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Producer Articles

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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Awash in Oil!

Exxon recently published its annual Outlook for Energy issue, in which it projects trends of the world’s energy supply and demand needs to 2040. It makes for interesting reading. According to Exxon, the world’s population will rise by more than 25 percent from 2010 to 2040, reaching nearly 9 billion. An expanding population, as...

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Sunset to Sunrise: Fundamentals & Trends

Industry consensus is that the increase to United States oil production volume in 2012 will exceed growth in world oil demand for the first time in half a century. The increase in the rate of US production is expected to continue for the foreseeable future. The success in development of new natural gas reserves...

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What Goes Around

I have previously commented in The Producer about the cyclic nature of the oil and gas industry. For those of us who have been involved in upstream exploration and development for a decade or more, we’ve become accustomed to the ebb and flow of business activities, and acutely sensitive to clues that may indicate...

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Sunset to Sunrise

My father loved the oil business. He grew up in West Texas during the World War II oil boom and worked his way through college “roughnecking” in the oilfields. Because the derrick crew did the dangerous work out in the weather on the rig floor, my grandfather told Dad to go to college so...

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Familiar Ground

Articles in two recent investment newsletters reminded me once again how volatile the prices of oil and natural gas can be and how many factors are continually in play to move markets, sometimes dramatically.  Price volatility makes investment planning and project analyses difficult, and can create havoc with investment results over both short and...

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Reversal of Fortune

In the last decade, we have experienced a complete reversal of expectations regarding the future of our domestic energy supply. Today we have the potential to materially improve both our geopolitical and economic situation. In the 1970s it was widely believed that U.S. oil and natural gas reserves had been depleted to the point...

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Mezzanine Financing: Portal to Profits

Recently, Arthur, Don and I, along with members of the Five States staff, have been meeting with investor groups throughout the country. We have been explaining the business plan of our capital partnerships and reporting on the ongoing activities and results of our currently active funds. What we have learned as we have committed...

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