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November 30, 2016

Texas oil stocks winners after OPEC agreement

See previous story for details of OPEC agreement

OPEC agreed today to cut output 1.2 million barrels per day with October levels as baseline, down to 32.5 million -- Russia to cut 300,000 bbls a day -- other non-OPECs to cut another 300,000 -- Oil closes up at $49.48 bbl

Agreement energizes stocks: Marathon up 22%; Denbury up 22%; Matador up 18%; Approach Resources up 18%; Diamondback up 11%; Abraxas up 11%; Exxon Mobil up 1.6%

By Mike Shiloh

November 30, 2016

Bloomberg: OPEC agrees to production cuts

Iran may have "special status" -- Price of oil up 8% -- News buoys stock market with Dow Industrials to almost 19,225

In a move that might strengthen the oil cartel, The Organization of the Petroleum Exporting Countries -- OPEC -- has decided to cut oil production by as much as 1.2 million barrels per day, according to unnamed sources cited by Bloomberg News.

The target would reduce production to 32.5 barrels per day, a drop of about 1%.

If an official agreement is reached, it would be the first limit on oil output since 2008.

Bloomberg's sources won't go on the record, the news organization says, because there has not yet been an official announcement.

Those sources say OPEC agreed to give Iran special status to pump up to almost 4 billion barrels per day.

Details are expected shortly. There has been no word yet on how much oil production Saudi Arabia and Iraq, specifically, might cut.

If these details play out, the agreement might open up a chance for non-OPEC members to reduce output too. Russia has already said it might go along with cuts if OPEC can reach a consensus.

Meanwhile, energy analysts say the surprising news of production cuts gives weight to the argument that OPEC is still a viable organization.

There has been speculation over the past two years at least that OPEC's inability to reach a consensus on most issues it faced indicated the disintegration of the 14-nation group as a world cartel.

Oil prices began to climb early this morning as the meeting began, with WTI crude up 7.5% at $48.69 a barrel and Brent up 8.1% to reach $50.13.

The news pushed up overall stock averages, with the Dow jumping past 19,225 in early trading.

By Mike Shiloh

November 21, 2016

Senator Van Taylor defends 70% land rights bill

Bill would reduce royalty rights access to 70% from current 100% -- Independent drillers criticize it as "brute force" taking of private land

Texas State Senator Van Taylor says a bill he filed earlier this month for consideration by the legislature will not only open up new oil fields but will make it easier for oil and gas drillers to prevent mischief on the part of environmentalists.

A Texas Energy Report article last week quoted a statement from the Committee of Texas Independents, which called Taylor's bill, SB 177 or The Majority Rights Protection Act, "a way for private oil and gas businesses to enhance their pocket books by imposing their will on other (usually smaller) oil and gas producers and royalty owners by a taking of their private property, using the brute force of government."

The committee also noted that Texas produces more tertiary oil "than the rest of the world combined," so the bill isn't needed. Taylor, however, says the bill, if passed, will bring Texas in line with more than two dozen other oil producing states by allowing 70% of land and royalty owners to okay an oil field for the drilling of secondary and tertiary wells only, rather than the unanimous owner go-ahead required by current law.

Taylor says the law if passed would bring up to an additional $1 trillion into the state economy and create a lot of jobs because of the relaxed royalty rights, encouraging the use of enhanced drilling techniques. The bill covers only rights for secondary and tertiary wells.

The 70% rule would prevent "radical environmentalists" from tying up oil and gas production by purchasing land rights to a small portion of fields and then declining to grant those rights, Taylor said in a new statement.

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By Mike Shiloh

November 21, 2016

TER: Energy Transfer Partners, Sunoco to merge

Pipeline companies to become one entity by next year -- Kelcy Warren to remain as CEO of parent Energy Transfer Equity

Dallas-based Energy Transfer Equity is merging its sister partnerships Sunoco Logistics Partners with Energy Transfer Partners, two companies well known for their pipeline businesses.

In the agreement announced this morning, Sunoco Logistics, based in Philadelphia, plans to acquire Energy Transfer Partners in a merger worth about $20 billion that is expect to close by the end of the first quarter of 2017.

Energy Transfer Equity, however, will remain the parent entity to the newly merged companies.

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By Mike Shiloh

November 18, 2016

Obama ends new Arctic drilling

On its way out, Obama administration closes off all new US Arctic drilling

In a blow to American oil drillers, the Obama administration Friday afternoon announced it will not auction off any drilling rights in US Arctic waters as part of its five-year plan, essentially forcing drillers to concentrate their efforts in the Gulf of Mexico.

The Department of the Interior as recently as this week had left open the possibility of auctioning leases north of Alaska, but in announcing today's decision, Secretary Sally Jewell said only Cook Inlet leases will be offered, declaring the northern waters off limits.

The move is widely seen as a bow to environmentalists, who have contended that oil drilling in Arctic waters runs a high risk of an oil spill. In a statement, Jewell said the plan "focuses lease sales in the best places -- those with the highest resource potential, lowest conflict and established infrastructure -- and removes regions that are simply not right to lease."

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By Mike Shiloh