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Oil and Gas Roundup — Jan. 20

January 20, 2014
TOPICS: In the news
A roundup of oil and natural gas industry news from around the state, nation and world:

State rig count rises by three to 186

The number of drilling rigs actively exploring for oil or natural gas in Oklahoma rose by three this week to 186, Baker Hughes Inc. reported Friday.

The tally is up four from a year ago, when it was 182.

Nationwide, the net number of active drilling rigs rose by 23 this week to 1,777, said Houston-based Baker Hughes. That's up 28 rigs from a year ago.

Of the rigs operating this week across the nation, 1,408 were exploring for oil, 365 for gas and four were listed as miscellaneous.

Friday on the New York Mercantile Exchange, benchmark crude oil for February delivery rose 41 cents to close at $94.37. Oil gained 2 percent this week, rising from $92.72.

Natural gas fell 5.6 cents Friday to end the week at $4.326 per 1,000 cubic feet.

Chesapeake sells stake in Chaparral

Chesapeake Energy Corp. said Friday it has sold its 20 percent stake in Oklahoma City oil and natural gas company Chaparral Energy Inc. to an undisclosed buyer for $215 million.

The transaction closed Monday. As a result of the sale, Domenic J. Dell'Osso, Chesapeake's chief financial officer, has resigned as a Chaparral director.

“This sale demonstrates the continued refinement and focus of our portfolio around core assets and continues our strategy of reducing financial complexity,” Dell'Osso said in a statement Friday.

Chesapeake paid $178 million in 2006 for the 20 percent stake in Chaparral. In April 2013, a Wells Fargo report valued the stake at $280 million.

This week's sales price of $215 million values Chaparral at more than $1 billion. Chaparral CEO Mark Fischer said he thinks the company is worth more than that.

“I would have loved to have bought it at that amount,” Fischer said. “That represents the strong desire by Chesapeake to sell. I can appreciate that. That value is relatively low as far as an enterprise or even equity value of the company.”

Read The Oklahoman story:

Hydraulic fracturing and water use: California Drought Edition

California is facing its driest year ever recorded, and Governor Jerry Brown held a press conference in San Francisco this morning declaring a drought emergency in the state. Challenges with water, and fights over it, are a recurring and ongoing theme in the history of California (as anyone familiar with the movie Chinatown knows), and a drought is to be taken very seriously indeed.

Unfortunately, in the face of a genuine crisis that will call on all Californians to be vigilant about water policies, anti-oil and gas activists are attempting to use this crisis as an opportunity to attack hydraulic fracturing.

Activists are peddling the untruth that hydraulic fracturing uses vast amounts of water, when it is repeatedly pointed out  that this is simply not the case in California. It is true that in other regions of the country the hydraulic fracturing process uses more water – often millions of gallons – than we use in California, though research for the U.S. Department of Energy has found that fracking still only accounts for less than one percent of water use in those areas.

The Center for Biological Diversity, a radical anti-industry and anti-science group, predictably put out a press release (we could write them ourselves at this point) claiming that “fracking” in California uses “enormous amounts” of water. The press release never mentions what these amounts actually are, because it would expose the full level of dishonesty in its activism.

Read more:

European countries anxious to buy U.S. natural gas

European countries dependent on Russia for natural gas are forming a group to lobby Washington to loosen export restrictions so they can buy the fuel from the United States, according to a media report.

The National Journal reported on its website on Thursday that a dozen countries, most of them in eastern Europe, are working with a Washington firm on a lobbying coalition with U.S. energy companies.

Two trade groups, America's Natural Gas Alliance and the American Petroleum Institute, were helping form the coalition, called LNG Allies, to seek greater access to natural gas from the United States for these countries, the report said.

Countries likely to participate include Austria, the Czech Republic, Estonia, Finland, Latvia, Lithuania, Poland, Romania, the Slovak Republic, Croatia, Hungary, Slovenia and Greece, the Journal reported.

"These countries are all still very heavily dependent upon Russia, and they're excited about getting into the LNG [liquefied natural gas] marketplace, and are looking for not only U.S. gas, but good, solid business relationships," the coalition's organizer, who was not identified, told National Journal.

Read more:

The Weekly Oil & Gas Follies

Each week, Forbes and Energy In Depth columnist David Blackmon will “briefly chronicle the week’s silliness, foibles, fake news and real news related to the oil and natural gas industry.”

Check out this week's here:
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