight oil in the IEO2014 Reference case.

Other liquid resources—including natural gas plant liquids, biofuels, coal-to-liquids, and gas-to-liquids—currently supply a relatively small portion of total world petroleum and other liquid fuels, accounting for about 14% of the total in 2010. However, they are expected to grow in importance, rising to 17% of the world's total liquids supply in 2040. Source: www.EIA.gov

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

49

RESTAURANT

by Marcy Madrid

BITES

Keith’s Hamburger Station If you’re in the neighborhood of the Permian Basin Oil Show this month and are looking for a quick bite to eat, one of the most popular lunch destinations in the area is Keith’s Hamburger Station.

The well known and loved lunch and dinner spot prides itself on serving always fresh, never frozen hamburgers, steak fingers and other cooked to order, delicious dishes.

Keith's was opened in 1984 when owner, Keith Johnson, decided to get out of the oil industry and try something a little different to earn a living. Keith spent his first year out of college working for the Mobil Oil Company, on an offshore production platform. After deciding he wasn't cut out for the 7 on and 7 off lifestyle in the oil-field, the dream of the now popular hamburger and steak finger restaurant began to take shape. Since opening, the restaurant has won several awards for best chicken-fried steak, best homemade steak fingers, and of course, best old fashion hamburgers.

As a nod to his first career in the oil business, Keith now happily and frequently caters on location to those still working long days in the field.

Keith’s Hamburger Station N eed delivery? Call (432) 272-9294 4324 Andrews Highway (Across From the Ector County Coliseum) Odessa, Texas 79762 10:00 am - 10:00 pm Phone (432) 368-0950 50

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

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

51

Tonya Harding,

Unbelief & Faith

by Daniel Stephens

Daniel Stephens is the Senior Pastor of Mid-Cities Community Church, since 2006. He is the honored husband to Kayla Stephens, a proud father of twin sons Jonah & Jude, daughter Kampbell and youngest daughter Karis Anna.

Do you remember Tonya Harding? She's the figure skater who “allegedly” hired a hit man to take out Nancy Kerrigan’s knee mafia style. This past Olympics, I watched an NBC special where they retold the dramatic story with fresh interviews of those directly involved, specifically Harding herself. I was drawn in like a moth to a flame. As I sat on my couch and listened to Harding being interviewed, I wondered ‘What would it be like to be asked the same questions every four years? What would it be like to be defined by your worst moment’?”

That could have happened to Sarah, the Biblical wife of Abraham. She could have been defined by her worst moment, but instead was defined in the book of Hebrews by faith even being mentioned alongside other heroes of the faith like Noah, Abraham, and Moses

about His promise to give them a son. But this time, Sarah was eavesdropping on the conversation and laughed to herself in disbelief understandably thinking “not only am I too old to do that, I’m too old to do what

We find that Sarah’s story is embedded in God’s interaction with her husband, Abraham. God had already spoken to Abraham and told him he would have a son and his descendants would be as numerous as the stars in the sky. At that time, Abraham was 99, and Sarah was 90. Abraham, however, had not told his wife about God’s promise. Can you imagine a husband failing to tell his wife something important? The Lord visited Abraham again, this time with two angels. He spoke to Abraham 52

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

it takes to do that!” God knew she was listening in on their conversation so He called her out, asking her why she laughed, to which she lied because she was afraid.

One thing about God that is so great is that He loves us enough to call us out in our unbelief. He knew Sarah was on the other side of the tent! He knew Sarah would be listening and He called her out.

I can imagine as this story was passed down from generation to generation, the people would hear about how God came and promised a son to them in their old age, and how Sarah laughed at God’s words. If laughing in unbelief at God’s promise while in the presence of God and two angels doesn’t go down as a potential defining worst moment, I don’t know what would. As a matter of fact, God showing up to speak to Abraham with a couple angels by His side was a bigger miracle than an old woman having a baby through natural means.

Sarah had waited a long time to be a mother, and she had obviously given up on the possibility of having

children. She laughed at what God had said, yet laughter and unbelief of God’s promise did not seal her fate as a disappointment or a failure. In that moment of unbelief God told her “nothing is too difficult for me”. She must have taken that statement to heart because the book of Hebrews describes Sarah as a woman not of doubt or disbelief but of faith.

Have you ever doubted God’s promise? Have you ever laughed in disbelief? Consider for a moment that you, like Sarah, may be currently living out a bigger miracle than what you are challenged to believe? The fact that you’re here, the fact that you are alive may be a miracle!

Don’t allow yourself to be defined by your worst moment.

Understand that nothing is too difficult for God. Because faith is not perfection or having never doubted. Faith is simply considering the One who made the promise faithful.

Follow Daniel on Twitter: @DanielBstephens

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

53

U.S. RIG COUNT - TEXAS

States &

through October 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

134

116

119

119

121

134

142

135

13

Texas RRC District 2

88

84

84

83

82

88

86

87

10

Texas RRC District 3

48

69

69

72

45

80

84

76

9

Texas RRC District 4

35

32

29

31

27

22

21

25

0

Texas RRC District 5

14

10

8

11

12

12

12

14

0

Texas RRC District 6

30

35

35

34

29

35

35

35

2

Texas RRC District 7B

14

11

12

10

22

20

19

19

6

Texas RRC District 7C

79

96

93

94

77

99

100

97

7

Texas RRC District 8

263

330

332

330

264

329

336

314

21

Texas RRC District 8A

39

38

37

34

41

37

36

31

3

Texas RRC District 9

18

15

16

13

35

22

20

21

4

Texas RRC District 10

68

65

64

64

76

72

75

73

1

Texas Total

830

901

898

895

831

950

966

927

76

U.S. Totals

1,766

1,937

1,934

2,208

2,221

2,171

140

Districts

1,931 1,931

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 | OCTOBER 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 September 30, 2014 Company

Footage Drilled

% of Total

Average Footage

Well Starts

% of Total

Directional Wells

1

Helmerich & Payne, Inc.

41,411,402

17.7%

10,434

3,969

13.6%

3,547

2

Patterson-UTI Drilling Company, LLC

24,847,500

10.6%

10,623

2,339

8.0%

2,119

3

Nabors Industries, Ltd.

20,395,245

8.7%

7,545

2,703

9.3%

2,454

4

Chesapeake Energy Corporation

10,198,789

4.4%

9,892

1,031

3.5%

1,031

5

Precision Drilling Trust

9,413,305

4.0%

8,773

1,073

3.7%

1,020

6

Ensign Energy Services, Inc.

9,044,813

3.9%

6,307

1,434

4.9%

808

7

Unit Corporation

7,535,819

3.2%

10,170

741

2.5%

701

8

Pioneer Energy Services Corp.

6,344,294

2.7%

10,266

618

2.1%

470

9

Trinidad Energy Services Income Trust

5,727,423

2.4%

9,707

590

2.0%

468

10

Cactus Drilling Company, LLC

4,956,650

2.1%

10,326

480

1.6%

471

11

Oil States International, Inc.

4,701,951

2.0%

6,220

756

2.6%

201

12

Sidewinder Drilling, Inc.

3,524,819

1.5%

8,946

394

1.4%

368

13

Savanna Energy Services Corp.

3,426,335

1.5%

8,900

385

1.3%

138

14

Xtreme Drilling and Coil Services Corp.

3,249,521

1.4%

10,316

315

1.1%

302

15

Latshaw Drilling & Exploration Company

2,287,340

1.0%

8,599

266

0.9%

266

16

Superior Energy Services, Inc.

2,230,566

1.0%

9,958

224

0.8%

108

17

Frontier Drilling, LLC

1,970,714

0.8%

8,386

235

0.8%

201

18

SandRidge Energy, Inc.

1,949,245

0.8%

6,698

291

1.0%

104

19

Robinson Drilling of Texas, Ltd.

1,909,564

0.8%

11,102

172

0.6%

5

20

CanElson Drilling, Inc.

1,815,985

0.8%

8,858

205

0.7%

90

21

Cyclone Drilling, Inc.

1,765,908

0.8%

4,350

406

1.4%

390

22

Scandrill, Inc.

1,693,633

0.7%

11,927

142

0.5%

127

23

Orion Drilling Company, LLC

1,676,368

0.7%

11,251

149

0.5%

138

24

Pinnergy, Ltd.

1,615,562

0.7%

9,339

173

0.6%

172

25

Bison Drilling and Field Services, LLC

1,476,458

0.6%

11,812

125

0.4%

46

26

SWN Drilling Company

1,427,644

0.6%

4,393

325

1.1%

324

27

Cade Drilling, LLC

1,393,865

0.6%

11,616

120

0.4%

120

28

Precision Drilling (US) Corporation

1,388,837

0.6%

9,018

154

0.5%

92

29

Basic Energy Services, Inc.

1,372,592

0.6%

7,460

184

0.6%

54

30

SST Energy Corporation

1,361,111

0.6%

10,008

136

0.5%

132

31

Lewis Energy Group, LP

1,276,600

0.5%

10,132

126

0.4%

125

32

ProPetro Services Incorporated

1,227,500

0.5%

11,580

106

0.4%

0

33

Big Dog Drilling Company

1,114,400

0.5%

11,855

94

0.3%

6

34

Murfin Drilling Company, Inc.

1,104,835

0.5%

4,701

235

0.8%

0

35

Aztec Well Servicing Co.

1,069,276

0.5%

6,041

177

0.6%

119

Total Top 100 for year 2014

234,118,933

100.0%

---

29,175

100.0%

---

RANK

OCTOBER 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 September 30, 2014

RANK

Company

Footage Drilled

% of Total

Average Footage

Well Starts

% of Total

Directional Wells

1

Anadarko Petroleum Corporation

11,587,752

4.9%

10,383

1,116

3.8%

1,106

2

Chesapeake Energy Corporation

9,641,190

4.1%

10,257

940

3.2%

940

3

EOG Resources, Inc.

7,753,823

3.3%

10,507

738

2.5%

710

4

Pioneer Natural Resources Company

7,645,086

3.3%

12,958

590

2.0%

422

5

Occidental Petroleum Corporation

7,419,996

3.2%

6,214

1,194

4.1%

618

6

Apache Corporation

6,623,404

2.8%

8,855

748

2.6%

523

7

Marathon Oil Corporation

5,479,896

2.3%

14,932

367

1.3%

367

8

Devon Energy Corporation

4,697,694

2.0%

9,229

509

1.7%

472

9

BHP Billiton Limited

4,687,941

2.0%

13,788

340

1.2%

339

10

ConocoPhillips Company

4,192,525

1.8%

8,662

484

1.7%

406

11

Chevron Corporation

4,078,875

1.7%

5,086

802

2.7%

353

12

QEP Resources, Inc.

3,904,724

1.7%

11,761

332

1.1%

298

13

Encana Corporation

3,527,145

1.5%

12,290

287

1.0%

275

14

Noble Energy, Inc.

3,318,508

1.4%

9,965

333

1.1%

333

15

Exxon Mobil Corporation

3,160,711

1.4%

5,098

620

2.1%

279

16

Concho Resources, Inc.

3,078,837

1.3%

11,115

277

0.9%

209

17

Oasis Petroleum North America, LLC

3,039,370

1.3%

10,234

297

1.0%

297

18

Whiting Petroleum Corporation

2,910,040

1.2%

9,898

294

1.0%

263

19

Linn Energy, LLC

2,517,460

1.1%

5,645

446

1.5%

215

20

Southwestern Energy Company

2,484,658

1.1%

4,485

554

1.9%

551

21

Laredo Petroleum, Inc.

2,445,300

1.0%

11,217

218

0.7%

88

22

SandRidge Energy, Inc.

2,362,158

1.0%

5,332

443

1.5%

321

23

EP Energy E&P Company, LP

2,332,375

1.0%

9,759

239

0.8%

212

24

CrownQuest Operating, LLC

2,043,600

0.9%

11,951

171

0.6%

0

25

WPX Energy, Inc.

2,010,755

0.9%

6,636

303

1.0%

301

26

Antero Resources Corporation

1,983,525

0.8%

11,334

175

0.6%

175

27

Murphy Oil Corporation

1,952,934

0.8%

10,500

186

0.6%

186

28

Continental Resources, Inc.

1,889,632

0.8%

3,817

495

1.7%

495

29

Ultra Petroleum Corp.

1,871,768

0.8%

11,922

157

0.5%

157

30

Newfield Exploration Company

1,804,028

0.8%

6,074

297

1.0%

286

31

Penn Virginia Corporation

1,709,000

0.7%

14,483

118

0.4%

118

32

Cimarex Energy Co.

1,619,635

0.7%

10,449

155

0.5%

149

33

Energen Resources Corporation

1,483,962

0.6%

9,828

151

0.5%

97

34

Parsley Energy Operations, LLC

1,419,450

0.6%

11,731

121

0.4%

13

35

SM Energy Company

1,413,010

0.6%

9,175

154

0.5%

154

Total Top 100 for year 2014

234,118,933

100.0%

---

29,175

100.0%

---

56

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

Source: www.eia.gov

North American shale-focused companies' financial performance has improved Independent upstream production companies focused on producing from shale formations or oil sands in North America were more profitable in the first six months of 2014 than in the prior two full years. Cash return on equity (ROE), a measure of the profit a company earns on money shareholders have invested, increased 7 percentage points from 33% in 2012 to 40% through second quarter 2014. In contrast, the cash ROE for global diversified vertically integrated oil and gas companies has declined slightly from 27% in 2012 to 25% through second quarter 2014 (Figure 1).

The analysis looked at 60 publicly traded companies that are required to submit quarterly and annual financial reports to the U.S. Securities and Exchange Commission, including both shale-focused producers in North America and globally diversified vertically integrated oil and gas companies. The groups differ in a number of areas. The producing assets of the global integrated companies are located in various regions of the world, while 98% of the assets of the shale-focused companies are in the United States and Canada. The former also tend to have multiple business segments, including exploration, production, midstream, refining,

marketing, and chemicals; while the latter are almost exclusively exploration and production companies.

The global integrated companies are generally much larger both in terms of liquids production and market capitalization. In the first half of 2014, the group of global vertically integrated companies produced a combined total of 27.7 million barrels per day (bbl/d) of liquids and had total market capitalization of $2.9 trillion, while the shale-focused companies produced 1.6 million bbl/d of liquids and had a combined market capitalization of $240 billion.

The relative profitability of smaller shale-focused companies increased for a number of reasons. The prices paid to producers for crude oils produced in various shale formations have risen relative to North Sea Brent prices since 2012, increasing the relative revenue of shalefocused companies. While some of the spreads have widened recently, the overall trend since 2012 through second quarter 2014 has been narrowing spreads as rail and new pipeline infrastructure allow these crudes to reach more economically refining centers in the United States. Absolute U.S. prices for West Texas Intermediate (WTI) Cushing, WTI Midland, and Bakken have increased 7%, 4%, and 9%, respectively, in the first half of 2014 compared to their 2012 average prices. This has also contributed to higher domestic upstream profitability.

While increased prices have provided higher revenue, technological progress has improved productivity in various plays. Technological progress can increase overall production volume while reducing the cost per barrel of oil produced. According to EIA's latest Drilling Productivity Report, new-well oil production per rig increased in the Bakken, Eagle Ford, Niobrara, and Permian regions from 2012 to 2014 (Figure 2). Technology such as pad drilling can lower costs and decrease the time needed to drill a new well. This has not only increased production for

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

57

the shale-focused companies, but has contributed to a reduction in operating expenses as a share of revenue from 30% in 2012 to 18% through second quarter 2014, according to the company financial statements.

The volume of crude oil produced from various shale formations, in particular the Bakken, the Eagle Ford, and the Permian, has increased dramatically. For the shale group of companies as a whole, total liquids production has increased 430,000 bbl/d.

In previous years, the returns of many of the shalefocused companies were affected by the relatively lower prices for North American midcontinent crudes as compared with global seaborne crudes. As crude oil distribution infrastructure has expanded, the price differences between Brent and U.S. and Canadian midcontinent crudes have narrowed, and relative returns for shale-focused companies have improved. EIA's latest Short-Term Energy Outlook (STEO) forecasts the BrentWTI spread to be $8/bbl in 2015, down from nearly $18/ bbl in 2012, which, combined with improved productivity and lower costs, could make shale-focused companies less susceptible to absolute price declines. Increased profitability is a contributing factor to STEO's latest U.S. crude oil production forecast of 9.53 million bbl/d in 2015, 0.25 million bbl/d higher than in the August STEO and 0.18 million bbl/d higher than the forecast average for 2014.

U.S. GASOLINE AND DIESEL FUEL PRICES DECREASE

On a barrels of oil equivalent basis, almost all of the increases in production since 2012 have come from liquids, with liquids as a share of total oil and gas production increasing from 57% in 2012 to 63% through second quarter 2014. Most shale oil and gas companies have redirected their drilling to "wetter" plays—areas that yield higher levels of crude oil and hydrocarbon gas liquids relative to lower-priced natural gas.

The group of global vertically integrated companies has faced different conditions that have resulted in slightly lower returns since 2012. The average price of North Sea Brent crude oil, the global crude oil benchmark, was 2% lower through second quarter 2014 compared to the average 2012 price, which reduced profits from upstream businesses. Since this group of companies has more geographically diversified assets, some are exposed to geopolitical risks and were affected by unplanned crude oil supply disruptions. In addition, while some companies within the group did have increased liquids production from North American assets, similar to the shalefocused companies, production declines in other parts of the world decreased total liquids production volumes by 414,000 bbl/d compared with 2012. Other lessprofitable business segments, in particular downstream refining operations in Europe, Asia and Latin America, also reduced returns for some companies.

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The U.S. average price for regular gasoline fell to $3.41 per gallon as of September 15, 2014, 5 cents lower than the previous week, and 14 cents lower than the same time last year. Prices in all regions of the nation decreased, led by a drop of eight cents in the Midwest to $3.36 per gallon. The Gulf Coast had the next largest decrease, falling five cents to $3.17 per gallon. The East Coast, Rocky Mountains and West Coast prices all decreased three cents this week, to $3.38 per gallon, $3.59 per gallon, and $3.74 per gallon, respectively.

The U.S. average diesel fuel price decreased one cent this week to $3.80 per gallon, down 17 cents from the same time last year. The East Coast and West Coast led the declines, each down two cents, to $3.83 per gallon and $4.02 per gallon, respectively. The Midwest, Gulf Coast, and Rocky Mountains all decreased by a penny, to $3.74 per gallon, $3.71 per gallon, and $3.86 per gallon, respectively.

PROPANE INVENTORIES GAIN U.S. propane stocks increased by 1.4 million barrels last week to 77.4 million barrels as of September 12, 2014, 13.0 million barrels (20.2%) higher than a year ago.

Midwest inventories increased by 1.1 million barrels and Gulf Coast inventories increased by 0.3 million barrels.

Rocky Mountain/ West Coast inventories increased by 0.1 million barrels while East Coast inventories decreased by 0.1 million barrels. Propylene non-fuel-use inventories represented 4.3% of total propane inventories.

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

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

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