.The Texas Energy Report

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/…
 

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….
 

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…
 

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.”….
 

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….
 

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….
 

June 2, 2023 — The Railroad Commission of Texas issued a total of 805 original drilling permits in May 2023. The total includes 702 to drill new oil or gas wells, 11 to …

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 …
 

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

May 31, 2023 — The possibility of moving up to 250 million tons of CO2 from sources along the Gulf Coast to a destination station will be studied by San Antonio’s Howard Energy …

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.

________________________________

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…
   

The Texas Legislature has weighed in and the PCM is a go — for now May 30, 2023 — After several close calls in which they almost didn’t make deadlines, a number of …

May 30, 2023 — Oil and natural gas bills quietly passed the Texas Legislature with new laws affecting mineral contracts and forward-thinking concepts like turning orphaned wells into geothermal energy projects, but the …

May 30, 2023 — We’re closely watching more than 83 bills making their way through the Texas Legislature. We list them here along with excerpts of reaction from Texas news media and op-eds. Also listed are a number of bills that are not moving. We are working to include a few bills that have been left out.

This list is being continually updated. HB = House of Representatives bill  SB = Senate bill   HJR = House Joint Resolution  SJR = Senate Joint Resolution  Companion bills (bills that are the same or very similar, one in the House, the other in the Senate) are grouped together

Looking for a certain bill number? On computer, please use your “find on page”

OIL AND GAS BILLS THAT HAVE PASSED

Texas Energy Independence Act

HB 33 — identical companion bill SB 470 by Springer — aimed at fending off implementation of any new federal regulations on oil or natural gas production in Texas — filed Nov. 14th, sent to House Energy Resources committee Feb. 23rd, public hearing March 27th, passed by the House May 5th, sent to the Senate Natural Resources & Economic Development committee May 9th, public hearing May 18th, substitute bill adopted May 19th, passed by the Senate May 22nd, reconciled May 25th, awaiting the Governor’s signature

SB 470 — companion bill HB 33 — filed Jan. 13th, sent to the Senate Natural Resources & Economic Development committee Feb. 17th

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Landmen & land services

SB 604 — companion bill HB 1915 by Hefner — land services performed by a landman — “the practice of law does not include engaging in land services … the acts are performed by a person who does not hold out the person as an attorney license to practice law in this state” — in Senate Natural Resources & Economic Development committee February 17th, public hearing March 22nd, committee substitute April 4th, passed the Senate April 12th, received in the House April 12th, sent to Senate Energy Resources committee April 14th, reported without amendments May 2nd, amended May 6th, passed by the Senate May 8th, Senate concurs with House amendment May 11th, signed and sent to the Governor May 12th, signed by the Governor May 24th

HB 1915 — companion bill SB 1915 — land services performed by a landman — “the practice of law does not include engaging in land services … the acts are performed by a person who does not hold out the person as an attorney license to practice law in this state” — in House Energy Resources committee March 8th, public hearing March 27th & April 3rd, substituted April 3rd, placed on general calendar, then postponed May 3rd, left on the table subject to call May 5th

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Orphaned well designation: Effective September 1st

SB 1210 — identical companion bill HB 3131 by Guerra — authority for the Railroad Commission of Texas to designate certain persons as the operator of an orphaned oil or gas well — filed Feb. 24th, referred to Senate Natural Resources & Economic Development committee March 9th, public testimony taken March 29th, substitute bill made April 11th, placed on local & uncontested calendar April 20th, passed the Senate April 20th and sent to the House, referred to the House Energy Resources committee April 21st, reported without amendments May 2nd, sent to Calendars May 4th, passed by the House May 5th, signed by the Governor May 19th

HB 3131 — companion bill is SB 1210 — authority for the Railroad Commission of Texas to designate certain persons as the operator of an orphaned oil or gas well — filed March 14th, sent to House Energy Resources committee March 14th, public hearing April 10th, committee substitute April 18th as CSHB 3131, sent to House Calendars April 24th, placed on general state calendar May 1st, postponed May 4th, left on the table subject to call

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Texas Produced Water Consortium: Effective Immediately

SB 1047 — funding and activities of the Texas Produced Water Consortium by Perry — in Water, Agriculture & Rural Affairs committee March 3rd, pubic hearing April 17th, placed on intent calendar April 19th, passed Senate April 20th, received in the House April 21st, referred to House Natural Resources committee April 24th, laid out in lieu of companion April 27th, passed House April 28th, sent to the Governor May 2nd, signed by the Governor May 13th, effective immediately

HB 2757 — funding and activities of the Texas Produced Water Consortium by Tepper (identical companion bill SB 1047) — now CCHB 2757 — see the bill analysis here — in House Natural Resources committee March 13th, public hearing March 21st, amendments added March 23rd, committee report sent to the House March 30th, placed on general state calendar April 26th, considered then postponed in favor of companion bill SB 1047

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O&G Royalty Interest: Becomes law Sept. 1st

HB 450 (final version) — from Rep. Tom Craddick and Burrows et al — companion bill SB 501 — cause of action for the bad faith washout of an overriding royalty interest in an oil and gas lease — in House Judiciary & Civil Jurisprudence committee February 23rd, public hearing March 15th, sent to full House March 21st, passed the House and sent to the Senate April 11th, public hearing April 18th in Administration committee, placed on local and uncontested calendar April 19th to go to the governor, then removed April 20th, returned to local & uncontested calendar & passed by the Senate April 27th, sent to the governor May 2nd, filed without the governor’s signature May 13th

SB 501 — companion bill HB 450 — cause of action for the bad faith washout of an overriding royalty interest in an oil and gas lease — in Senate Natural Resources & Economic Development committee February 17th, public hearing March 29th, left committee April 4th, placed on local & uncontested calendar April 12th, removed from calendar April 12th

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“The Ch. 313 replacement”

HB 5 — Establishing a tax incentive program aimed at creating jobs and bringing business to Texas — widely seen as an attempt to replace the Chapter 313 tax incentive program that expired at the end of last year, but would not include “grid reliability” projects, including some O&G projects, from much of the provisions —  Houston Chronicle analysis here — see public comments here — see the Chronicle’s Chris Tomlinson’s critique here — filed Feb. 28th, sent to House Ways & Means committee March 1st, public hearing April 10th, another public hearing then committee substitute adopted April 24th, to Calendars May 2nd, considered by the full House, amendments offered but not adopted May 4th, passed by the House May 4th, received by the Senate May 8th, referred to Senate Business & Commerce committee May 9th, set for public hearing May 18th, substituted May 22nd, passed the Senate May 24th, signed by Legislature and sent to the Governor May 29th

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Renewal of TCEQ under Sunset

SB 1397 — companion bill HB 1505 — renewal of the TCEQ under the state Sunset guidelines, would increase penalties that can be …
 

May 29, 2023 –Governor Greg Abbott about 9 Monday night officially called a special session of the Texas Legislature to take up only border security and property taxes — but he called it “special session #1,” indicating the first in a series of special summer sessions.

Gov. Abbott said the session begins immediately — at 9 pm Monday; like, now. (See the full proclamation below.)

Earlier in the evening, three energy-related suggestions were made by the Texas Lieutenant Governor for legislative action in a likely special session of the state legislature….

May 29, 2023 — The 88th Texas Legislature ended Monday evening on an uncertain note, without the “must-pass” property tax cuts and with a special session certain and imminent; details are expected as soon as tonight, with Aug. 28th set as the deadline.

Texas Energy Report is preparing a session wrap-up report to appear Tuesday morning.

— In case you missed it, the lead story in this morning’s TER NewsClips is ConocoPhillips‘ 50% stake buy-in (for about $3 billion) in the Surmont oil facility held by TotalEnergies’ Canadian subsidiary

— The Texas Senate‘s impeachment trial of Attorney General Ken Paxton is expected sometime this summer.

Lt. Gov. Dan Patrick will set trial date and all the Senate must convene, must accept charges made by the House, and a two-thirds vote is required to remove Mr. Paxton from office.

The impeachment committee that will prosecute Attorney General Paxton was named on Monday, with the prosecution committee from the House made up of Rep. Andrew Murr (R) as chairman, Rep. Ann Johnson (D) as vice chair; and “managers” will be Reps. Charlie Geren (R); Joe Moody (D); Jeff Leach (R); Terry Canales (D); Briscoe Cain (R); Oscar Longoria (D); Morgan Meyer (R); Cody Vasut (R); Erin Gámez (D); and David Spiller (R)

A Senate panel of seven people will suggest procedure for the trial, with Sen. Brian Birdwell (R) as chairman, Sen. Juan “Chuy” Hinojosa (D) as vice chair; Sens. Brandon Creighton (R); Royce West (D); Pete Flores (R); Joan Huffman (R) and Phil King (R) filling out that panel.

May 29, 2023 — The Texas Legislature finally agreed on several energy-related bills on the eve of Memorial Day, the final official day of the 2023 session.

As it started to get dark, a compromise was reached on Senate Bill 2627 (Conference committee report) regarding low interest (or even no-interest) state funding for new or enhanced power plants and an agreement released from the conference committee, backdated.

The latest version of the bill, which is headed to Governor Greg Abbott‘s desk, still includes budgeting $5 billion to pay for bonuses to those entities getting plants ready and connected to the grid by June 1st, 2026 ($120,000 per megawatt of capacity) or June 1st, 2029 ($80,000 per megawatt capacity).

The enabling legislation, SJR 93 (amended), for a constitutional amendment and public vote for the creation of the Texas energy fund, has passed conference and is headed to the Governor.

The bill agreement was reached more than 18 hours after the legislative deadline of midnight Saturday night, but is considered okay to move forward.

Also better late than never was…
 

May 27, 2023 — The Texas House on Saturday afternoon voted to impeach Republican Attorney General Ken Paxton, removing him from office at least temporarily while he awaits a trial in the state …

By Alex Mills

Retail gasoline prices are more than $1 per gallon lower this Memorial Day weekend than last year, and AAA expects more traffic on the highways.

AAA expects 6% more Memorial Day weekend road trips in 2023 than in 2022.

Even though U.S. retail gasoline prices are lower than 2022, prices are relatively high compared to previous years according to a report from the Energy Information Administration (EIA).

“Heading into Memorial Day weekend 2023, the U.S. retail gasoline price averaged $3.53 per gallon, or $1.24 (26%) lower than the inflation-adjusted price one year ago,” EIA stated in its report issued on Wednesday.

“Despite this price decrease, retail gasoline prices remain relatively high. This year’s price is higher than the inflation-adjusted prices of $3.38 in 2019, $2.22 in 2020 (when responses to the COVID-19 pandemic decreased demand for petroleum products), and $3.41 in 2021,” EIA stated.

Gasoline prices follow crude oil prices closely. When market conditions for both commodities are tight prices tend to follow. In recent years, a global pandemic and Russia’s invasion of Ukraine have played key roles in energy prices….
 

May 25, 2023 — The Supreme Court on Thursday ruled against the Environmental Protection Agency in a dispute over its authority to regulate certain wetlands under the Clean Water Act, long seen as a key tool to protect waterways from pollution…