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			Texas Rotary Rig Count  (as of 5-25-2012):    926 Rigs

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*- O & G Industry Adds More Jobs than any other Texas Industry Segment
In March 2012 statistics were released from the Texas Workforce Commission showing that the mining and logging sector of the workforce, which includes the oil and gas industry, was the fastest growing employer of Texans over the past year – growing 17.6 percent. That equates to over 38,000 jobs added in the mining and logging industries since January 2011. Another 5,700 jobs were added in the industry this past January alone. The Texas Independent Producers and Royalty Owners pointed out that the lowest levels of unemployment statewide are in Midland/Odessa area, which is the hub for industry activity in the state’s busiest oil and gas area – the Permian Basin. The unemployment rate in Midland is at 4.1 percent – about half of the 8.3 percent unemployment rate statewide.

*- El Paso Corp. Shareholders Approve Kinder Morgan Merger
Shareholders of El Paso Corporation have approved of that company’s merger agreement with Kinder Morgan – a transaction that is expected to be finalized during the second quarter of this year. Kinder Morgan expects the deal to be final in May. Completion of the merger was dependent on El Paso spinning off and selling its E&P operations and Kinder Morgan selling certain pipeline and gas processing assets in the Rocky Mountain region. El Paso operates about 43,000 miles of natural gas pipeline, while Kinder Morgan operates 38,000 miles of pipeline and 180 terminals in North America.

*- SandRidge to Sell East Texas Natural Gas Properties
Oklahoma City based SandRidge Energy announced that it will sell its natural gas producing properties in East Texas to NFR Energy for $231 million. These properties are located in Gregg, Rusk and Panola Counties and produced an average of 25 million cubic feet of gas equivalent per day during 2011. SandRidge will use the proceeds of this sale to fund further development of its oil producing properties in Permian Basin of Texas and Mid-Continent.

*- EIA Report: Natural Gas Contribution to Domestic Energy Supply Expected to Grow
According to a recent report from the Energy Information Administration, demand for natural gas is expected to grow more than any other fossil fuel between now and the year 2035. The report shows that demand for natural gas over the next 25 years is expected to grow from 111 trillion cubic feet to 169 trillion cubic feet worldwide. Overall, world energy consumption will grow by 53% by 2035 with crude oil prices expected to reach $125 per barrel during that period. The report notes that oil prices can remain volatile, subject to economic conditions, and could range between 50 and 200 dollars per barrel at anytime over the next 25 years.

*- Quantum Resources Expands Footprint in Permian Basin, Mid-Continent & Ark-La-Tex
Houston based Quantum Resources has acquired acreage containing approximately 1,500 oil and natural gas wells in producing areas of the Permian Basin, Mid-Continent and Ark-La Tex Region for 577 million dollars. The acquisition totals 109,000 acres in Texas, Oklahoma and New Mexico. Net production from the acquired properties is about 8,000 barrels of oil equivalent per day. The acquisition is expected to close on or about October 1st. Quantum estimated that the properties contain about 37.1 million barrels of oil equivalent in proven reserves.

*- Current Oil & Gas Statistics
In February 2012 the Texas Railroad Commission issued a total of 1,798 drilling permits. By comparison there were 1,696 drilling permits issued in February of 2011. Most of the permitting activity continues to be in the Spraberry Trend of the Midland Area where 585 drilling permits were approved in February and the Eagle Ford trend across south Texas were over 400 drilling permits were approved. Low gas prices continue to depress drilling activity in East Texas, where most of the drilling is for Natural gas. Only 46 drilling permits were approved in February for wells in East Texas Counties. Texas preliminary January crude oil production averaged 1,064,917 barrels per day, up from the 962,338 barrel per day average of January 2011. Texas oil and gas wells produced 533.5 Billion cubic feet of gas based upon preliminary production figures for January 2012, that’s down from the January 2012 preliminary gas production total of 552.8 Bcf. In the last 12 months, total Texas reported production was 403 million barrels of oil and 7.1 trillion cubic feet of natural gas.

* - Linn Energy Acquires East Texas Assets
Linn Energy has expanded its presence in East Texas – acquiring natural gas producing properties covering approximately 19,800 contiguous net acres. Linn purchased the assets at a contract price of $175 million. The properties contain about 430 wells and currently produce about 24 million cubic feet per day. Linn has identified multiple infill drilling and well bore recompletion opportunities on the properties.

*- RRC to Revise Recycling Facility Rules
The Railroad Commission directed its staff to start collecting comments on proposed rulemaking to handle the state’s oilfield waste water recycling facilities. The Commission, which regulates the oil and gas industry in Texas, will hold a meeting later this month to further review the proposed rule with industry representatives and interested members of the public. Beginning in the fall of last year the agency initiated a process of reviewing its rules dealing with stationary and mobile facilities that recycle oilfield waste fluids. The proposed rulemaking is intended to modernize the agency’s regulations to handle recent advancements in fluid recycling technology.

*- EnCana to Sell Certain Barnett Shale Assets
EnCana Oil & Gas announced that it plans to sell its substantial natural gas producing assets in the Barnett Shale play of North Texas. EnCana's Barnett Shale properties currently produce about 125 million cubic feet of gas equivalent per day and includes associated processing and pipeline facilities on about 52,000 acres. EnCana expects this sale of its Fort Worth Basin properties to be completed later this year or early next year. EnCana acquired its core acreage in the Barnett Shale in 2004 when it acquired Tom Brown Inc.


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Patrick C. Forbis    - Texas Oil & Gas Industry Consultant -    Editor & Publisher - Texas Drilling Observer    The Oil & Gas Regulatory Report    & Statewide Regional Reporting Service      Texas Drilling Observer    P.O. Box 11648    Capitol Station    Austin, Texas -- United States    78711-1648         patrick@drillingobserver.com    +1- (512) - 826-3732 - CELL    +1- (512) - 372-9772 - OFFICE