Hitting the Brakes on Gas

While the Permian is all gas and no brakes (except takeaway constraints), the Haynesville and Marcellus shows signs of slowing

Calgary, Alberta (December 7, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released several natural gas-focused reports.

EIR’s Permian Gas Report investigates whether we have seen operators shift activity to gas production because of higher natural gas prices and analyzes how relative well-level economics compare between gassy and oily regions. Also included is EIR’s view on Permian gas takeaway and expectations for Waha basis differentials in the near term. Since the beginning of 2021, EIR has seen a substantial rally in spot natural gas prices, resulting in a shift in permitting activity across the Delaware Basin.

“Permitting activity across the Delaware has shifted from the liquids-rich regions of the basin to the gas-weighted areas,” said Stephen Pratt, report author and senior associate at EIR. “The relative well-level economics in the gas-weighted areas generate comparable returns and value when compared to the core of the basin and should compete for capital for operators with regional optionality.”

EIR analysts also investigated well productivity in the Haynesville and Marcellus and looked at operational trends in its U.S. Gas Productivity report. Their findings estimate how productivity per foot will likely change in each of the two plays in 2023.

“Average well productivity has increased this year in the Haynesville, deteriorated in the northeast Marcellus and remained flat in the southwest Marcellus” added Jimmy McNamara, vice president at Enverus Intelligence Research and report author.

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

About Enverus
Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Media Contact: Jon Haubert | 303.396.5996

3 Key Efficiency Metrics for Enhanced Operations With PRISM Activity Analytics

Adding confidence to efficiency metrics

Understanding the timing of each stage of preproduction, known as efficiency metrics, is imperative for having confidence in forecasting cycle times of operators and service companies. This helps ensure equipment is fully utilized and groups know what’s needed for each development phase.

To decipher efficiency metrics, it’s necessary to create a complete picture of what happens pre-production, including permits, pad construction, spud, rig release, DUC and turning-in-line first production.

Luckily, Enverus has made identifying these metrics easier than ever. Let’s take a look at three key efficiency metrics that can be identified using Enverus’ Activity Analytics within PRISM.

Conversion rates: Identify areas of growth

Conversion rate is a good key performance indicator (KPI) for permit as it helps identify areas where operators continue to invest by showing who follows through on drilling commitments. As we have seen in areas like the Delaware Basin, where regulatory environments can be in flux, operators may stock up on permits before administration changes. But those permits aren’t a true indication of planned activity. Being able to identify continued investment beyond the initial drilling permit instills confidence in which sites will be developed and where production will be coming from.

We can look at conversions, or the number of permits with detected pad construction. Evaluating conversions across basins helps decide if permits are good indicators for growth.

Permit numbers  can be a quick way to gauge changes in future activity. However, some basins are far from a reliable indicator. PRISM Activity Analytics makes it easy to see this KPI change. As illustrated in Figure 1, Marietta has an ideal conversion rate of 1-1. This instills more confidence in areas with high conversion rate, compared San Juan or even parts of the Permian where permits are more speculative.

For drilling, we can add confidence to our analysis by detecting exactly when rigs move to the pad

Correlating GPS data with Activity Analytics satellite and radar data, the operators drilling the well and the contractors on site, also increases confidence in drilling analysis. This gives us a better sense of the changing market share, who’s holding steady, declining or increasing.

Figure 1: Conversion rate for permitted pads to pad construction.

DUC inventory count: Indicator for future activity

As we consider outstanding investments in an area, DUC inventory is a key metric that offers insights on future activity levels. During the pandemic, we observed operators following through on drilling commitments and completing rig contracts, but not bringing frac crews on site to convert the DUCs.

Figure 2: Exxon Permian rigs through time.

For example, in Figure 2 and 3, we see Exxon maintaining their rig obligations in the Permian through the first portion of 2020, with an associated DUC build, but not bringing crews to continue work on those DUCs until much later.

Figure 3: Exxon Permian DUCs through time.

With PRISM, we can see frac crews arriving on site and determine how long the DUCs have been sitting to evaluate which is closest to development. Not all DUCs are created equal, so understanding which well will be prioritized allows for more competitive service bids, better volume predictions and more accurate understanding of oilfield activity.

Downtime: Improve planning and financial modeling

Understanding the typical duration for each instance of work and the downtime between development phases enables better planning and financial modeling. With Activity Analytics, we can evaluate efficiency at every stage, including KPIs for:

  • Permit to spud. Instead of taking a permit at face value, users can understand how immediately applicable a permit is to an operator’s development schedule, and how likely the permit is to be acted upon.
  • Spud to rig release. Given that not all drilling jobs require equal work, users can anticipate how long equipment will be needed on site, allowing for more competitive bid creation and higher win rates.
  • Completion to first production. Ideally, all available production will be turned in line as soon as possible. However, timing may be dependent on infrastructure constraints, weather conditions or lease conditions. Understanding the turnaround time from completion to TIL allows users to understand when volumes will enter gathering systems and impact prices, and when different equipment will be necessary.

Data for Lower 48 basins indicates that the overall efficiency timeline takes from a few months to more than a year, underscoring the need to get to know your operators’ behavior. PRISM also makes it easy to apply a cluster plot to any of these well stages to get a feel for how much we can trust the numbers.

Activity Analytics provides insight into each separate phase of development, from permit to production, and enables more specific business development, transparency into proposed schedules and enhanced equipment utilization. Without PRISM, teams are reliant solely upon reported data and quarterly updates.

Click here to learn more about how Activity Analytics can help you optimize the many stages of preproduction, and fill out the form below to speak with an Enverus expert.

2023 Outlook: Oil to Rise, Gas to Drop

Near-term recession concerns and oil price weakness should not obscure a tight oil supply outlook that should spark $100/bbl oil in 2023. NYMEX natural gas meanwhile should dip into the $3.50s next summer.

Calgary, Alberta (December 6, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released its latest Macro Forecaster, a report that looks at near-term oil and gas balances, recession risks, Russian-Ukraine war impacts, COVID-19 demand impacts in China and OPEC’s decisions on oil supply.

“U.S. oil supply has disappointed this year, forcing us to downgrade our growth expectations significantly. We now forecast U.S. supply growth of 560 Mbbl/d E/E in 2023,” said Bill Farren-Price, report author and a director at EIR.

“We forecast U.S. gas demand growth of 2 Bcf/d in 2023, down 2 Bcf/d versus 2022. Demand gains into 2023 will be limited after a record 32.9 Bcf/d of gas consumption for power in 2022,” Farren-Price said.

Key takeaways the report:

  • EIR expects near-term recession concerns and oil price weakness to not obscure a tight supply outlook for 2023, when we forecast Brent pinned above $100/bbl on the back of OPEC supply management and EU sanctions on Russian exports.
  • EIR forecasts NYMEX gas prices of $5.10/MMBtu this winter, falling to $3.50/MMBtu in summer 2023.
  • A full removal of COVID-19 restrictions in China is not expected. Measures may be relaxed, but the threat of fresh shutdowns will undermine Chinese business confidence and oil demand.
  • Haynesville gas production is expected to grow 1.5 Bcf/d E/E in 2022 and 0.2 Bcf/d E/E in 2023. The slowdown next year reflects limited takeaway capacity with the Gulf Run pipeline limited to 0.5 Bcf/d until Golden Pass starts up in 2Q24.

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

About Enverus
Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Media Contact: Jon Haubert | 303.396.5996

Halliburton Selects Enverus for Energy Analytics and Intelligence

Single source platform makes intelligent connections for an industry constantly disrupted by change

Austin, Texas (November 29, 2022) — Today Enverus, the most trusted energy-dedicated SaaS platform, announced a new, multi-year agreement for Halliburton to leverage Enverus software, analytics and intelligence across its business. The agreement underscores the importance that data analytics and technology will play in the future of energy.

“Enverus provides Halliburton with critical, timely energy industry information so we can make better, data-driven decisions throughout the organization,” said Shannon Slocum, senior vice president, Global Business Development and Marketing, Halliburton.

“The energy business is complex and fragmented, but through two decades of innovation and development, Enverus makes possible the intelligent connections that enable customers to overcome that fragmentation. As a result, they can discover previously unseen insights and opportunities, act fast and deliver extraordinary outcomes,” said Manuj Nikhanj, president at Enverus. “Today’s announcement further solidifies Halliburton’s position as one of the most technologically advanced service providers to the energy sector and our collective belief that technology and advanced analytics will provide cleaner, more efficient and lower-cost energy for the world.”

Enverus is the most trusted, energy-dedicated SaaS platform in the world, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from connection to 98% of U.S. producers and more than 35,000 suppliers. For more than two decades, Enverus has cultivated both public and proprietary energy data to create industry-leading analytics and insights for its 6,000 customers.

About Enverus
Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data, sourced from our partnerships to 98% of U.S. energy producers and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6000 customers in 50 countries. Learn more at Enverus.com.

Media Contact: Jon Haubert | 303.396.5996

Is Louisiana CO2 Storage Risky?

Reservoir investigations key to project success and future viability

Calgary, Alberta (November 22, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released a report exploring risks and evaluating considerations for carbon sequestration (CCS) in southern Louisiana, and the risk profiles of recently announced CCS projects in Louisiana and the closely surrounding area.

The seven risk factors for CO2 storage, injection and containment reviewed throughout the report published by Enverus Intelligence Research (EIR).

In its report, EIR focused on four key themes:

  1. What subsurface risks are prevalent in the region and their potential to add complications to or impact long-term CO2 projects.
  2. How the risks stack up to show low-risk versus high-risk regions.
  3. How the recent southern Louisiana projects are benchmarked against one another in terms of risk profiles.
  4. Comparing and assessing what makes one project riskier than another looking into the unique factors elevating or diminishing the project’s risk factor.

“Louisiana screens as a top-tier region for CCS activity, but even with the greatest reservoirs, elements of risk can complicate a project’s success and viability. Thus, these risks must be delineated and understood,” said Evan MacDonald, senior geology associate at EIR.

“To firmly understand the total risk associated with a CCS project, multiple elements must be analyzed. Combining those elements to define a scaled, cumulative risk factor can help with future project screening efforts. This report aims to not only daylight and analyze the risks as they may impact the projects that have been announced thus far, but to also provide a look at how those risks should be baked into future efforts to delineate sequestration sites in the future.”

Southern Louisiana project risk profiles and storage potential by operator.

Key takeaways from the report:

  • Subsurface risk features could trigger CO2 migration and containment losses as well as introduce additional safety, reputational and financial risks. The contamination of freshwater aquifers by the migration of CO2 or pressurized brine requires extensive measurement, monitoring and verification (MMV) and is a key consideration of the Class VI permit process.
  • The northern half of the Oligocene-Miocene area of interest (AOI) features the highest potential risk due to the presence of freshwater aquifers, high caprock permeability and deep legacy wellbores. Most disclosed projects are situated in the southern half of the AOI where there are fewer freshwater aquifers and thicker less permeable caprock.
  • DEN’s Donaldsonville and Assumption St. James projects are subject to the most risk despite holding some of the highest CO2 storage capacities. Conversely, the operator’s New Orleans project screens as the lowest-risk project, while also exhibiting the lowest CO2 storage potential.
  • Projecting the impact of storage risks is complex and will ultimately require injection before these systems are fully understood. Higher-risk areas require added planning and costs to ensure those features are managed appropriately.

View EIR’s previous report: CCUS Inventory Unlocks Hidden Potential.

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

About Enverus
Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Media Contact: Jon Haubert | 303.396.5996

Permit to First Production: Optimize the Many Stages of Pre-Production

Unlike the energy industry’s pre-pandemic growth, today’s market is focused on lean operations, asset optimization and sourcing reserves as efficiently as possible. The current oil and gas development landscape presents many pitfalls and abundant opportunities, making it imperative to do more than merely “get ahead of the bit.”

Investors and operators need visibility into oilfield activity to optimize the many stages of pre-production — from permits through pad construction, drilling, completion and first production. However, public data lag gaps persist at every stage of well delivery, and when combined with widely varying operator behavior and timings, uncertainty accrues along with risk of missing opportunities.

Enverus’ Activity Analytics can help bridge the gap between permit and first production, unlocking solutions faster, no matter what you’re trying to solve in the energy sector.

  • Minerals Owners: Understand where the market is moving for growth opportunities and keep a pulse on the current activity to accurately forecast revenue.
  • Operator Asset Teams: Increase operational efficiency by coordinating service needs and rig logistics, track competitor activities by identifying potential frac hits before they happen and benchmark cycle times.
  • Oilfield Services Providers: Assess current market needs and identify growth opportunities, benchmark competitors, and build market share.
  • Financial Services Analysts: Stay ahead of operator movement with constantly updated well positions, rig locations and crew activity in any area to track operational and activity trends. Determine who is positioned for growth to uncover investment opportunities and track market shifts.

Watch our recent Activity Analytics webinar to learn how Enverus’ solutions can bridge the gap from permit to first production, no matter where you are within the energy ecosystem.

Permits to pad construction

Permits used to be the only way to know where and when new wells could potentially be drilled. While the number varies from basin to basin, only two of every three permits in the Lower 48 are drilled. If you rely on permits alone as an indicator of new production in or around your properties, you will be wrong 33% of the time, according to Enverus’ Activity Analytics. Operators often hedge their bets by permitting more sites than they know will be needed, change their development course or shift focus based on evolving economics.

How can we improve our odds? Leverage unprecedented detail through satellite imagery and radar analysis to identify true constructed pad locations.

With Enverus’ PRISM, users can now filter for planned, but not yet permitted wells, run spacing analyses, assess subsurface risk, comb through operator activity and productivity, determine the economic viability of an asset and identify future inventory in one platform that your teams can leverage to get to their analysis faster. Anticipate new production in advance of the well permit being filed with the state, truly seeing ahead of the bit.

Satellite imagery detecting constructed pads.

Active rigs and DUC inventory count

Use PRISM’s historical rig activity to benchmark different operator and service providers’ efficiency and drilling timelines. Pad construction to spud to rig release timing can vary widely depending on operator behavior and by service company. Enverus uses GPS tracking on more than 90% of Lower 48 onshore rigs to see all active rigs, as well as track historical rig activity.

Post-drilling, Enverus tags wells as drilled uncompleted (DUC) until a frac crew arrives on site. By monitoring how long DUCs sit, we gain a good understanding for frac fleet movement over time and the delay by operator.

It is critical to know if an operator is sticking to a typical development cycle or holding DUCs for inventory to be able to forecast future trends. In today’s market, this is where optimization comes into play, as burning DUC inventory depends on labor availability, pricing and economic trends.

Frac crew detection and completed wells

Until now, most teams could only track drilled wells, DUCs and completed wells, the latter well status being reported to the state and often out of date. Frac fleets are a limited and valuable resource. By knowing where the crews are, we can know with greater certainty when production is coming online. Activity Analytics uses machine learning algorithms to scour satellite imagery for the movement of the dozens of vehicles that herald the arrival of a frac fleet. We can know with certainty by correlating expected frac fleet movement with radar, which lights up the metal of the convoy’s trucks.

Frac crew detection is now available in both Canada and the U.S.

Royalty and minerals investors can leverage these insights, and even call their operator’s owner relations center to ensure there’s no delay when the producer starts cutting checks on the new well.

Savvy operators can also use frac fleet movement detection to be proactive in their well neighborhood by shutting in wells to avoid frac hits and planning their development schedule efficiently.

Analyze active and historical rigs and crews.

Production

As a final step in understanding the time to first production, we also need to consider wells that have been completed but are not producing. This can happen for a variety of reasons, including wells that are waiting on services (WOS), such as gathering or production facilities that are yet completed, or wells that are flowing back frac fluids.

PRISM provides additional operator analytics to help you mine cycle times and get a good feel of activity between completion and first production, helping royalty and minerals investors know when they can expect additional revenue checks in the mail.

Right now, there is a widening capability chasm between the investors who only rely on permits and those who know with confidence where and when to expect first production because they leverage data and analytics across the well delivery process. Which side of the chasm do you want to be on?

Want to learn more about how Activity Analytics can help you optimize the many stages of pre-production? Fill out the form below to speak with an Enverus expert.

Insulation From Price Inflation: 2 Operating Strategies Realize Same Positive Outcome

Cost inflation impacts everyone. But for operating companies that aren’t strangers to volatility and adversity, there are opportunities for strong performance despite rising prices.

In the Nov. 15 Enverus Intelligence®| Research Morning Energy article, Andrew Gillick explores the factors impacting company valuations. Cost inflation and rising rates are two factors affecting investing decisions, but inflation doesn’t have as big an impact on FCF/EV yields, which remain above 10% despite 40% cost inflation.

There’s much more to unpack behind this statement that can be found in this new report, Finding the Valuation Floor: Cost-Inflation and Discount-Rate Scenarios, available to current subscribers of Enverus Intelligence®| Research.

How are different companies insulating their performance against rising inflation?

The bullet points below, sourced from two articles written by Erin Faulkner, senior editor on the Enverus Publications team, highlight how Gulfport Energy and Hess are tackling this challenge head on with unique strategies that are working to insulate their businesses against this industry-wide problem.

Subscribers to Enverus Intelligence Publications can access the full articles via the links provided below.   

Click here to read the Nov. 10 article, “Gulfport boosts EURs, lowers development costs in Utica.”

  • Gulfport Energy’s Utica D&C program has focused this year on utilizing wider spacing, longer laterals and right-sized completions for each pad. The results have been increased EURs and lower developments costs. Despite 25% inflation on D&C costs in 2022, Gulfport’s Utica development costs have averaged $0.62/Mcfe, which is only $0.02 more than in 2021 and down $0.20 cents compared to 2020.
  • Gulfport has been running a one-rig program in the Utica this year and plans to add a top-hole rig in Q4 that will run for six months to allow a continuous completion schedule. The company believes this level of activity should allow a continuous eight-month frac program in the Utica, eliminating the risk of releasing crews in today’s tight service market and providing the opportunity for increased efficiencies and cost savings.

Click here to read the Oct. 27 article, “Hess cutting inflation impacts in half vs. industry average.”

  • Despite double-digit inflation, Hess has been able to maintain its 2022 Bakken well cost guidance of $6.3 million. While the industry has seen a 15-20% YOY increase in prices, Hess was able to reduce the impact to just 8.5% through lean manufacturing, strategic contracting and technology, COO Gregory Hill said on an Oct. 26 earnings call.
  • In the Bakken, the company drilled 20 wells, brought online 22 in Q3, will drill another 30 and turn in line 25 in Q4. In addition to a new-well D&C program, Hess is also refracturing older wells. “In some cases, the wells, the IP rates that we’re seeing are as good as some of the new wells,” Hill said on the Q3 call. “And that’s not surprising because these were kind of vintage 001 completions. We have several hundred wells that we could refrac, and we will fit them in our program as we go forward. One of the advantages of the refrac program is it allows you more continuity with the frac crew. So, we’ve been sort of dovetailing some refracs into our program just to maintain continuity of a second frac crew.”

Here are a few key takeaways to explore to combat the impact of inflation on your business:

  • Optimized well designs can lower development costs.
  • Continue frac schedules to retain frac crews in a tight labor market. This creates efficiencies and additional cost savings. You could also consider refrac programs, like Hess, to maintain continuity with frac crews.
  • Explore technology options that can increase efficiency of operations.
  • Analyze pricing with your vendors to find opportunities to lock in long-term price contracts.

Not a subscriber to Enverus Intelligence®| Research? Call 1-800-282-4245 or email [email protected] to subscribe.

Crypto Mining’s Growing Role in Power Markets

Crypto mining is gaining dominance in the U.S., where more than a third of miners worldwide are centralized. For Bitcoin, network power demand is in the range of 10-15 gigawatts per day, which translates to roughly 0.4-0.9% of annual global use. Miners are looking to situate operations in areas where they can source low-cost electricity to maximize profit. The U.S. is an attractive market because renewable energy generation offers cryptocurrency operations access to low-cost electricity options. Crypto also offers renewables reliable load at times where network demand may not be pervasive.

Scrutinizing average generation output and daily LMP alone does not factor in the intricacies of working alongside intermittent energy sources. Additional factors such as curtailment, the reduction in generation output, causes of congestion such as overload of power, physical distribution of projects, and areas with an abundance of negative hours are essential factors when narrowing down site options. Understanding drivers of electricity pricing is key when identifying potential areas and negotiating a power purchase agreement for offtake.

We recently hosted the webinar, “Crypto Mining and its Growing Role in Power Markets,” where we discussed the following:

  • Crypto basics: hash rate, network power demand and electricity consumption.
  • The relationship between cryptocurrency profitability and electricity price .
  • How to identify areas and projects with the highest negative hours.
  • Identifying constraint causes and drivers for prices.


 You can find a recording of the webinar here.

Canadian Oil Sands: A Look at Regulatory, Economics and Transportation

Trans Mountain Pipeline expansion key to near-term production but environmental pushback, GHG reductions could constrain expected growth

Calgary, Alberta (November 16, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released a new report that forecasts Canadian oil sands production through 2030, including a projection for Saskatchewan, and looks at regulatory, economics and transportation issues that could pose hurdles to our estimates. The report arrives as EIR recently cut its forecast for U.S. production growth, a result of the headwinds created by oilfield services limitations, the risk of recession and reduced performance from wells drilled recently in the Permian Basin.

“Expansion in the oil sands will be supported by the Trans Mountain Pipeline Expansion, which is due to come online at the end of 2023,” said Carson Kearl, report author and an associate at EIR. “The increased takeaway supports our growth projection to the end of the decade, when we believe increasing social and political headwinds will begin to slow or stall the region’s pace of growth.”

Key takeaways from the report:

  • Canadian oil sands production is on pace to grow to 4.2 MMbbl/d by 2030, up from ~3.3 MMbbl/d today, driven by infrastructure buildouts that will increase takeaway capacity.
  • Federal regulations, expected to be enacted in early 2023, will seek to reduce greenhouse gas emissions from the oil and gas industry by 31% below 2005 levels in 2030 (or 42% below 2019 levels).
  • Other challenges, including pipeline planning, uncertain longer-term economics and growing public environmental pushback against new mining projects, may also constrain growth.

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

About Enverus
Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Media Contact: Jon Haubert | 303.396.5996

US Oil Supply Downgrade Explained

Oilfield services headwinds behind big cut in U.S. oil supply forecast as mild weather lifts U.S. gas inventories

Calgary, Alberta (November 15, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released its latest quarterly FundamentalEdge report that provides its medium-term outlook on oil and gas balances. This edition explains why EIR cut its forecast for U.S. production growth, a result of the headwinds created by oilfield services limitations, the risk of recession and reduced performance from wells drilled recently in the Permian Basin.

“In U.S. gas markets, mild weather through the first half of November has helped storage build, lifting inventories to approximately 3.6 Tcf before winter withdrawals start. On average for winter, we expect a storage deficit to the five-year average of 170 Bcf with prices at $5.30/MMBtu,” said Jonathan Snyder, report author and a vice president at EIR.

“Russian oil supply outperformed our expectations mid-year, with European buyers slow to phase out term contracts and discounted cargoes redirected to India and China. However, hard-hitting European sanctions will come into effect in December, which we expect will reduce Russian crude production to  about 9MMbbl/d,” said Bill Farren-Price, an EIR director.

Key takeaways from the report:

  • EIR’s Lower 48 oil production forecast has been significantly downgraded and the firm now expects growth of ~450 Mbbl/d E/E for 2022 and 560 Mbbl/d for 2023.
  • U.S. natural gas supply growth has surprised on the upside, touching 100 Bcf/d sooner than anticipated. EIR now expects strong growth for 2022 at ~3.4 Bcf/d E/E.
  • EIR expects the gas inventory deficit to flip to a surplus by early summer 2023, further reducing prices toward $3.50/MMBtu until 2026.

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

About Enverus
Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Media Contact: Jon Haubert | 303.396.5996

Enverus Again Named 2022 Top Workplace

Technology leader in creating intelligent connections in energy receives top accolades for second year in a row

Austin, Texas (November 15, 2022) — For the second year in a row, Enverus, the most trusted energy-dedicated SaaS platform, has been awarded a Top Workplaces distinction by both the Austin American-Statesman and Houston Chronicle.

The awards are based on employee feedback gathered through a third-party survey administered by employee engagement technology partner Energage LLC. The anonymous survey uniquely measures 15 culture drivers that are critical to the success of any organization: including alignment, execution and connection, just to name a few.

“The world of energy is evolving and the speed of change is accelerating. As energy becomes more complex, the stakes grow, the risks and rewards become more significant. As the world’s largest energy-specialized technology partner, we live and breathe the energy industry. We understand our customer’s challenges and provide intelligent connections across the global energy ecosystem, so they can discover previously unseen insights and opportunities, act fast, and deliver extraordinary outcomes. It’s about making their future clearer. To be named a Top Workplace in Austin, a major technology hub and Houston, the energy epicenter of the U.S., speaks to the value we provide our customers and our employees. This validation that our mission and approach is both humbling and an honor,” said Jeff Hughes, CEO of Enverus.

“Earning a Top Workplaces award is a badge of honor for companies, especially because it comes authentically from their employees,” said Eric Rubino, Energage CEO. “That’s something to be proud of. In today’s market, leaders must ensure they’re allowing employees to have a voice and be heard. That’s paramount. Top Workplaces do this, and it pays dividends.”

About Enverus
Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Energage
Energage is a purpose-driven company that helps organizations turn employee feedback into useful business intelligence and credible employer recognition through Top Workplaces. Built on 14 years of culture research and the results from 23 million employees surveyed across more than 70,000 organizations,  Energage delivers the most accurate competitive benchmark available. With access to a unique combination of patented analytic tools and expert guidance, Energage customers lead the competition with an engaged workforce and an opportunity to gain recognition for their people-first approach to culture. For more information or to nominate your organization, visit energage.com or topworkplaces.com.

Media Contact: Jon Haubert | 303.396.5996

Purchase Order Automation: End Project Delays & Overspending

Advances in purchase order management software continue to create new and valuable opportunities for operators to reduce project delays and overspending along the entire source-to-pay process, from touchless invoicing to digital field ticketing to purchase order automation and beyond. And while digitalizing and automating each of these parts of the source-to-pay process has proven to add value to oil and gas companies of all sizes, today we’re going to focus how to automate purchase orders to help your team overcome common challenges.

Purchase order automation has the power to relieve oil and gas operators and OFS companies of many headaches in the procure-to-pay process. Energy companies continue to manage the procurement process using tedious, manual workflows that result in the same issues over and over — limited visibility to accounting teams on committed spend, duplicate invoices and payments, delayed payment to suppliers, manual verification and matching of documents, to name a few.

For operations, this could mean missing your bonus because the lack of spend reporting caused the project to go way over the budget. For supply chain teams, this could mean purchasing happens outside of pricing agreements. Accounting teams face dreaded, time-consuming manual processes like the three-way match and invoice approvals.

Tracking goods and services using paper documents is challenging and often creates poor spend visibility.

Purchase order management is complex in oil & gas

While these pain points are enough to drive these teams crazy, there’s an unsatisfied resignation that this is how things are for two reasons.

1) Different companies have their own ways of managing and documenting this process, so there isn’t one solution flexible enough to meet everyone’s unique needs.

2) The existing procurement solutions used by our industry today are either:

  • Not solutions, but a combination of email and spreadsheets used to manage purchasing.
  • Not designed for the energy industry’s unique procurement needs.

Introducing streamlined, efficient ordering with OpenOrder

The new OpenOrder purchase order management software solution by Enverus, allows oil and gas operators and OFS companies to create and process purchase and job orders for dispatching services and ordering materials through the entire procure-to-pay process. The solution integrates seamlessly with OpenInvoice, PriceBook and OpenTicket, allowing you to manage the order-receive-invoice process in one platform while ensuring consistent coding (cost objects and GL codes). This means you can reference the orders to both field tickets and invoices, saving significant time with automated compliance checks and three-way matches. Also, automated three-way match allows you to make automatic invoice payments without manual intervention.

OpenOrder is also less expensive than using multiple systems. By managing ordering on the OpenInvoice network, it’s much easier and faster to collaborate in real time with your connected suppliers. Buyers and suppliers transacting in the same environment results in better communication, more transparency and fewer processing delays.

Watch this brief demo video to see the OpenOrder experience.

How OpenOrder creates time savings for every group involved in the procure-to-pay process

  • Improve procurement control: Supply chain teams can monitor and regulate purchases with insights into what and how much you purchased and from which supplier.
  • Optimize spend: Digital procurement workflows provide operations a view of costs before they are incurred through receipts and invoices for companies to stay on top of project budgets and overall spend. With access to digital spend data, supply chain teams can conduct spend analysis to identify future cost saving opportunities.
  • Streamline dispatch: Operations can keep projects moving on time. Purchase order automation and centralization of dispatch allows a single team to manage the match and dispatch process in a single platform.
  • Save time: Fully integrated ordering, receiving and invoicing allows for automatic references and matching between a contract, order, receipt and invoice, saving accounting teams significant time processing invoices for payment. By eliminating payment delays, companies can pay suppliers on time, creating better supplier relationships.

OpenOrder workflow for purchase order automation.

Success in the field: How Grayson Mill Energy leverages Enverus procurement automation software to optimize operations

Grayson Mill Energy, currently using OpenOrder, OpenInvoice, OpenTicket and PriceBook, uses POs for inventory items and engineering services. Their main driver with OpenOrder was capturing procure-to-pay and automating the three-way match to create lean, efficient operations.

“On other systems, a three-way match is hard to execute. With OpenOrder, we had all the back info – well ID, supplier info, etc. When you have a PO with approval and coding up front, it’s much easier to validate with the goods receipt. When the supplier submits the invoice, there’s your match all in the same system, in one place. It really automates your approval process,” said Mary Atkinson, the director of supply chain at Grayson Mill Energy.

With OpenOrder, we have all the information, and it all matches. —Mary Atkinson, Supply Chain Director, Grayson Mill Energy

Enhancing the purchase order automation experience for oil and gas operators

The Enverus team continues to develop OpenOrder to include more functionality in the near future. An RFx module will provide integrated sourcing and bids out of goods and services. The results of the “sourcing event” will allow for the conversion of the bid results into a commercial agreement within OpenContract – a new smart contract management solution launching in 2022, a purchase order within OpenOrder, or both depending on company processes and requirements.

Learn how to automate purchase orders with Enverus OpenOrder in this on-demand webinar.

Regain your sanity with purchase order automation

If the definition of insanity is doing the same thing but expecting different results, OpenOrder will bring the sanity back to your procure-to-pay process. You won’t have to work in your cumbersome ordering system that creates manual work, confusion and frustration. Instead, you’ll be trying something different and, we believe, you’ll experience different, better results.

Request your live demo of OpenOrder by filling out the form below.

Workflows to Forecast Higher Minerals Profits

As a royalty and minerals investor, your financial outlook is only as good as the underlying production forecasts that consider decline curves and expected commodity prices. You need a high fidelity forecast to acquire, expand and divest at the best (defensible) price. Absent accurate forecasts, interest owners are left with difficult questions to answer, such as:

  • Am I getting paid correctly on the assets in my portfolio?
  • What will my revenue streams look like one to five years in the future?
  • How much are my assets worth based on future economics?
  • How much can I spend to acquire assets by leveraging my NPV to increase 12 month cash flow?
  • What is the fair market value if I were to sell today?

Another level of complexity is that accurate oil and gas forecasts must include your current producing wells and wells likely to pay in the future, i.e., development on your properties that adds additional wells. It’s a moving production forecast target without a nuanced, data-driven strategy for understanding operator behavior.

Royalty and minerals investors have the greatest need and greatest opportunity to forecast with precision. But with many investors still relying on Excel calculators and software tools that provide little more than the back of the envelope forecast, precision is elusive. What if you could not only get your production forecasts in the ballpark of accuracy (an 80% solution), but instead forecast with the same level of reliability that reserves certification firms employ? It’s possible with PRISM Forecast Studio.

Over the next few sections, we’ll walk through some quick Forecast Studio workflows that can help your team look beyond line-of-sight opportunities. We’ll explore the five key areas and varying levels of risk and certainty you can focus on to forecast to higher profitability, from proved developed producing (PDP) and lowest risk, to proved undeveloped (PUD) and highest risk.

As a sandbox for our forecasts, we’ll use assets in the Midland Basin operated by Pioneer and Chevron. If you happen to be an interest owner in this area, you will paste in your API list to build out a map and see your unit shapes by operator. PRISM gives you a complete breakdown of your acreage, enabling users to filter the map to view laterals and well inventory along with producing wells, DUCs, native producers and permitted wells.

PRISM Scatter plot and units with 82 wells.

PDP forecast workflow

These wells are currently producing assets that provide steady streams of royalty checks and the lowest forecast risk because of their production history. By filtering the map to producing wells, we see each assets’ production zones, well header and estimated ultimate recovery (EUR). We want to quickly assess the remaining recoverable reserves by unit and discover the greatest concentration of value in our portfolio area.

PRISM’s scatter plots tool provides a good sense of where the highest remaining EUR is grouped. Next, we’ll evaluate the 82 wells in this example with 12-month production and decline curves. Using Forecast Studio directly from within PRISM, we can build the actual PDP profile with historic data, built up by operator.

Now we put a value on this production by exporting the economic model using the PDP profile into Excel, where we can fine tune with production dates and pricing. Applying a conservative 15% discount on cash flow, the NPV of these PDP assets is $362 million, accounting for severance taxes, yields and operator royalty rate correlated with M&A activity and commodity prices. That results in a $67,000 boe per day valuation, rendered with confidence using Forecast Studio.

Type wells: Jo Mill and Sprayberry intervals comparison.

PDNP forecast workflow

Proved developed not producing (PDNP) wells are stuck in limbo. They have been completed but are not in pay and include shut-in wells. PDNP wells are often newly fractured but waiting on services or in process of flowing back post completion. Timing between completion and first production really depends on operator behavior, so understanding historical activity and timelines is key.

Let’s begin the workflow by evaluating only completed wells not in play by filtering for PDNP wells in the same units as before and expanding the analysis by using a three-mile radius of activity. The goal is to know when these wells will start producing hydrocarbons and revenue for interest owners.

To this end, cycle times between completion date to first production for a given operator provide a good KPI. This shows an average 40-day cycle time trending toward 30 days, signaling that we might see revenue checks soon on our PDNP wells. Forecasting from the same Jo Mill and Sprayberry intervals as the PDP workflow, Forecast Studio automatically creates type well profiles to build out our valuation, both normalized and showing which production zones outperform the others.

It’s important to note that we’re not just building a basic line model. Forecast Studio can also export a complete development model with total number of well locations by interval, giving us the timing for when production is most likely to come online. With our PDNP analysis complete, we can see that the NPV of the forecasted royalty stream is $61 million.

You can use the same workflow to forecast DUC inventory and permitted wells, giving you four powerful ways to forecast with precision. Let’s delve into the fifth and final workflow.

Forecast Studio auto forecast.

PUD forecast workflow

There’s no crystal ball for PUD forecasts, but we can leverage tools and data sets to see what wells are “coming soon.” Because these wells are not yet permitted, we need to infer from historical offset wells where and when drilling will start, understanding that our forecasts carry the highest risk … but we’ll use the discount rate to de-risk the forecast later.

Well spacing is a great place to start our PUD forecasting. From our area of interest in the Midland Basin, we’ll use PRISM to filter the map to evaluate development spacing by unit and interval. Analyzing operator well spacing would normally be a time-consuming workflow, but Enverus has already added future inventory to get your analysis up and running fast. Filter for Enverus Placed Wells to get a good feel for the future development scenario. To avoid double dipping production on our forecast, we include proposed and permitted wells.

Understanding when these potential future wells will come online is a matter of operator behavior and cycle times. From the rig count over time, we can see Pioneer and Chevron running a high number of rigs that has recently dropped off, indicating that these operators are not in a hurry to develop remaining inventory within the next couple of years. Why? PRISM analytics indicate this is due to the number of already permitted wells and ample supply of DUC inventory that will be burned first. We can also see that each operator is holding steady at around 60 net new wells per year and typically drills a whole pad at a time, up to seven well pads, but settling around five per pad. As a final step in our well selection, let’s filter down to future/potential location producing intervals in the Wolfcamp A and B.

Since this is a fairly high forecast risk based on timing assumptions, we’ll have Forecast Studio build our own typecurves for the selected wells. Then we’ll use the auto forecast to batch generate our forecasts with the option to manually adjust individual forecasts by using stats on overpredicted EUR.

We can export to Excel, Aries or PHDWin for deep-dive economic analysis. Having generated multiple typecurves with good justification to add to our forecast model, we can now turn our attention to valuating this PUD production potential. Using the type wells from the typecurves we created, let’s filter out the outliers to focus the forecast on normal distribution wells. Finally, we can compare historic and forecasted production to see how they fit and home in on a production profile. Rinse and repeat for the gas phase.

For this PUD forecast, a 50% discount rate is used due to the high risk relative to PDP where we used 15%.

The result is a forecasted NPV of $75 million for our selected PUD wells. Just a few years ago, this type of analysis would have taken weeks to wrangle up the right data, analyze well spacing, place wells based on company guidance, generate typecurves and run the economics model. Today, leveraging PRISM data sets and Forecast Studio, we can achieve the same level of analysis with confidence in just minutes.

Final thoughts

This is a universal, repeatable PRISM workflow royalty and minerals investors can easily apply to any basin for a complete view of current PDP and upside potential across reserves categories (permitted, DUC, PDNP and PUD).

Looking to acquire assets? You can use the exact same workflow to scout out acquisition targets ahead of the bit. And you may need credit or capital backing to do that. With reserves certification level accuracy, PRISM’s Forecast Studio provides your team with defensible methods and economics that can help make your case to private equity and lenders for a reserves-based loan, accelerating growth and de-risking your portfolio.

Want to learn more about how Enverus can help forecast higher minerals profits? Fill out the form below to speak with an Enverus expert.

Exposing the Hidden Bear Trap: Recession Expected To Bite Global Oil Demand

China, India and non-OECD Asia will drive oil demand growth in 2023, with other regions offering negative or marginal growth

Calgary, Alberta (November 7, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released a new report that looks at near-term global oil demand, correlations between gross domestic product (GDP) and oil demand, and impacts of a possible recession on oil demand. EIR’s report further explains its estimate for global oil demand growth in 2023, and why it remains sharply lower than the International Energy Agency (IEA) and OPEC’s estimates.

“Our analysis shows that China, India and non-OECD Asia are the largest components of oil demand growth in 2023, with other regions offering negative or marginal growth at best,” said Bill Farren-Price, report author and a director at EIR.

“While we don’t anticipate a repeat of the 2008 recession, we assess the consensus estimate for 2023 oil demand growth (1.7-2.0 MMbbl/d growth over this year) as optimistic, especially compared to historical analogues. We instead forecast oil demand growth of 1.0 MMbbl/d Y/Y for 2023,” Farren-Price said.

Key takeaways from the report:

  • EIR forecasts global oil demand in 2023 will grow 1 MMbbl/d, lower than the major agencies such as the International Energy Agency (IEA).
  • While the IMF GDP forecasts underpin our oil demand model, EIR observes that in 2008-09, the IMF was late in forecasting recession; light in its expectations for the pace of recovery; and that medium-term growth was lower than the Fund’s forecasts in the recovery phase.
  •  Around 50% of global oil demand serves the transport sector, where energy transition is accelerating. 

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

About Enverus
Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com.

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters. Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Media Contact: Jon Haubert | 303.396.5996

Speaker giving presentation on scientific business conference

Digitalizing Source-to-Pay Key To Maximizing Time and Cost Savings in Operations

How Enverus Source-to-Pay innovation is helping operators make big leaps toward total operating efficiency

Colin Westmoreland, Enverus’ chief innovation officer, spoke at our SPARK 2022 conference in August.

During his “Innovation Acceleration: Source-to-Pay” keynote, Westmoreland discussed how the complexity of the energy industry requires a comprehensive, connected Source-to-Pay platform — and how Enverus is bringing it to life.

Below is a transcript of Westmoreland’s keynote, which has been edited for length and clarity, and an update on the Source-to-Pay vision and roadmap.

Colin Westmoreland here, hi! I’ve worked at Enverus for 19 years in various roles, supporting product innovation strategy — both for oilfield service companies and operators.

The world has changed

Like you all, I’ve experienced the ups and downs of our industry. But the last two years, we’ve seen highs and lows that are more extreme and more frequent.

This change along with a world that is more connected and moves faster now, thanks to technology makes it more critical than ever for the energy industry to not just keep up but stay ahead, anticipate and plan for change.

Investing in technology for greater efficiencies whether it’s more time savings, lower operating expenses or better well designs is a proven way to insulate your business from this volatility.

OpenInvoice then and now

There is an opportunity that many energy companies haven’t fully tapped into that could and would have a profound positive impact on your operating efficiency and bottom line digitalizing the entire source-to-pay process. I’d like to talk about exactly where we currently are in that process, but first I’d like to share the results of the quick poll we did during the session.

When asked how many of you at the session recognized the name OpenInvoice, most raised their hand. It made sense. OpenInvoice has been around now for 21 years.

OpenInvoice was originally intended to create a marketplace for the industry. But after listening to our clients’ immediate needs, it became a powerful digital invoicing platform designed specifically for the unique needs of oil and gas.

The oil and gas industry in itself is unique because operators outsource almost everything to their suppliers. In fact, 80% of industry spend is on services.

Another unique fact is drilling rigs run like small factories that move around every 30 days.

Invoices are the common instrument between operators and suppliers, and so we focused on digitalizing the invoicing process.  Every time a supplier joined the network, any operator that worked with them on OpenInvoice could immediately begin receiving digital invoices.

Today, after 21 years, the OpenInvoice network is huge. We currently have 35,000 suppliers submitting their invoices to more than 400 operators for payment, capturing over 80% of industry digital spend.

How we are addressing industry needs

Another benefit to digital platforms is capturing valuable data. Because so many companies submit their invoices for payment using OpenInvoice, we capture around $200 billion in industry spend each year.

Like OpenInvoice, over the last 20 years, the industry has been on a journey of its own. A few years ago, we saw the industry shift from the shale boom with rampant M&A activity and heavy investment — to investors that were much more focused on free cash flow and returns.

In response to this, we started to see a much stronger emphasis on spend optimization and efficiency gains through more strategic sourcing, contracting and procurement between supply chain and field operations teams. 

To meet this growing need for efficiency across the source-to-pay process, IT teams looked to reduce costs by employing more all-in-one solutions that they don’t need to separately integrate and maintain.

This was the point where we realized we had the ingredients to provide exactly what our industry needs — a single platform to manage an energy company’s entire source-to-pay process from beginning to end.

Now it’s not just making the AP teams jobs easier but really providing all teams working together — starting with supply chain and procurement, then to operations and then to finance and accounting — a faster, more efficient way to manage this entire process.

Having all these teams on a single platform does a few important things:

  • Each of these teams rely on spend data in their role, but they each look at it through a different lens.
  • They need a single source of truth. This means everyone needs to speak the same common language.
  • Uniform coding on one platform is a giant leap toward making full automation possible.

Over the last three years, we’ve invested $400 million in product development to support each stage of the source-to-pay process going beyond the OpenInvoice solution. By connecting this workflow to one platform, you can now eliminate much of the manual work involved in price compliance and contract management and automate order tracking, deliveries and payment on services and materials.

You can now get much better visibility into spend in almost real time for much better strategic sourcing and budgeting for operations. This allows for better collaboration among supply chain, account and operations.

And we don’t want to forget our friends in IT — now there is a single platform to manage — with updates and support included in the cost.

Source-to-pay roadmap update

So where exactly are we in this innovation journey? We’ve made a lot of progress since SPARK 2021 last October.

We launched our market price indices — real price indices of goods and services based on real spend captured in OpenInvoice and aggregated so you can see where the market trends compared to the pricing you’re receiving. We continue to add more categories. In the last year, we’ve gone from around 200 to more than 500 indices updated every month.

For the last 18 months, we’ve worked in collaboration with Marathon Oil to create a pricing contract management solution that aligns with the needs of category managers and supplier account managers. It allows them to quickly collaborate with the supplier network, automate compliance and monitor performance of pricing agreements.

Now let’s talk about ordering. When we launched our new ordering module, OpenOrder, we received feedback that took us in two new directions.

The first is around inventory management and material transfers — it is essential for some of you to gain better visibility into the availability and value of items and equipment you have on hand. You want to facilitate the physical and financial transfer to and from the well site. 

The second direction was around job management and dispatch — that workflow supports operations groups efficiently managing the call out of services.

And finally — work validation at unmanned sites is much more straightforward.

Our OpenTicket mobile app that uses GPS tracking and geofence technology to track routes, hours and location makes work validation much easier. Now ops teams can spend less time figuring out what their suppliers have done and more time actually running their operations.

Applying source-to-pay to a real-world workflow

Now that I’ve had the opportunity to discuss these new solutions, I’m going to close out our time by walking you through a real scenario that includes all these solutions I just discussed — all of which really came to life just in the last 18 months.

An operator discovers a pump is underperforming and is likely close to completely failing on a well. The ops manager checks the system and sees right away there is a replacement pump in inventory, but stock is getting low, so it will need to be backfilled. The worker calls out the service order for a rig, tubing tester and vacuum truck to three of their suppliers that are needed to complete the replacement. The asset location of the pump is moved from the warehouse to the well site. 

The tester and vacuum truck both use the mobile tracking app on their cell phones to show details of the work done. This is done using a combination of geofencing and time stamps along the route and at the site.

Since the job information is shown on the work ticket and the ticket is already pre-coded, the field supervisor easily validates and approves the ticket. Then the supplier flips the approved ticket into an invoice with no additional data entry required.

The invoice is submitted and the system checks the price against the existing price book. The pricing is correct and since the scope and quantity of the work performed were already approved by the field supervisor, there is no need for an operations manager to approve the invoice. It gets auto-approved.

It’s been more than a year since the operator needed to source a pump and the supply chain team decides its probably time to see what price the market supports.

Looking at the market index in the Permian and they see that the current price on pumps has lowered over the last year. They take the current market price and analyze this against what their suppliers are currently charging them.

They notice one of the suppliers is charging them a price that matches the current index and there is very little variation on that price compared to the other suppliers, so they issue the PO to that supplier for the replacement. When the pump is received, the inventory is updated and the goods receipt is approved, so the PO is flipped into an invoice that matches the approved goods receipt. Because these documents match, the invoice is auto-approved without manual intervention.

If this workflow sounds like a vision, it’s not. We have clients doing it. And I hope it gets you excited about the possibilities for the future as we partner with you on your source-to-pay journey.

Note: We have this conference once a year, and this was the first time since 2019 we were able to come together in person. So, you can only imagine the interesting conversations that transpired.

Catch all 2022 SPARK keynotes On-Demand now.

Carbon Capture, Utilization & Storage: Finding Opportunities in an Emerging Market

The current state of carbon capture, utilization and storage (CCUS) is dominated by the supermajors and large midstream companies who can afford to absorb risks in this emerging market. CCUS project developers are forging ahead without the typical commitments between an oil and gas producer and midstream pipeline developer. And, as we argued in our last blog on CCUS, the economics simply aren’t good. CCUS as it stands today could never turn a profit.

The U.S. 45Q tax credit, while generous, only covers part of the total cost to build and operate CCUS from source to sink. Canada’s Investment Tax Credit (ITC) similarly falls short of full coverage. Some might say it’s a bet, but with the unstoppable forces of net zero policies, Wall Street ESG sentiment and an upgrade to 45Q from $50 to $85 per ton of CO2, it’s likely a safe bet.

Pairing emissions with subsurface storage estimates and operating pipeline location provides a solid view of the opportunity landscape and a starting point for project developers and investors to focus their efforts. Now, let’s review some of the trends we are seeing in planned projects to help frame your investment decisions.

Tracking CCUS opportunities

So, just where are the centers of gravity for CCUS projects? If we look at the raft of announced projects and total planned CO2 capture capacity, Alberta, Canada, stands out as the most aggressive at 65% of annual emissions. Government award rounds for right of way are driving this surge in Alberta, compared to the U.S., where private landowners hold land rights.

Canada and Texas combined are the drivers for North American CCUS growth, especially from Gulf Coast hubs, transportation and storage clusters that serve emitters across many sectors and seek to minimize costs through large economies of scale.

Going forward, we can assess CCUS opportunities on multiple dimensions, including the capture capacity as a ratio of annual emissions (a good indicator of early adoption) and emission-weighted capture breakeven costs. Here, we can clearly see that Louisiana is the earliest adopter in the Lower 48, benefiting from low-cost capture capacity and proximity to viable storage in the Frio Formation.

It’s also important to analyze where the adoption rate is driven by sectors fed by multiple subsectors. These include petroleum and natural gas systems and power generation. The latter has seen accelerated CCUS growth due to U.S. Department of Energy initiatives, despite the uneconomic capture costs and competition from renewable energy. We are seeing hub-style buildout of transportation and storage infrastructure bringing in CO2 from multiple subsectors to support these areas of CCUS growth.

Many CCUS project developers have adopted a “build it and they will come” mindset, proceeding with projects without upfront commitments from emitters. In this light, carbon capture can be seen as carrying similar risks as water management, where it’s a necessary cost for emitters and a continuous revenue stream for transporters.

CCUS drivers

A breakdown of CCUS project announcements as of the end of 2021 shows that hub-style projects — those that source multiple sectors — dominate the mix, followed by onshore production, coal-fired power generation and ethanol production. And while the latter has one of the lowest capture costs, it has some of the highest transportation costs given that projects must cover multiple states due to the distribution of ethanol facilities.

Because of climate change optics and interest by investors in ESG, CCUS is often synonymous with disposal of CO2. But for years the petroleum industry has utilized CO2 for enhanced oil recovery (EOR), effectively creating a loop of reusage as CO2 is injected into reservoirs and finds its way back to the wellhead. However, the focus in CCUS projects is shifting from EOR to pure carbon capture and sequestration along with climate change urgency and Wall Street sentiment.

North American policy makers have disparate views of EOR. CO2 EOR has fallen out of favor in Canada and consequently has been omitted from the ITC, but is still covered in the U.S. 45Q.

While a few pure play CCUS players have emerged, 80% of CCUS projects are led by upstream and midstream companies, including supermajors and large operators who can afford to be first movers and absorb more of the policy and technical risks. ExxonMobil and its partners in a Houston carbon capture and sequestration hub lead current project development with the Oil Sands Pathway alliance. This partnership is expected to cut regional emissions by 60%, making oil sands carbon intensity competitive with the Lower 48. And smaller CCUS project developers targeting less than 5 million tons of additional CO2 capacity annually are again led by oil and gas operators who are partnering with natural gas processors, LNG and power generators.

What does CCUS mean for investors?

CCUS is still in its infancy with many potential market accelerators and blockers to growth. Despite advancements in policy and tax incentives, the current policy situation limits the pace of growth given breakeven, transportation and storage costs, making it difficult to justify investment in this emerging market.

Boosting the 45Q tax credit from $50 to $85 per ton of CO2 is likely to catalyze a wave of new CCUS projects, especially in the lowest cost-to-capture sectors. Not all CO2 sequestration reservoirs are created equal. Making or breaking CCUS as a long-term viable industry is the quality of rock in close proximity to CO2 point sources. Large-scale CCUS projects are underway and set to come online by mid-decade, driven by permanent sequestration and hub-style projects that enable developers to capture economy of scale.

Bolstered by an imperative to achieve net zero, CCUS will play an increasingly important role in attaining climate change goals. As an industry, it’s not there yet in terms of profitability. Like a Silicon Valley tech startup with a business plan that anticipates losing money as the business gets off the ground, CCUS project developers understand the economics of capturing, transporting and storing CO2 with the assumption that policy and technology to reduce costs further will finally catchup.

Fill out the form below to speak to an Enverus expert about how our solutions can help you find CCUS opportunities.

ERCOT Storage: Hunting for New Opportunities

Double-digit returns expected to attract private equity, drive rapid growth

Calgary, Alberta (November 1, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released another report exploring storage opportunities within the Electric Reliability Council of Texas (ERCOT).

In this third and final ERCOT storage series report, EIR studies the key economic drivers for storage assets across different markets and identifies the best opportunities for investment within ERCOT. EIR estimates the economic returns of different operating strategies for more than 5,000 storage projects in its power and renewables tracking database.

“Enverus’ analysis shows the economic model for grid storage assets in Texas is rapidly evolving as storage becomes a larger part of the energy mix. We still expect strong double-digit returns for storage projects, despite forecasting a decline in annual profitability as competition increases,” said Ryan Luther, report author and senior vice president at Enverus Intelligence Research.

“The incredible returns these projects can achieve should continue to attract attention from private equity sponsors and eventually will result in the rapid growth of storage assets. We’re valuing larger well-funded storage developers in the billions of dollars, and the valuation of storage developers should rapidly move higher as planned projects become operational in the coming years,” Luther said.

Key takeaways from the report:

  • The economic returns for storage assets are driven by several factors including location (realized arbitrage spreads, ancillary services prices and capacity payments), operation strategy, energy capacity and capital and operating costs.
  • Short-duration batteries achieve stronger returns from ancillary services strategies since these batteries can receive more daily payments per MW of capacity. Duration’s impact on the economics of a project is amplified in markets with higher ancillary services prices such as PJM and SPP.
  • PJM and SPP provided the highest reserve and regulation prices over the past 12 months, leading Enverus to estimate the strongest returns on ancillary services strategies in these regions. Enverus expects ancillary services prices and anticipated storage returns to fall once these markets are saturated with storage assets.
  • MISO, SPP and PJM are the most attractive regions for arbitrage strategies, but all ISOs contain certain areas with strong enough locational marginal pricing (LMP) volatility to generate double digit returns.
  • The strongest returns for a combo strategy exist in SPP and PJM, again driven by strong reserve prices. MISO, ISONE and ERCOT also exhibit attractive returns averaging ~40% IRRs. CAISO offers the lowest returns, which we attribute to increased competition among storage assets driving down ancillary services prices and intraday LMP spreads, despite an increasing non-dispatchable generation mix.
  • Double-digit returns driven by the investment tax credit (ITC) provide a compelling argument for private equity-backed competition to accelerate in the coming months. We expect all markets to see a rapid uptake in storage projects, and we anticipate this sector to evolve rapidly through M&A or IPOs.+

Figure 2 - Storage Strategy Returns Benchmarking

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

About Enverus
Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Media Contact: Jon Haubert | 303.396.5996

5 Essential Source-to-Pay Process Automations for Oil & Gas Operators

Leveraging advances in oil and gas software to digitalize and automate your source-to-pay process is essential if you want to keep projects running on time and on budget while ensuring optimal performance across business functions.

In fact, source-to-pay process automation plays a key role in helping operators overcome common challenges such as inaccurate coding, insufficient documentation, incompatible systems and redundant, labor-intensive processes. These lead to a lack of visibility into operational spend and wasted time and resources.

Fear not! These common bottlenecks can be easily fixed by digitalizing all or part of your source-to-pay process. These upgrades will bring significant value to your business. Examples include:

  • Lowered processing overhead and G&A spend.
  • Overbilling prevention.
  • Reduced compliance violations and rogue spend.
  • Access to spend reports for better budgeting and forecasting.
  • Improved collaboration and relationships with suppliers.

In this blog post, we’ll share five ways you can digitalize and automate processes across functions – from sourcing and procurement to invoicing and payment and beyond – to realize these benefits.

1. Digitalize invoices for shorter invoice cycles 

Digitalizing your invoices is the first major step that will help you become more efficient, both in time and cost. Also, as your organization grows, digitalization and automation sets you up to easily scale with minimal effort. In fact, research from Ardent Partners indicates that – thanks in large part to the adoption of ePayables solutions and source-to-pay process automation – best-in-class enterprises see an average invoice processing cost of $2.25 per invoice compared to an average cost of $10.95 per invoice among all other peers.

While digitalization is beneficial for an oil and gas business of any size, the benefits are amplified for small- and medium- sized operations because automation allows these businesses to manage large invoice volumes without a large internal staff.

Stephanie Brittain, AP manager at TEP Barnett says, “With OpenInvoice, we process 10,000 — 15,000 invoices each month with a staff of two.”

Watch the video below to learn how the digitalization of invoices makes it possible for TEP Barnett to manage its high invoice volume without a large internal AP team.

Digital invoices are also easier to track. If you use an AP management system like OpenInvoice, the Enverus AP solution that operates on a connected network of oil and gas buyers and suppliers, you can communicate with your suppliers within the platform for better status tracking and faster dispute resolution, ultimately shortening invoice cycles. If you shorten your invoice cycles enough, you could negotiate more early pay discounts, saving your company even more money.

When choosing a digital invoicing software solution for oil and gas, there are two things to look for:

  • Connected to a network — Ideally, your digital invoicing solution will operate using a network of connected suppliers. The larger the community of providers in oil and gas, the better. This makes collaboration and communication much easier and faster.
  • Flexible and customizable — Every business wants to grow, so while you may be considering digitalizing invoices only at this time, it’s wise to plan for how your technology can scale with your business. Ideally, you want a SaaS solution with customizable workflows to fit your business processes. With SaaS, updates and support are typically included in the license fee, so you save money by eliminating support and maintenance fees. All system maintenance work is done by the provider, freeing up IT resources. Finally, the digital invoicing solution you choose should also integrate with various financial and ERP systems.

2. Automate price compliance for improved spend management 

Reducing opex and optimizing capex are top of mind for energy businesses across the board. Managing digital price books is a way to support more automation and improve overall cost control through price compliance enforcement. With digital price books, you can empower your suppliers to keep the price book updated before your approval, eliminating overhead.

Discovery Natural Resources leverages Enverus digital PriceBook with OpenInvoice to systematically enforce compliance while reducing time spent manually reviewing alerts. Discovery estimates an average of 12 hours per week are saved by eliminating the need to manually enforce compliance. Also, vendors have been trained in PriceBook collaboration, reducing the amount of time Discovery spends maintaining more than 120 active price books. Discovery has gone from updating 10 price items per day to less than 10 per week, an estimated savings of eight hours a month.

3. Auto-approve invoices 

Adding automation, removing extra steps, modifying the sequence of steps or changing who performs the steps in these specific areas could make your entire workflow faster and more efficient.

After examining its OpenInvoice data, one large Permian operator realized invoice approvals were creating a bottleneck in its AP process. Often, in this approval process, the same person that approves the field ticket must also approve the invoice, creating a double touch. After analyzing the data, the company realized approvers averaged eight seconds approving low-value invoices. This indicated the approvers weren’t properly reviewing the invoices due to the volume of low-value invoices requiring approval.

The company decided to implement invoice auto-approvals.  If the field ticket and the invoice contain the same information, the approver doesn’t need to review the invoice. The operator has since fully automated 40% of its invoice approvals and partially automated between 20-30%.

To realize additional time savings, this same operator took this another step further by integrating WellView with OpenTicket – the Enverus digital field ticket solution. The field supervisor enters the cost estimation in the morning report and sends it to the office as part of the daily operation’s routine. The information is then exported into OpenTicket. If the ticket submitted by the supplier matches the morning report information, it is automatically approved. Suppliers can submit their invoices faster and it removes manual work from drilling and completion engineers. Everyone is happy.

About the automation the senior lead accountant at the operator said, “In Q2 2021, we took a daily report from WellView and started matching it up manually against our OpenTicket data with the intention to help our approvers quickly identify which exceptions they needed to review. As soon as we turned on auto-approval, we were able to match 80% of tickets, driving our average approval time from 15 to less than four days.”

open-ticket-quote

If you were able to match 80% of your ticket volume, we suspect your drilling and completion engineers will thank you.

Automatic invoice approvals, or touchless invoicing, is just one example of a process improvement opportunity that helps energy companies reduce their overall invoice processing cycle times, which leads to more early pay discounts. By removing repetitive, manual work through process improvement, your team can focus more on high-value activities like cost analysis, forecasting and budget control.

4. Leverage mobile tracking technology to validate work faster 

Workers often work in remote areas or at unsupervised job sites, so validating these jobs can be tricky. New advances in technology have led to the development of oil and gas software solutions that allow these workers to track their routes using their own mobile devices or those provided by their employer.

Mobile devices use GPS coordinates and geofence proximities to automatically capture details for suppliers related to job location and times. OpenTicket Mobile, the Enverus mobile app, even provides detailed views of routes and hours spent on the entire job on the work ticket.

Ticket details that match mobile data provided by the supplier are automatically validated. Alerts signal approvers if the number of hours or service locations entered on the ticket don’t align with GPS and geofencing records. This allows you to switch to a manage-by-exception model for more time savings.

This use of mobile technology is particularly valuable for LOE operations. Your operations teams in the field can turn more focus on maximizing production and managing job safety. Suppliers can leverage IoT technology to accurately track the work performed so they can focus on the work at hand.

mobile-divice-using-open-ticket-software

5. Digitalize the ordering process

Our fifth and final recommendation today to get you started on your source-to-pay automation journey calls for a digitalized ordering process.

If you want to maximize spend and time efficiency, managing the order-receive-invoice process digitally in one platform ensures consistency for cost objects and GL codes. This means orders can be referenced to field tickets and invoices, saving significant time with automated compliance checks and three-way matches. Also, automated three-way matching allows you to automate invoice payments without manual intervention.

When it comes to finding the right automation software for your business, it’s important to remember that oil and gas is a unique industry. , which means the scope and quantity of deliverables often aren’t known until after the work is performed. Procurement solutions that work on a discrete PO model only make processing services spend extremely painful and time-consuming. The best solution is one that is built specifically for energy workflows. Discrete POs are great for managing goods procurement, services require more flexibility. One example of this is Grayson Mill. Grayson Mill Energy, an operator with assets in the Williston and Powder River Basins, digitalized their procure-to-pay process with the Enverus source-to-pay solution to automate the three-way match. Due to the many services the company sources, purchase orders were not always fit for purpose, but are often necessary for supply chain and accounting governance.

Mary Atkinson, director of Supply Chain at Grayson Mill said, “One of the things that I’ve found is while the three-way match is an easy concept, it’s very hard to execute. Now we have all the information: your cost centers, chart of accounts, your supplier information, your well ID, your AFE number, etc. That information is in the system already, and it all matches.

When you have a purchase order with approval, with coding upfront, it’s much easier to validate as a goods receipt. Then when a supplier submits an invoice, there is your match right there, all in the same system with the same information.”

open-order-quote

Operations teams benefit from this digital workflow because by linking purchases and call-outs to coding and AFE line items, they can track against estimates before a field ticket or shipment is received,  sometimes well in advance.

This advanced insight into spend, coupled with automated compliance checks and workflow automation, provides greater insight and control over the procurement process, saves time and significantly improves spend management on projects.

Bringing it all together

In this blog post, we shared five ways you can leverage digitalization and automation in the source-to-pay process today to accelerate and improve operations. These include digitalizing invoices, automating price compliance, auto-approving invoices, leveraging mobile tracking technology, and digitalizing the ordering process.

To find opportunities in your own company, first, evaluate your workflows. Are there specific areas where there are bottlenecks? Due to high volumes, are there long ticket approval times, long payment cycles, or delayed invoice approvals?

Once you begin your own audit, you’ll likely uncover ideas. You’ll want to create a list of potential initiatives, and do a strategic analysis by determining the estimated time and cost of each initiative compared to the impact it will have on your organization. Based on this analysis, you can determine what makes sense to implement first. It doesn’t have to be an all-or-nothing approach. In fact, many customers that use Enverus solutions to streamline their source-to-pay processes tackle implementation in a phased approach.

The two important things to remember are:

  • It’s not all or nothing — Taking just one of these steps, whether it’s digitalizing your invoices or your entire source-to-pay process, will improve your business’ efficiency.
  • Incremental digitalization amplifies value — If you choose to digitalize your source-to-pay processes over time, each addition will only further improve operating efficiency and cost management, providing you demonstrable results that position your company as an operation worthy of investment.
digital-journey-with-source-to-pay

Ready to level up your operations with automation? Fill out the form below to speak to one of our experts!

Energy Market Growth and Production: 3 Trends You Need To Know

Operators and oilfield service companies need to keep pace with the volatile and rapidly evolving energy industry. However, if you are relying solely on public filings to make investment decisions or anticipate future activity, you’re shortchanging yourself. Public data often lags by three months and can be inaccurately reported. If you consider the state of the industry three months ago compared to today, you know the public filings are not going to get your company to where it needs to be in the next quarter.

Every day there is a new headline to consider, with direct implications to near-term strategic planning. Whether the global news involves the economic downturn affecting oil demand, such as Russian supply being hit with EU sanctions or the major economic headwinds in China, or LNG construction delays, these geopolitical events affect daily market trends and drive changes in oilfield activity.

In our October 2022 “Macro Forecaster” published by Enverus Intelligence Research, our analysts assert that weakening economic conditions and outperforming Russian supply will incentivize crude and product builds. Embedded in this view was extensive analysis on North American supply, specifically in the Lower 48. We detected well pads being constructed in real time, outlined historical and current trends in rig deployments and frac crew demand, and offered productivity metrics in a single platform, so you can stay ahead of the changing energy landscape.

Using Activity Analytics, we uncovered three key trends to help you know what’s happening in the oilfield.

1. DUC inventory is nearly depleted

In the published report, analysts suggest excess drilled uncompleted (DUC) inventory is nearly depleted, with new wells coming mainly from newly drilled inventory. This shift in strategy comes from oil price pressures easing while operating costs rise.

Using only publicly filed permits, your ability to assess the change in strategy would be both delayed and incorrect, because not all approved permits will see drilling activity. Focusing your efforts on satellite detected constructed pads, you will have an accurate, near real-time view of where drilling, completions and production will occur, rather than taking an educated guess on which permits will be drilled.

With detected constructed well pads, you can determine:

  • Where and when service companies can be poised to support operations.
  • If pricing environments are worthwhile for operators to continue development plans.
  • If the DUC duration from a specific operator falls within a normal timeframe compared to peers, or if it seems the operator is sitting on the asset.

2. Pricing power for service providers as demand outpaces supply growth

For operators and service companies alike, it is crucial to keep tabs on demand for oilfield goods and services. Active rig tracking shows demand continues to outpace the ability and desire to grow supply, leading to increased pricing power for service companies.

Additionally, analysts expect the rig count in oil plays to increase further in 2H22, while rigs targeting gas are expected to decline in 2023 due to takeaway constraints.

Leverage real-time, GPS monitored rig activity to understand where more than 90% of the rigs are in North America to directly inform how you can fit your strategy to near-term market trends.

Use proprietary rig and drilling tracking to:

  • Indicate subsequent investment from operators.
  • Assess changes in market share from service companies.
  • Determine which types of rigs can support your asset development plan to save service costs.

Rigs through time, colored by operator.

3. Frac crew demand pushes upper bounds of available capacity

Frac crew demand continues to push the upper bounds of available capacity, meaning equipment shortages are creating pressure on service companies to fulfill scheduled fleet activations.

Operators are making an early start in planning for 2023 to lock in materials and assets for the year. However, the U.S. is currently operating at a near 100% effective crew utilization, limiting overall production growth. Leveraging satellite informed completion activity allows for an accurate, near real-time view of frac crew activity and utilization.

Get ahead of delayed and inaccurate completion filings to:

  • Identify where and when operators are completing wells, giving you an indication of when wells will complete their lifecycle.
  • Understand fluctuations in activity and future market needs.

Frac crews through time, colored by operator.

Enverus Activity Analytics offers insights into changes in activity levels across North America. With access to both active and historical pad construction, drilling and completions, you can:

  • Find answers faster to determine who is positioned for growth to uncover investment opportunities and track market shifts.
  • Increase efficiency by getting an edge on development planning and more accurate production timeline predictions.
  • Save time and resources by having all data sets and intelligence linked in a single platform.

Learn more about how Activity Analytics can help you stay informed about important oilfield events.

Evaluating Carbon Budgets and the Future Energy Mix

Quantifying lofty climate goals and a shift from hydrocarbons reveal impossible choices

Calgary, Alberta (October 26, 2022) — Enverus Intelligence Research (EIR), a subsidiary of Enverus, the most trusted energy-dedicated SaaS platform, has released its inaugural Primary Energy Outlook that establishes a climate change pathway that offers insights into energy transition investment opportunities and the potential to shape hydrocarbon demand out to 2050. The outlook arrives in anticipation of the International Energy Agency (IEA) World Energy Outlook 2022 (WEO).

The U.S. Energy Information Administration (EIA) defines primary energy as “energy in the form that it is first accounted for in a statistical energy balance before any transformation to secondary or tertiary forms of energy.” For example, coal can be converted to synthetic gas, which can be converted to electricity. In this example, coal is primary energy, synthetic gas is secondary energy, and electricity is tertiary energy.

As EIR experts highlight in their inaugural Primary Energy Outlook, the clear challenge is when carbon constraints are introduced and what the world is allowed to consume, both now and into the future. To achieve these lofty climate goals that some global leaders have put forth and satiate our collective growing need for energy, choices must be made, some of which may be deemed impossible. In its outlook, EIR has modeled to a 2.5 degrees Celsius warming scenario versus typical 1.5-2 degrees Celsius targets.

“Investments across the energy landscape have become more complex as policymakers incorporate climate goals and policy shifts into their decision frameworks. These changes are expected to transform the primary energy mix — where we source the energy that sustains the global economy — and the energy markets they supply,” said Ian Nieboer, report author and managing director at EIR.

“To better understand the dynamics and tradeoffs at play, we constrained the analysis along three dimensions: a binding carbon budget based on a 2.5 C warming pathway; primary energy demand taken as ‘known’ input based on our analysis; and absolute oil and coal contributions taken as ‘known’ inputs,” Nieboer said.

“By no means is this a prescriptive recommendation. This outlook is an objective evaluation of the data, quantity and quality of recoverable resources, and the intentional constraints that must be placed on global energy demand in order to achieve these goals. There will be no easy choices to make,” Nieboer said.

Key takeaways the inaugural Primary Energy Outlook:

  • Global primary energy demand grows by 13% and 29% by 2030 and 2050, respectively, we expect. Our analysis yielded little deviation from the 60-year global upward trend in primary energy demand. Regional stories differ: North American and European primary energy consumption have plateaued while consumption rises alongside population growth in the rest of the world.
  • Most climate goals focus on 1.5 C or 2 C warming pathways that require extreme shifts in the energy mix to achieve. In this analysis we model a less challenging 2.5 C pathway, but this scenario still requires an enormous amount of coordinated global capital, policy and natural resources which we view as highly improbable in today’s world.
  • A model constrained by rising primary energy demand and a shrinking carbon budget to meet a 2.5 C global warming trajectory implies 14x growth in primary energy supply from carbon-neutral energy (CNE) technologies compared to 2019 levels, given our outlook for oil and coal over the period. This implies an unprecedented substitution of the energy mix with CNE achieving 60% of the primary energy share by 2050. We do not believe that CNE technologies exist today to achieve the growth necessary to maintain our 2.5 C constraint.

View the primary energy sources, according to the U.S. Energy Information Administration (EIA).

View the World Energy Outlook 2022 landing page.

Members of the media should contact Jon Haubert to schedule an interview with one of Enverus’ expert analysts.

About Enverus
Enverus is the most trusted, energy-dedicated SaaS platform, offering real-time access to analytics, insights and benchmark cost and revenue data sourced from our partnerships to 98% of U.S. energy producers, and more than 35,000 suppliers. Our platform, with intelligent connections, drives more efficient production and distribution, capital allocation, renewable energy development, investment and sourcing, and our experienced industry experts support our customers through thought leadership, consulting and technology innovations. We provide intelligence across the energy ecosystem: renewables, oil and gas, financial institutions, and power and utilities, with more than 6,000 customers in 50 countries. Learn more at Enverus.com

About Enverus Intelligence Research
Enverus Intelligence Research, Inc. is a subsidiary of Enverus and publishes energy-sector research that focuses on the oil and natural gas industries and broader energy topics including publicly traded and privately held oil, gas, midstream and other energy industry companies, basin studies (including characteristics, activity, infrastructure, etc.), commodity pricing forecasts, global macroeconomics and geopolitical matters.  Enverus Intelligence Research, Inc. is registered with the U.S. Securities and Exchange Commission as an investment adviser.

Media Contact: Jon Haubert | 303.396.5996

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