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New University of Texas/Texas Politics Project Poll Finds Little Confidence In the Legislature’s Efforts to Address Key Issues

By Jim Henson & Joshua Blank, Texas Politics Project at the University of Texas

June 23, 2023 — After a regular legislative session that found lawmakers attempting to use a historic budget surplus to address major fiscal issues and infrastructure needs while also pushing some cultural hot buttons, the latest University of Texas/Texas Politics Project Poll found Texas voters with low expectations of the impact of their actions, and dim views of the legislature’s responsiveness.

When asked in general terms about their confidence in legislative efforts to address areas deemed critical by voters in Texas Politics Project polling conducted earlier in the session, most Texas voters lacked confidence in lawmakers’ efforts. Fewer than one in five voters was willing to say they were ‘very’ or ‘extremely’ confident that the legislature had increased the reliability of the electric grid or the water supply, improved the safety of Texas’ public schools, or improved security along the Texas-Mexico border.

In a more general assessment that also illustrates Texans’ low expectations of the legislature’s efforts, asked at the conclusion of the regular session whether the legislature had “made the lives of Texans like you better, made the lives of Texans like you worse, or had no impact on the lives of Texans like you,” only 5% said the legislature had made their lives “a lot better,” joined by 24% who agreed that lawmakers had made their lives “somewhat better.” The plurality, 26%, expected no impact, while 3 in 10 expected the legislature to have made Texans’ lives “somewhat worse” (16%) or “a lot worse (14%).

At the same time, nearly half of Texans (49%) said that Texas’ state government “mostly ignores the needs of Texas residents” — up nearly 20-points since the question was first asked in October of 2012 — while only a little more than a third (36%) said that state government mostly addresses Texans’ needs — down from 54% in October 2012.

As the Texas legislature remains riven by intra-party conflict over property tax reform during the current (first called) special session, Texas voters expressed disapproval of legislative efforts on key issues flagged as priorities by the state’s leadership and, in some cases, by voters themselves, according to results in the latest UT/TXPP Poll. The most striking examples of public skepticism toward recent and current legislative efforts were in response to issues voters identified as urgent in Texas Politics Project Polling conducted earlier in the legislative session: property tax reduction, the reliability of the electric grid, and school safety.

THE PROPERTY TAX IMPASSE

Texans largely disapproved when asked to rate legislative efforts to reduce property taxes, with 45% disapproving and only 25% expressing approval. While all three of the state’s major elected leaders – the governor, lieutenant governor, and Speaker of the House – publicly prioritized cutting property taxes prior to the session, and subsequently committed large shares of the state’s budget surplus to that effort, the House and Senate failed to agree on an approach to achieving those cuts, leading to an impasse that has continued into a special session called by Gov. Abbott to address the issue. This state of affairs appears to be informing public evaluations.

Voters’ evaluations of state leaders’ attempts to reduce property taxes saw the lowest total approval rating from among 16 issue areas voters were asked to evaluate, as well as the lowest net approval rating (-20)…
 

ERCOT Is a State Agency, Cannot Be Sued In Official Capacity: State Supreme Court

June 23, 2023 — The Texas Supreme Court ruled Friday that the Electric Reliability Council of Texas cannot be sued for damages that happened during Winter Storm Uri.

The state high court affirmed sovereign immunity for ERCOT, placing it firmly within Texas government, thereby placing it outside vulnerability to lawsuits based on the execution of ERCOT’s official duties and actions.

The 5-4 ruling is a reversal of an earlier lower court ruling stating that ERCOT, as a non-profit corporation, is not a government agency…..
 

Governor Vetoes Energy Bills: Special Session Action On the Way?

June 21, 2023 — Governor Greg Abbott has been vetoing bills related to energy matters, along with nearly 70 other unrelated bills, perhaps signalling at least some energy bill activity this summer in upcoming special sessions.

The governor’s deadline to sign most bills was Sunday, June 19th.

Governor Abbott and Lt. Gov. Dan Patrick have been feuding over details of property tax relief legislation during the current special session; the two have competing plans, with Gov. Abbott threatening to veto bills related to property taxes and other bills that might be brought up again later.

Mr. Abbott made good on those threats over the weekend.

Prominent among those vetoed bills is Senate Bill 1404, which would have created a coal-to-nuclear conversion work group to study the benefits of converting sites in Texas “with coal-fired electric generating facilities to use nuclear electric generating facilities instead and to develop a model plan for implementing coal-to-nuclear conversion to provide affordable and sustainable power in Texas,” according to the bill analysis.

In his veto proclamation, Gov. Abbott wrote, “While Senate Bill No. 1404 is important, it is simply not as important as cutting property taxes. At this time, the legislature must concentrate on delivering property tax cuts to Texans. This bill can be reconsidered at a future special session only after property tax relief is passed.”

In fact, the Mr. Abbott made that same proclamation about the following three bills too:

The governor vetoed SB 2010, which would have required the independent market monitor’s existing report to provide more information and be more widely distributed and to require the Public Utility Commission of Texas (PUC) to provide an annual report regarding these issues to the legislature.

And SB 2399, also vetoed by Mr. Abbott, would have clarified rules about Voice over Internet Protocol (VoIP), a technology used by a variety of providers in telecommunications and broadband. VoIP technology can help lower costs and provide a more robust, reliable network.

Recently, the general counsel of the PUC took “as a new position in a proceeding that the PUC does not have jurisdiction to grant a service provider certificate of operating authority to VoIP providers, but that position is seen as contrary” to extensive PUC precedent.

HB 4106, also vetoed, would have directed the PUC to simplify the complaint resolution process when a tenant and owner have a small (under $500) discrepancy on a water…
 

Texas Petro Index In a Three-Month Decline

By Alex Mills

Mixed economic indicators for the upstream oil and gas industry in Texas have industry watchers wondering which direction the industry will be going during the remainder of the year.

The Texas Alliance of Energy Producers’ “Texas Petro Index” (TPI) has declined during the last three months, but is still ahead of the same period in 2022.

The culprit: primarily lower prices.

“Once again, weak pricing for crude oil and natural gas are largely responsible for the decline, with downward pressure on the index coming from prices themselves, as well as the falling value of crude oil and natural gas production,” Alliance Executive Vice President Karr Ingham, who is a petroleum economist and author and founder of the TPI, said.  “Drilling permits are the other TPI component to register year-over-year negatives for April and the first four months of the year.”

 

Company Planning Freeport-Area Small Modular Nuclear Reactor Re-Values Deal

June 13, 2023 — Modular nuclear reactor company X-Energy Reactor and Ares Acquisition Corporation have revised downward the valuation of their partnership from $2.1 billion to $1.8 billion with hope of establishing a more attractive entry point for investors — but the re-valuation doesn’t affect the partnership’s proposed advanced small modular reactor nuclear project at the Dow Seadrift plant near Freeport.

Dow and X-energy are to continue to prepare and submit to the US Nuclear Regulatory Commission a construction permit application, as announced last month, with an aim for construction to begin in 2026.

X-Energy said Monday the announcement of the Dow Seadrift project was made after the …
 

Governor Abbott Signs Several Bills: Promoting Energy Efficiency, Adding RRC Jurisdiction & More

June 13, 2023 — The move toward increasing energy conservation is underway in Texas with Governor Greg Abbott‘s signing on Monday of a bill from the Texas Legislature to bring a statewide framework for the implementation of natural gas-saving programs.

HB 2263, authored by Rep. Drew Darby, was written as an attempt to bring together a wide-ranging array of programs from natural gas suppliers directly to homes and businesses that promote energy efficiency in order to reduce electricity consumption.

The new law goes into effect…
 

Texas Oil and Gas Production Statistics for March 2023: RRC

June 12, 2023 — Crude oil and natural gas production as reported to the Railroad Commission of Texas (RRC) for March 2023 came from 160,742 oil wells and 87,487 gas wells.

Crude oil production reported by the RRC is limited to oil produced from oil leases and does not include condensate, which is reported separately by the RRC. For full oil and gas production statistics, you can visit the links below.

Statewide totals: https://www.rrc.texas.gov/oil-and-gas/research-and-statistics/production-data/texas-monthly-oil-gas-production/

County rankings: https://www.rrc.texas.gov/oil-and-gas/research-and-statistics/production-data/texas-monthly-oil-gas-production-by-county-ranking/
 

ERCOT Adds New Ancillary Service to Support Grid Reliability: Press Release

June 12, 2023 – ERCOT has launched the ERCOT Contingency Reserve Service (ECRS), a new daily procured Ancillary Service. As energy demand continues to grow in Texas, adding ECRS will support grid reliability and mitigate real-time operational issues to keep supply and demand balanced.

“As summer temperatures begin to rise across Texas and with high demand forecasted, we will continue to use all operational tools available, including implementation of new programs like ECRS,” said ERCOT President and CEO Pablo Vegas. “ERCOT will also execute previous sessions’ legislative reforms, such as our weatherization inspections, and we’ll continue our reliability-first approach to operations, always prioritizing grid reliability.”

ECRS will complement and provide support to the four procured Ancillary Services ERCOT currently uses: Regulation Up, Regulation Down, Responsive Reserve Service and Non-Spin Reserve Service. The public can view the Ancillary Services and system frequency dashboards here.

ECRS is the first daily procured Ancillary Service introduced to the ERCOT market in more than 20 years….
 

Governor Abbott Signs More Energy-Related Bills: Here They Are

June 12, 2023 — Among the results of the Texas Legislature‘s examination and approval of possible upgrades for the ERCOT (and non-ERCOT) grid system in the state are several bills that have now become law with their signing by Governor Greg Abbott in the past several days.

One thing is clear: The state legislature has endorsed for now, with some substantial changes, the Performance Credit Mechanism for ERCOT.

Two bills that could result in the building of more power plants have been getting all the publicity. They are:

Senate Bill 2627 (signed by the Governor but requires a public vote on November 7th of this year) — creating the Texas Energy Fund, providing up to $10 billion in loans and grants to incentivize the construction, maintenance and operation of electric generating facilities to ensure the reliability of the ERCOT grid.

At the signing, Governor Abbott said, “It provides low-interest loans for the construction of up to 10,000 MW of new dispatchable power generation and provides related completion bonuses to help bringing facilities online as quickly as possible. Companies must apply for those loans by the end of the year.  And it provides grants for backup power and improvement of transmission and distribution facilities for non-ERCOT regions of Texas.”

The bill requires a change to the Constitution of Texas and therefore a public vote is needed through SJR 93, which has been filed with Secretary of State Jane Nelson.

 

House Bill 1500, the “Sunset Bill for the Public Utility Commission of Texas and the Office of Public Utility Counsel,” which Governor Abbott said “ensures greater public stakeholder input at commission meetings” and “clarifies the PUC’s complete oversight of ERCOT and established guardrails” over the PCM (the Performance Credit Mechanism) ensuring that “costs associated with building new transmission lines are more evenly shared between the generation resource and the broader customer base.”

It also instructs ERCOT to “procure a new ancillary service designed to help ERCOT account for certain operational challenges” and establishes “performance requirements for certain generation resources to ensure a more reliable and predictable grid.”

And it instructs ERCOT to “make information related to unplanned outages of generation resources more publicly accessible and provides for a greater transparency in reporting of any potential misconduct in the ERCOT market.”

The PUC adopted the PCM just after the start of the just-ended regular legislative session, helping to ensure that new power plants are profitable while paying bonuses to reliable power plants for firing up when needed.

The Texas Senate added more than a dozen new guidelines as amendments to the original HB 1500 for companies to gain the credits, adding a penalty up to $1 million for a violation of a voluntary mitigation plan, defining some energy resource references, requirement of notice of “material” unplanned service interruptions within a reasonable time, adding the “postage stamp” method of pricing and adding more duties for the PUC, among other changes.

It becomes effective September 1st.

 

9 Other Bills Now Law

Among the lesser-known bills that are now law following the governor’s signing:

SB 2013 — “This bill protects the Texas electric grid from hostile foreign nations and actors,” Governor Abbott said at the signing ceremony. It’s aimed at “ensuring…
 

Railroad Commissioners Push Back on Anti-Fossil Fuel Legislation Before Congress: RRC

June 8, 2023 — RRC Chairman Christi Craddick, Commissioner Wayne Christian, and Commissioner Jim Wright each sent letters to Texas Senator John Cornyn and Commerce, Science & Transportation Ranking Member Senator Ted Cruz outlining concerns about S.576, the Railway Safety Act of 2023, and its specific impacts on the energy supply chain in America. They are concerned the legislation grants rulemaking authority to the U.S. Department of Transportation that could detrimentally limit the transport of fossil fuel-based energy products on freight cars.

“The current federal administration is doing everything it can to limit domestic energy production, and this bill is just the latest effort to shut down the oil and gas industry in America,” said Chairman Christi Craddick. “I urge members of the Senate Committee on Commerce, Science, & Transportation, and members of Congress to implement guardrails in this legislation before it moves forward. Americans are already paying the price for failed energy policies coming from the federal government – we can’t afford to limit our access to clean, responsibly produced energy anymore.”….
 

Petroleum Market ‘Remains Highly Uncertain’

By Alex Mills

Demand up, supplies questionable, and price “remains highly uncertain.”

That’s a summary of the Energy Information Administration’s (EIA) short-term market forecast for petroleum products released this week.

“We expect to see demand for travel to increase, which drives our forecast for record consumption of petroleum products,” said EIA Administrator Joe DeCarolis. “The petroleum market remains highly uncertain, so we will continue monitoring developments and tracking supply and demand dynamics.”

EIA forecast Brent crude oil price, which is traded on the international exchange, will average $79 per barrel during the second half of 2023 and $84 during 2024. Brent closed on Wednesday at $76.89, and West Texas Intermediate closed at $72.49.

EIA believes global oil inventories will decline slightly during the remainder of this year primarily because of Saudi Arabia’s announcement on June 4 that it will reduce production 1 million barrels per day (b/d) beginning July. OPEC+ produces about 40% of the world’s oil supplies (40 million b/d). Saudi Arabia produces about 10 million b/d.

This is the second cut this year. Saudi Arabia and Russia said they would reduce production by 1.6 million b/d in April. Market analysts question the validity of Russia’s production, because Russia dumps huge volumes of cheaper crude to get around sanctions placed by U.S. on other countries.

EIA forecast global liquids fuels consumption will rise by 1.6 million b/d in 2023 from an average of 99.4 million b/d last year. Consumption grows by an additional 1.7 million b/d in 2024. Most of this growth comes from non-OECD countries….
 

US Electricity Generation from Natural Gas Was Highest on Record This Past Winter: EIA

U.S> winter electricity generation from natural gas

Data source: U.S. Energy Information Administration, Short-Term Energy Outlook

According to our Short-Term Energy Outlook (STEO), U.S. electricity generation from natural gas reached a record-high 619 billion kilowatthours (BkWh) during the most recent winter heating season (November 1–March 31), averaging more than 120 BkWh per month and accounting for 38% of the country’s electricity generation mix. Electricity generation from natural gas increased in the United States this past winter due to increased demand for electricity and continued reductions in electricity generation from coal….
 

PUC Chairman Peter Lake Resigns

June 2, 2023 — Texas PUC Chairman Peter Lake has resigned effective July 1st, Gov. Greg Abbott announced on Friday, with Chairman Lake drawing praise for his tumultuous tenure while the Governor said he would name a replacement.

Mr. Lake took over the agency just two months after Winter Storm Uri knocked out power in much of the state, providing a steady hand during a restructuring of ERCOT and new staffing at the PUC, while working to reassure electricity customers that work is underway to restore reliability to the system.

He’s been a major mover in trying to implement the Performance Credit Mechanism (PCM), an attempt to meet the requirements of the 87th Legislature‘s Senate Bill 3, requiring the PUC to create grid reliability standards.

The PCM plan was …
 

Weekend Kickoff Buzz from the Texas Energy Report

Public Utility Commission Chairman Peter Lake has resigned — Gov. Abbott says Mr. Lake is leaving the agency July 1st

Gov. Abbott on Friday signed HB 591, introducing severance tax exemptions for well and pipeline companies that put to use on-site natural gas that would otherwise be normally vented or flared, including use for powering bitcoin mining data centers — authority is granted to the RRC, the law becomes effective Sept. 1st

And he signed SB 786, removing the TCEQ from jurisdiction over closed-loop geothermal injection wells, placing them entirely under the regulatory authority of the RRC

Mr. Abbott also signed SB 246, shifting some of the duties of the Texas Department of Licensing and Regulation — including the removal of TDLR’s regulation authority over LPG, among other things

Gov. Abbott on Friday signed SB 1364, changing the amount by which a vehicle primarily powered by a natural gas engine may exceed a statutory weight limitation on the Interstate Highway System

And the Governor has signed HB 3390, allowing the PUC to create its own protocols requiring distributed generation operators to provide information that ERCOT “determines is necessary for maintaining system reliability” by Sept. 1st of this year — the new law includes storage facilities

Finally, Gov. Abbott also on Friday signed SB 1860, requiring Texas legislative approval of a proposed municipal climate charter (such as has been proposed for El Paso) before the municipality may hold an election on the charter, effective Sept. 1st

Houston driller Diamond Offshore is moving its headquarters toward the end of the year — the new offices in the Energy Corridor will be more compact but will remain in the One Eldridge building, according to Granite Properties

 

They’re All In: The TER 1st Quarter 2023 Texas Energy Companies Earnings Roundup

This Texas Energy Report database is published each quarter and is updated as earnings are released throughout the reporting period.

Click on the name of the company for more information about the quarterly earnings report, usually from the company’s own press release

 

AEP

American Electric Power (Nasdaq: AEP) today reported first-quarter 2023 earnings, prepared in accordance with Generally Accepted Accounting Principles (GAAP), of $397 million or $0.77 per share, compared with GAAP earnings of $715 million or $1.41 per share in first-quarter 2022. Operating earnings for first-quarter 2023 were $572 million or $1.11 per share, compared with operating earnings of $616 million or $1.22 per share in first-quarter 2022.

Operating earnings is a non-GAAP measure representing GAAP earnings excluding special items. The difference between 2023 GAAP and operating earnings for the quarter was largely due to the mark-to-market impact of commodity prices on economic hedging activities and charges related to the anticipated sale of the unregulated contracted renewables portfolio. A full reconciliation of GAAP earnings to operating earnings for the quarter is included in the tables at the end of this news release.

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Amplify Energy

    • Achieved average total production of 19.4 MBoepd
    • Generated net cash provided by operating activities of $90.3 million and net income of $352.8 million
    • Delivered Adjusted EBITDA of $25.8 million
    • Generated $11.4 million of free cash flow
    • Reduced debt outstanding by $65 million
  • Announced the appointments of Dan Furbee, as the Company’s Senior Vice President and Chief Operating Officer, and Jim Frew, as the Company’s Senior Vice President and Chief Financial Officer
  • As of April 30, 2023, net debt was $109 million, consisting of $125 million outstanding under the revolving credit facility and $16 million of cash on hand
    • Net Debt to Last Twelve Months (“LTM”) Adjusted EBITDA of 1.1x1
  • Reaffirmed our full-year 2023 guidance

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APA

  • Reported production of 394,000 barrels of oil equivalent (BOE) per day; adjusted production, which excludes Egypt noncontrolling interest and tax barrels, was 318,000 BOE per day; 
  • Generated net cash from operating activities of $335 million, adjusted EBITDAX of $1.3 billion, and free cash flow (FCF) of $272 million;
  • Strong operational execution drove higher-than-expected 1Q adjusted oil production; 
  • Returned 81% of first quarter FCF to shareholders, reiterating commitment to minimum 60% capital return framework; and 
  • Announced reduction in 2023 capital investment by $100 million in response to lower Permian Basin natural gas prices; full-year capital budget now set at $1.9- to $2.0 billion.

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Archrock Inc.

  • Revenue for the first quarter of 2023 was $229.8 million compared to $197.2 million in the first quarter of 2022.
  • Net income for the first quarter of 2023 was $16.5 million compared to $1.7 million in the first quarter of 2022.
  • Adjusted EBITDA (a non-GAAP measure defined below) for the first quarter of 2023 was $97.2 million compared to $81.4 million in the first quarter of 2022.
  • Declared a quarterly dividend of $0.15 per common share for the first quarter of 2023, resulting in dividend coverage of 2.0x, and announced a $50 million share repurchase authorization.
  • Achieved record period-end utilization of 94% for the first quarter of 2023 compared to 84% in the first quarter of 2022.
  • Trending toward the high-end of 2023 Adjusted EBITDA guidance range of $400 million to $430 million.

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Atmos

  • Earnings per diluted share was $4.40 for the six months ended March 31, 2023; $2.48 per diluted share for the second fiscal quarter.
  • Consolidated net income was $629.5 million for the six months ended March 31, 2023; $357.7 million for the second fiscal quarter.
  • Capital expenditures totaled $1,415.3 million for the six months ended March 31, 2023, with approximately 86 percent of capital spending related to system safety and reliability investments.

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Baker Hughes

  • Orders of $7.6 billion for the quarter, up 12% year-over-year.
  • Revenue of $5.7 billion for the quarter, up 18% year-over-year.
  • GAAP operating income of $438 million for the quarter, up $160 million year-over-year.
  • Adjusted operating income (a non-GAAP measure) of $512 million for the quarter, up 47% year-over-year.
  • Adjusted EBITDA* (a non-GAAP measure) of $782 million for the quarter, up 25% year-over-year.
  • GAAP diluted earnings per share of $0.57 for the quarter which included $0.28 per share of adjusting items. Adjusted diluted earnings per share (a non-GAAP measure) was $0.28.
  • Cash flows generated from operating activities were $461 million for the quarter. Free cash flow (a non-GAAP measure) for the quarter was $197 million.

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Baytex Energy (Canada, active in Eagle Ford)

On February 28, 2023, Baytex announced the acquisition of Ranger, a pure play Eagle Ford operator.

  • Entered into an agreement to acquire Ranger Oil Corporation (“Ranger”) for approximately US$2.5 billion.
  • Generated production of…