Independent capital for independent producers.

Producer Articles

Changing Expectations

What a year! This time last year, I thought Mr. Trump was in the race to provide a media shill to allow the “real Republican candidates to debate the real issues.” After the primaries I thought a Republican victory over the Clinton machine was impossible. Equally surprising to me was the Republican dominance in...

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What a Difference a Year Makes!

2017 opened with a much brighter outlook for the petroleum industry and the future for America’s energy security than did 2016. At year-end 2015 the U.S. oil industry was in a funk. In the last seven months of 2015, oil prices declined 38 percent, from more than $60 per barrel in June to $37...

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Election Year Choices

On the threshold of the November elections, we are being assailed by both major presidential candidates with charges and counter-charges, uninformed rhetoric and strident babble. Neither candidate appears willing or able to discuss energy matters with reason, nor almost any other major issue. The creativity and ingenuity of American geoscientists and engineers have led...

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How We Purchase Oil and Gas Properties

Financial theory is based on the assumption that money has Time Value.  The idea is that a dollar available to you today is worth more than a dollar available to you later.  The mechanics are fairly simple: Borrowers will pay interest to get money now and repay it later. Lenders will be paid to...

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The Five Stages of Loss & Grief

In the last few issues of The Producer, I have discussed and illustrated the impact of the decline in oil prices on the value of producing properties. Also discussed was the fact that most producers who had what were previously considered “prime” debt levels drawn against their properties are now insolvent (their assets are...

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When Good Wells Go Bad

Like people, oil and natural gas wells have productive lives—they are born, decline over a period of time, then are put to rest. Also like people, the length of their lives can be affected by a variety of circumstances, both physical and economic. Ultimately, however, all wells reach their economic limit and can no...

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The News is So Bad!

I have received a number of calls recently with a common theme; “The News is So Bad!” This statement is usually followed by: “I read that the price of oil/gas will never recover”; “The drilling industry is collapsing”; “I read that the collapse of the oil/gas industry may go on for decades”; or “How...

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Good News – Bad News

The US Energy Information Agency (“EIA”) recently announced that production from wells drilled since the start of 2014 made up 48 percent of total US crude oil production in 2015. With the increased use of hydraulically fractured horizontal wells, new production as a percentage of total US production has more than doubled from 22%in...

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“Déjà Vu All Over Again” – The Market for Oil and Gas Assets

What a difference a year makes! At this time last year, oil was around $60 per barrel, and we thought we had taken a beating. When oil fell from $85 to $60 per barrel, the present value of the future production fell in half. Little did we know that, in 2015, we would see...

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What Happened in 2015?

As the oil industry stumbles into 2016, everyone is asking the same questions: Why did oil and natural gas prices fall so far and so fast in 2015? Did anyone see the collapse coming? Did anyone forecast it? Were OPEC or non-OPEC countries or groups to blame? Were individuals? How long will current conditions...

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Beyond the Storm, Bright Horizons

Over the last five years, oil production in the US increased by over 4.5 million barrels of oil per day (“bopd”) to almost 10 million bopd.  The US now rivals Saudi Arabia for the position of largest oil producer in the world.  This 4.5 million bopd increase is about a 5% increase in world...

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Riding the Cycles

No one needs to inform west Texas citizens that the oil and natural gas industry is currently in a slump. All one has to do is drive from Midland to Odessa and count the number of drilling rigs standing idle in storage yards, or pick up a copy of Midland’s The Daily Observer to...

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How Do We Know?

Our most frequently asked question the last several months can be summarized as “How Do We Know?” Some specific questions are, “How do we know: When oil prices have bottomed? When it is time to buy? When the banks will force their non-compliant or insolvent borrowers to sell? When it is time to “back...

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30-Year Anniversary Events

Five States is celebrating our 30th year in business! We gratefully acknowledge the confidence and support of the many financial advisors, investors, business associates, employees, and friends who have been a part of our success and growth through the years. Many of the company’s current activities are “business as usual”: reviewing investment submittals, analyzing...

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