The 21 oil-focused U.S. exploration and production companies examined in our Piranha! market study are planning an average 47% increase in their 2017 capital expenditures and expecting a 7% increase in production. The 47% boost in capex is huge, but due to draconian cuts in 2015 and 2016 this year’s total is still off 58% from 2014’s—an indication of the big hole the sector is still climbing out of. The Permian Basin continues to attract more capital—no surprise there—but capex in the Bakken is also on the rise after a few lean years. Today we continue our Piranha! series on upstream spending in the oil and natural gas sector, this time zeroing in on E&Ps that focus on crude.
U.S. oil and natural gas exploration and production companies, anticipating continuing low crude oil and natural gas prices, have been reshaping their portfolios to focus on a half-dozen top-notch resource plays whose production economics can hold up even through the roughest of patches. The biggest of these asset purchases and sales grab the headlines, but countless other, smaller deals are having profound effects too. Taken together, this piranha-like devouring of E&P assets in the Permian, the SCOOP/STACK and other key production areas is transforming who owns what in the plays that matter most, and positioning a select group of E&Ps for success.
We examine this ongoing transformation in Piranha!, our new market study of 43 representative U.S. E&Ps; of that total universe of companies, 21 focus on oil (60%+ liquids reserves), nine are gas-weighted producers (60%+ natural gas reserves) and 13 are diversified producers. All of the major U.S. shale/unconventional plays are represented in the combined portfolios of these firms. In Very Particular Places to Go, we discussed Piranha!’s purpose and organization. The first part of the four-part market study examines the strategies that companies are adopting to thrive in a $50/bbl world, breaking down merger and acquisition (M&A) activity by basin to show where these firms are selling and where they are buying. The second part considers the E&P sector’s 2017 capital spending plans and production expectations as a whole, while the third delves into what these company’s have been doing to maintain and improve their financial health. The fourth and final section of Piranha!, which accounts for more than 120 of the report’s 150-plus pages, examines each company in our universe of 43 firms at a granular level, looking at their financial condition, capex plans, geographic focus, M&A strategies and a general assessment of the company’s position in today’s U.S. E&P industry.
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About the song
"Higher Ground" was written by Stevie Wonder, and appears as the first cut on the second side of Wonder's 16th studio album, Innervisions. Incredibly, Wonder wrote, played all the instruments and recorded the song in only three hours. The song is one of the first recordings to showcase the Hohner Clavinet keyboard, which Wonder played with a wah-wah pedal through a Mutron III envelope filter. The lyrics in the song reflect Wonder's feelings about reincarnation and spirituality. "Higher Ground" was recorded at The Record Plant in Los Angeles, and released as a single in July 1973. It went to #1 on the Billboard Hot R&B Singles chart, and #4 on the Billboard Hot 100 list.
The Red Hot Chili Peppers released a cover of "Higher Ground" as the first single from their fourth studio album, Mother's Milk. It went to #11 on the Billboard Modern Rock Tracks chart, and #25 on the Hot Mainstream Rock Tracks list. Personnel on their version was: Anthony Kiedis (lead vocals), John Frusciante (guitar, backing vocals), Flea (bass, backing vocals) and Chad Smith (drums, tambourine).
Innervisions was recorded at The Record Plant in Los Angeles, and Media Sound Studios in New York City, with Wonder producing all the tracks. The album was released in August 1973, and went to #1 on the Billboard Soul LP chart, and #4 on the Billboard Top 200 Albums list. Wonder sang all the lead vocals and was assisted in the studio by Dean Parks, David Walker and Ralph Hammer on guitar, with Willie Weeks and Malcom Cecil on bass. Wonder played all the other instruments on the record.
Stevie Wonder (Stevland Hardaway Morris) is an American singer, songwriter, musician, multi-instrumentalist and record producer. Blind since birth, Wonder was a child prodigy, signing with Motown's Tamla Records at the age of 11. With a career approaching six decades in length, he has released 23 studio albums, four live albums, 11 compilation albums, and 98 singles. Stevie has sold over 100 million records worldwide, and has won 25 Grammy Awards and a Grammy Lifetime Achievement Award. He is a member of the Rock and Roll Hall of Fame and Songwriters Hall of Fame, is a Gershwin Prize recipient, and has won a Billboard Century Award. Wonder also has been awarded a Presidential Medal of Freedom. He still records and performs.
