Recap of the OSU Energy Conference
Oklahoma State University held its 7th Annual Energy Conference on Tuesday in Oklahoma City, and our man Jay F. Marks (@okenergybeat) was a tweeting machine. You can read his dispatches below and check out Energy Editor Adam Wilmoth’s recap of the conference here. For the speaker presentations, go here.
Former Devon exec, Chesapeake target to attend Harvard Divinity School
Anadarko Petroleum Corp. Executive Chairman James Hackett plans to attend Harvard Divinity School later this year, the Wall Street Journal reported.
“Jim Hackett will be attending Harvard Divinity School to become better prepared to write, speak and teach about faith and leadership, which has been a long-held interest of Jim’s and one of the key reasons he is retiring from Anadarko,” Anadarko spokesman John Christiansen said.
Hackett, 59, was president and chief operating officer at Devon after its 2003 merger with Houston-based Ocean Energy Inc. He became CEO of Anadarko later that year, then led the company’s 2006 acquisition of Oklahoma City’s Kerr-McGee Corp.
Hackett, who retired as Anadarko CEO in May, reportedly turned down the opportunity to replace co-founder Aubrey McClendon at Chesapeake in January.
Chesapeake is expected to name McClendon’s successor before he leaves the company April 1.
Devon oil well burning in Utah
Residents near a Devon Energy Corp. oil rig in southern Utah were evacuated early Tuesday after a fire filled the air with thick black smoke.
Devon spokesman Chip Minty said no one was injured after a well control issue led to the release of oil and natural gas on the rig, sparking the fire.
Utah’s KSL-TV captured video of the fire.
Minty said crews are working to extinguish the fire safely Wednesday. Once the fire is under control, officials will investigate what caused it.
Devon has been active in Utah’s Uinta Basin for some time, but Minty said the company recently began drilling operations there in hopes of increasing its oil production.
Devon Energy Corp. to consolidate operations in Oklahoma City
Devon Tower in Oklahoma City, Tuesday, June 12, 2012. Photo By Steve Gooch, The Oklahoman
Devon Energy Corp. is consolidating its operations in Oklahoma City and shutting down its offices in Houston.
“Consolidating our U.S. operations will improve our ability to quickly shift the focus of our workforce between project areas as economic conditions dictate,” said Dave Hager, Devon’s executive vice president of exploration and production. “In addition, this move will improve the sharing of best practices and enhance overall operational efficiency.”
Devon intends to relocate employees who oversee operations in south Texas, east Texas and Louisiana from Houston to Oklahoma City by early next year.
The move is expected to save the company about $80 million a year in lower administrative expenses and personnel costs.
Devon estimates the reorganization will cost about $125 million, with most of those costs being incurred this year.
The Oklahoma City-based oil and natural gas company recently completed a new 50-story headquarters building downtown. It has room for the employees who had been in Houston, but company officials declined to say how many of Devon’s 500 Houston employees would move to Oklahoma City.
Devon CEO discusses stock price and oil production on CNBC
Devon Energy Corp. CEO John Richels spoke Tuesday with CNBC’s Mad Money host Jim Cramer about how the company’s stock price is trading down on lower-than-expected earnings in the second quarter.
Richels blamed much of the drop on lower prices for natural gas, natural gas liquids and Canadian oil. The temporary price drop should not significantly affect the company’s long-term growth, he said.
This business is cyclical. Prices are cyclical. We’re sticking with our focus on investing in high-return projects. We’re maintaining our capital discipline, and we’re continuing to build this big asset base on the oil side, which we’re really excited about,” Richels said.
Like most oil and natural gas companies, Devon is working hard to refocus its attention on oil instead of natural gas.
We grew our oil production 26 percent year-over-year. That’s not off of a small base. By the end of this year, we’ll be over 40 percent oil and liquids production. We’re spending every cent in our company today on oil and natural gas liquids growth, and about three-quarters of it on oil,” Richels said.
Devon announces $1.4B joint venture with Japanese firm
Devon Energy Corp. has signed a joint venture agreement worth $1.4 billion with Japan’s Sumitomo Corp. to help develop its holdings in west Texas’ Permian Basin, the company announced Tuesday morning.
Sumitomo’s investment will yield a 30 percent stake in Devon’s acreage in the Cline Shale and the Midland-Wolfcamp Shale. Devon has about 650,000 acres in the oil-rich plays.
“This transaction once again demonstrates the value embedded in our high-quality portfolio,” Devon CEO John Richels said. “This arrangement will materially enhance Devon’s future returns and improve our capital efficiency. It will also further enhance our financial strength. For quite some time we have had a strong working relationship with Sumitomo and look forward to a mutually beneficial joint venture.”
Sumitomo will pay Devon about $340 million in cash when the deal closes. The remaining $1.025 billion in the deal with be a drilling carry that will fund about 70 percent of Devon’s capital requirements.
The partners expect to drill 40 wells in the targeted plays this year.
The Sumitomo deal is Devon’s second joint venture with an Asian firm this year.
The Oklahoma City-based company sealed a $2.5 billion deal with China’s Sinopec International Petroleum Exploration & Production Corp. in January. Sinopec acquired a stake in Devon’s 1.2 million net acres in five developing plays: the Tuscaloosa Marine Shale, Niobrara, Mississippian, Ohio Utica Shale and the Michigan Basin.
Report: falling natural gas liquids prices could hurt Devon, WPX earnings
Falling natural gas liquids prices could hurt many energy company earnings, but Oklahoma City-based Devon Energy Corp. and Tulsa-based WPX Energy could be most affected, Bloomberg reported Friday.
Natural gas liquids include ethane and propane. The industry has moved from dry gas to liquids-rich fields in recent years because of higher sales prices.
But increased production and an unusually warm winter have driven down the price for natural gas liquids.
“It’s a massive decline in prices,” Thomas Driscoll, a New York-based analyst for Barclays Plc, said of natural gas liquids in a phone interview with Bloomberg. “People are a little bit behind in their estimates” for revenue.
A spokesman for Devon declined comment to Bloomberg on Friday, and a spokeswoman for WPX did not immediatly return phone calls.
NFL great Thurman Thomas looking for return to Oklahoma, energy job
Former Oklahoma State running back Thurman Thomas acknowledges the crowd at Boone Pickens Stadium during a timeout in a 2008 game (photo by Chris Landsberger, The Oklahoman)
Thurman Thomas is a Texas native who achieved his greatest fame in western New York, where he helped lead the Buffalo Bills to four straight Super Bowls in the 1990s.
But now Thomas is looking to return to his roots.
The NFL Hall of Famer tweeted Tuesday that he missses Oklahoma and would like to return. He’s angling for a job with a state energy company.
“I will miss #Oklahoma. I would move back here, but I need a job. Can someone make that happen? Continental Resources, Devon Energy, etc…”
Thomas, who starred at Oklahoma State University in the mid-1980s, started his own energy company after he retired from the NFL.
Thurman Thomas Global Energy Group helps businesses save money on their energy costs with demand response programs, according to a Yahoo Sports profile last year. He also operates Legends Energy.
“Energy and energy savings has become a hot topic; whether you are talking about gasoline, electric, natural gas, or renewable energies, it is something everyone is talking about and concerned with these days,” Thomas said in a Q&A earlier this month with Green Real Estate Daily.
Thomas credited billionaire Oklahoma State alumnus T. Boone Pickens with spurring his interest in energy in that interview.
Maybe another OSU alum can help Thomas find a job that will bring him back to Oklahoma.
UPDATED: Thomas says he is not in a big hurry to return to Oklahoma since his daughter wants to graduate from high school in Buffalo.
“Just trying to get the ball rolling early,” he told The Oklahoman in a direct message on Twitter.
Devon Energy takes Oklahoma leaders on tour of Canada’s Jackfish oil sands
Workers connect a series of hoses that the supply the moveable drilling rig at Devon Energy's Jackfish oil sands production facility north of Calgary, Canada, in this November 2010 photo. Staff photo by David McDaniel/The Oklahoman
Energy reporter Jay F. Marks is riding along today with Oklahoma leaders on a tour of Devon Energy Corp.’s Jackfish oil sands in Canada. He’ll have a story later this week on the three Devon projects in the Jackfish.
Marks last toured the Jackfish with photographer David McDaniel in November 2010 , when it was a little chillier. That’s one of McDaniel’s pictures above. Today’s weather is expected to be a little warmer: 68F and partly cloudy by this afternoon.
Canada’s oil sands in pictures
Business Insider's Robert Johnson had to rent a plane to see how companies mine Canada's oil sands.
Canada’s oil sands are a growing source of oil. And controversy.
The oil sands hold an estimated 169 billion barrels of recoverable oil, but critics contend extraction is too costly because of greenhouse gas emissions, water pollution and other health threats.
Business Insider looked at operations in Alberta’s oil sands this week, although reporter Robert Johnson had to rent a plane to get a look at mining operations there.
The aerial tour resulted in some striking pictures of how oil close to the surface is extracted. Mining accounts for about 20 percent of operations in the oil sands.
Most operators, like Oklahoma City-based Devon Energy Corp., drill for oil deeper underground, using steam-assisted gravity drainage to bring it to the surface.
Ninety-seven percent of Canada’s oil reserves, which are the third largest in the world, are in the oil sands, according to the Canadian Association of Petroleum Producers. The oil sands are a mixture of sand, water, clay and bitumen, or oil that is too heavy or thick to be pumped to the surface.
Business Insider toured Cenovus Energy’s Christina Lake operation earlier this month.
