DJ/Niobrara News Pulse August 2020

The DJ/Niobrara Basin| August 2020

Field Overview

Located mainly in the Northeast of Colorado, the Denver-Julesburg Basin consists of five main oil-producing formations: Niobrara sections A-C, Codell, and Greenhorn. These five plays produce over 90% of Colorado’s oil/gas.

State Drilling Statistics (End of August)

Active Drilling Rigs in Basin: 4
Total Rigs in Colorado: 5
Total Rigs in United States: 254
Total U.S. Rigs down -72% YTD

State Top Producers

Top Oil Producer- Kerr McGee Oil & Gas Onshore LP
Top Gas Producer- Kinder Morgan


Financial & Economic Updates

Unlikely Compromise

In a move that we have become all too familiar with, Colorado has adjusted its taxing on the oil and gas industry to address state budget deficits that are a result of the still depressed oil prices. Although oil prices have been increasing slowly, the month of August showed that WTI prices could climb ever so slowly and remained in the realm of $42. The Colorado Oil and Gas Conservation Commission raised the tax on production to compensate for a $3.4 million dollar hole in the organization’s budget with support from the industry and environmental groups. Industry support came from the fact that the increase was scaled back from what it potentially could have been thanks to the slightly increasing prices. Environmental groups are always pleased when oil and gas is taxed more, but Boulder County Commissioner, Matt Jones, urged the commission to go for the full increase in production tax in order to fulfill the agency’s new mandate to protect public health, safety, welfare, and the environment. Governor Polis expressed his approval for the increase by saying it is “viewed as a way to have the staff they need to process permitting quicker.”

Article Link


State Highlights

Occidental Frantic for Free Cash

In mid August, Occidental announced that it had entered into a purchase and sale agreement to divest land assets in Wyoming, Colorado, and Utah. CEO Vicki Hollub said, “This transaction significantly advances the progress against our $2 billion plus divestiture target for 2020.” This deal is expected to free up approximately $1.33 billion for the aforementioned plan which was put into place as a preparatory goal for when debt matures and needs to be paid off. Occidental has been struggling to get rid of foreign Anadarko assets in a market where few people are acquiring assets, so this is a significant win for the company, but an almost negligible amount considering the several billions of dollars that will mature in the coming two years.

Article Link

Wells Under Threat from Record Fires

The month of August was hot in more ways than one. The Pine Gulch fire was the second largest fire in the state of Colorado burning an area of just over 139,000 acres. Storms over Pine Gulch continued to blow embers to other sources of dry fuel, spreading the fire. The fire contained dozens of oil and gas wells which had been confirmed damaged. The fire department confirmed that they were working with operators in the area to protect the sites from damage and prevent increased damage from compromised gas lines.

Article Link


Top Oil Producers (2020 cum)

RankCompanyProduction
(Bbl)
1Kerr McGee22,945,969
2Noble Energy15,787,428
3PDC Energy15,702,575
4Extraction Oil and Gas11,779,877
5Great Western6,033,678

Top Gas Producers (2020 cum)

RankCompanyProduction
(Mscf )
1Kinder Morgan213,830,153
2Kerr McGee193,004,500
3PDC Energy135,501,836
4TEP Rocky Mtn. 124,483,674
5Caerus Piceance85,921,037

Refining

Colorado Production


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The information contained in this newsletter is provided by RARE
PETRO Engineering, PLLC via the following sources unless otherwise
noted:

www.eia.gov
www.drillinginfo.com
www.bhge.com
RARE Petro Analytics

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