American Oil and Gas Reporter - November 2017 - 89

covery," he said.
Operators should look at their data
differently, following the lead of industries
such as aerospace, medicine and retail,
he suggested. Companies such as Google,
Amazon and Netflix employ digital technology and machine-learning to predict
consumer behavior and identify emerging
trends in near real time, Tillerson described. "Think about how much enterprise
value these companies have generated,
based on how they leverage data," he
posed. "Why can't the oil and gas industry
leverage its data in much the same way?
It can, and it should."
Breakeven Prices
Miné Yücel, senior vice president and
director of research for the Federal Reserve
Bank of Dallas, told NMOGA her agency
conducted a quarterly survey of 200 oil
and gas firms in Texas. One of the questions was what West Texas Intermediate
price was needed to cover a company
need's operating expenses from existing
and new wells.
According to the first-quarter survey,
she said $38 was the average for existing
wells, while new wells required prices
closer to $51. "The existing well number
is an average. so the range is pretty large,
ranging from $10-$55 in the Permian/Midland area," she reported.
The nation's inventory of drilled but
uncompleted wells has increased, showing
producers are not willing to produce in
this price environment, Yücel said. On
top of market factors, she noted many
Permian Basin operators were having
trouble finding rig crews.
In addition to the quarterly survey, the
Federal Reserve also compiles an oil sector

Permian Basin operators need West Texas
Intermediate oil prices around $38 to
cover operating expenses for existing
wells and $51 for new wells, Miné Yücel,
senior vice president and director of research for the Federal Reserve Bank of
Dallas, tells the New Mexico Oil & Gas
Association annual convention.

The United States is a global energy
leader directly because of oil and natural
gas industry-led innovation and market
forces, Jack Gerard, president and chief
executive officer of the American Petroleum Institute, tells the New Mexico Oil
& Gas Association.

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outlook index, which she said compared
the number of firms with brighter outlooks
minus the percentage of firms that said
their outlooks were worse. Yücel reported
the survey taken in the first half of 2017
showed a declining index, but the third
quarter indicated a more positive outlook.
Turning to the impact of low oil prices
on the U.S. economy, Yücel noted that
the overall effect should be positive, but
so far there has been no significant signs
of improvement.
"The timing may be a little asymmetric," she posed. "We may be seeing the
negative effects first, because of company
cuts, but then we will get the positive effects later, as companies that use energy
invest more, but this investment may take
time. Looking forward, there is a lot of
uncertainty about oil supply, and the market may be in flux for some time. But,
the oil market will be amply supplied, at
least in 2018."
Economic Opportunity
The United States is a global energy
leader, not by accident, or government
regulation and intervention, but as a direct
result of oil and natural gas industry-led
innovation and market forces, Jack Gerard,
president and chief executive officer of
the American Petroleum Institute, told
the meeting.
"Today, American energy is about
more than the barrels of crude produced,
the amount of natural gas extracted or
the product refined. It is about economic
opportunity, environmental leadership
and long-term global energy dominance.
We have a responsibility to do all we can
to ensure that our nation's position as the

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American Oil and Gas Reporter - November 2017

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