Independent capital for independent producers.

Producer Articles

Shale Revolution

The vast majority of new production in the US is from shale formations. It has been understood almost since the beginning of the oil and gas industry that shale deposits are the source rock for conventional crude oil and natural gas deposits. Over geologic time hydrocarbons migrate under pressure and high temperatures from the...

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Forward Curves, Markets & Trading Strategies

Energy commodities—crude oil, natural gas, heating oil and gasoline—are bought and sold globally through Futures contracts (“Futures”). These are legally binding agreements for the physical delivery of a specified volume of a commodity at a specified time and place for an agreed upon price. Futures are not derivatives; they are contracts to actually purchase...

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Price Differentials

As the US has become a much larger oil producer over the last few years, regional market dynamics are playing a larger role in the price of oil at the wellhead. Today, we do not focus only on global factors that affect oil prices. Of equal importance is a strong understanding of the regional...

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Great Expectations: Revisiting Peak Oil

Crude oil supply expectations have changed over the last twenty years. In the late 1990s, the idea of “peak oil” was gaining popularity. The theory was presented by M. King Hubbert in the 1950s and popularized in the last quarter of the 20th century. Working as a geologist for Shell, he predicted US oil...

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OPEC in the Modern Era

Founded in 1960, the Organization of the Petroleum Exporting Countries (“OPEC”) is a coalition currently comprised of 12 member countries predominately located in the Middle East. OPEC’s stated mission is to provide “steady income to producers and a fair return on capital.” This mission has historically been accomplished through production restrictions. Founding members Saudi...

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Where We See Opportunities in Oil & Gas

Historically low interest rates continue to drive capital away from traditional “safe” liquid investments such as CDs, money market funds and bonds in pursuit of yield. Investors are paying ever higher prices in an attempt to lock in current return. The increasing flow of capital into riskier assets–such as stocks that pay dividends and...

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A Shakeout at $100 Oil?

I have received several inquiries regarding recent articles (such as “Shakeout Threatens U.S. Shale Patch as Drillers Go for Broke” which I distributed in June) asking my thoughts on a shakeout for the industry and the impact such an event could have on Five States. The following are my comments on (1) the Case for...

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When Things Change, Things Change

Only a decade ago, many economic seers were predicting that oil prices would be in the $150 to $200 per barrel range in this current decade.  But there is an old adage in commodity industries: “the cure for higher prices is higher prices”.  It is analogous to a most basic economic concept, “change begets...

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Fracking Good

America’s shale is changing the dynamics of world energy. The reemergence of the United States as a global energy superpower is addressing many of the major problems in the United States and is having profound strategic and geo-political effects throughout the world. In November 2012, the U.S. replaced Saudi Arabia as the world’s largest...

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A Correction in Oil Prices?

The media has recently hopped on the possibility of a decline in oil prices due to the success of the new development in the United States. This has prompted three questions from Five States investors: Do we agree that there will be a correction in oil prices? How would a correction affect the Five...

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Sunshine and Clouds

January is the time of year when we look back at our previous year of work and accomplishments, and get operations underway for the new year. For Five States, 2013 was productive. We stayed busy throughout, evaluating 115 individual submittals, representing $140.2 million. Of these, only five made it across the finish line by...

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Whirlwind of Change

Looking back, I am astonished by the changes that have occurred in the development of U.S. energy supplies over the last decade. In fewer years than a kindergartner becomes a teenager, the U.S. oil and gas industry has found the keys to unlock literally billions of barrels of oil and trillions of cubic feet...

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Will the US Achieve Energy Independence?

I am frequently asked if America can, or will, ever again be energy self-sufficient. The question is more complex than it seems. For many of those who ask, the question is really about American’s ever-increasing level of oil imports. “Are we likely to develop sufficient production capacity in the US such that we no...

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Five Hundred Million

We reached an interesting milestone at Five States this year. Total distributions from Five States partnerships over our history have now exceeded half a billion dollars. This is about three times the total equity invested1 in the Five States partnerships from 1989 through 2005. About half of this was operating income generated from our...

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