American Oil and Gas Reporter - April 2021 - 42

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SpecialReport: Capital Crews
partner for energy at global audit and advisory firm Grant
change in this current phenomenon, it will most likely come
Thornton. " No artificial intelligence or predictive data could
in the form of creative and alternative financing. Private
have been of much assistance in charting any path for how we
equity may lead the way. "
may have arrived at where we are today in energy, a year later. "
Conventional Opportunities
Grant Thornton says it has an advantageous perspective on
Several sources note a renaissance in conventional development,
whether startups can obtain capital to buy distressed assets to
a trend that includes capital providers achieving new comfort
build new companies. In that quest, the important elements are
levels with such projects. " Over
proven management teams
the past year, there has generthat put skin in the game
and are committed to a long
ally been greater interest in
" With so much transition and
run, according to Benoit.
funding deals for conventional
innovation, unique opportunities
Putting a finer point on
plays, " says Grant Thornton's
are sure to present themselves
it, Benoit elaborates, " Today,
Benoit. " One driving force has
with much greater frequency. "
commitment to the long run
been that WTI prices generally
in energy is relative. Manhave been too low and unconBryan Benoit, National Managing
Partner for Energy
agement teams and investors
ventional plays have not been
Grant Thornton
that previously had threeas economical. "
five-year planning horizons
In a December 2020 inwill most likely find that
terview with Yahoo Finance,
time frame will be longer. However, with so much transition
Benoit suggested a possible oil price recovery during the second
and innovation, unique opportunities are sure to present themselves
quarter of 2021. " With WTI now around $60 per barrel, " he
with much greater frequency than the past. Installing a proven
notes, " unconventional may appear considerably more attractive.
management team will undoubtedly increase value by reducing
The question of course is for how long? "
risk and enhancing the likelihood of success. We may find they
One technique that is currently in favor among producers
command a reasonable premium. "
is to go back to drilled uncompleted wells and bring them on
Benoit is circumspect about commenting on banks' eagerness
line, he observes. " My family loves duck season, but not this
to lend. " It depends. Commercial banks and lenders may be
DUC season, " Benoit quips. " My clients see this lasting
overextended in oil and gas and we have been able to study
possibly six-nine months, or well into 2021. Shareholders are
looking for earnings, returns and dividends. In the third quarter
this for the past few years. PDP reserves, particularly in lowof 2020, I commented that drilling activity would most likely
er-cost of production plays such as the Permian Basin, have
not reach pre-pandemic levels for two-three years and sitting
been most desirable and I do not see much evidence to
here now at the end of the first quarter of 2021, that appears to
suggest that is changing. Availability of capital is somewhat
still be the case. "
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constrained, even in the context of PDP. If there will be

EIA Data Shows 2020 Gas Output Decline
WASHINGTON-U.S. natural gas production-as measured by gross withdrawals-averaged 111.2 billion cubic feet
a day in 2020, 900 million cubic feet a
day less than it did in 2019, the U.S. Energy Information Administration says.
The agency attributes the decline to last
year's lackluster prices.
According to EIA, 2019's record gas
production growth ballooned storage
volumes and weakened prices. Beginning
in March 2020, unusually warm temperatures and reactions to COVID-19
sapped natural gas demand and further
42 THE AMERICAN OIL & GAS REPORTER

reduced prices. The lowest average
monthly U.S. natural gas production
volume was in May 2020 at 106.4 Bcf/d.
By December 2020, natural gas production had risen to 113.0 Bcf/d.
EIA notes that Appalachia remains
the country's top natural-gas producing
region, with production from the Marcellus and Utica/Point Pleasant shales
continuing to grow despite low regional
spot prices. Natural gas production from
Pennsylvania, Ohio and West Virginia
increased from 32.1 Bcf/d in 2019 to
33.6 Bcf/d in 2020. Within the Appalachia

region, West Virginia had the largest
production increase, climbing 1.2 Bcf/d,
or 20%, to reach 7.1 Bcf/d. Natural gas
production grew 1.0 Bcf/d in Pennsylvania and dropped 700 million cubic
feet a day in Ohio.
In 2020, Oklahoma had the largest
decrease in natural gas production, falling
by 1.1 Bcf/d, or 13%, to an annual average
of 7.6 Bcf/d, EIA continues. Texas remained the largest natural-gas producing
state, although natural gas production
there declined from 28.4 Bcf/d in 2019
to 28.1 Bcf/d in 2020.
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American Oil and Gas Reporter - April 2021

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