American Oil and Gas Reporter - January 2016 - 47

putting first quarter 2016 dry gas production at 75.93 billion cubic feet a day, 3.1
percent above first quarter 2015's 73.67
Bcf/d. EIA projects U.S. gas production
will continue to rise throughout 2016 to an
annual average of 76.26 Bcf/d.
In AOGR's survey, category 1 (least active) drillers projected the largest crude oil
and natural gas production drops of 8.1 and
9.1 percent, respectively (see Figure 3).
Category 2 drillers report a 1.9 percent increase in first quarter oil production year
over year, and a 3.8 percent drop in natural gas production.
BDO USA LLP doesn't measure volumetric changes in oil and gas production in
its 2016 Energy Outlook Survey, for which
it interviews chief financial officers at 100
U.S. oil and gas exploration and production
firms. But it does report that 43 percent of
the CFOs it spoke with expect the domestic supply of oil to decrease in 2016, while
22 percent expect it to stay the same.
BDO adds that 10 percent of its CFOs
expect the domestic supply of natural gas
to decrease this year, while 50 percent expect it to remain the same. BDO also mentions that 53 percent of the CFOs it interviewed say their companies significantly

delayed or terminated oil or gas exploration or processing projects over the previous 12 months.
In AOGR's survey, 64 percent of respondents said their 2016 crude oil production would be down, 22 percent said it
would remain the same, and 23 percent
said it would increase. For natural gas production, the numbers are 69 percent down,
31 percent the same, and 6 percent up.
Elsewhere, Jodi Quinnell, manager
of crude oil analytics at Boston-based
Genscape Inc., says her company expects
an 800,000 bbl/d decline in U.S. crude oil
production by year-end.
News service Bloomberg quotes ConocoPhillips Chairman and Chief Executive
Officer Ryan Lance telling an early December conference in Qatar that he expects U.S.
production to drop 500,000 bbl/d this year.
And in an interview with investor Carl Icahn posted on www.profitconfidential.com,
legendary oilman T. Boone Pickens explains
why he expects an industry rebound in the
second half of 2016: "When you went from
1,609 rigs to 514, that took half a million
barrels (a day) off of 9.6 MMbbl/d. In another six months, you are going to take another half million barrels off."
❒

Oil And Gas
Liquidity Remains Strong
NEW YORK-Despite the impact of
low oil prices on company cash flows,
the upstream sector enters 2016 with surprisingly strong liquidity, according to
Evercore ISI.
The 2016 Evercore ISI Global E&P
Spending Outlook reports credit facilities for the U.S., Canadian and international producer/operators it studied fell
only 6 percent during fall credit facility redeterminations.
"Half the companies saw their borrowing bases either reconfirmed or increased," Evercore states, adding that the
aggregate decline among those companies whose borrowing bases did decline
was only 16 percent.
"Looking out to the spring, we believe
redeterminations will be less impactful
than they were in the fall as pricing decks
already reflect lower commodity prices,"
Evercore projects.
Additionally, Evercore notes that

previous reserve calculations assumed
higher service costs. And even though
the company says it believes "oil field
services pricing likely has reached its
nadir in most markets," it reasons lower costs still will partially offset lower
commodity prices, thereby lessening the
decline in reserve and PV-10 calculations.
Consequently, Evercore reports, "In
comparing credit availability and cash
balances for 73 North American independents and international oil companies
with fourth quarter 2014 balances, we
found liquidity was down a surprisingly low 5 percent."
On one other point, Evercore mentions that when prices eventually do turn,
it expects North America "to be the first
to see a pickup in spending as our survey results once again highlight the
fact that North America is the shortest
capital cycle region."
❒

JANUARY 2016 47

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American Oil and Gas Reporter - January 2016

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