PLAY SPOTLIGHT: GETTING READY FOR
WHEN THE EAGLE FORD SOARS
Stephen Morgan, Vice President
THE INDUSTRY DOWNTURN – WE KNOW THE
STORY
 Significant outspend of cash flow
 Highly levered balance sheets
 Analysts attach high trading multiples to companies with increased production
 Wall Street rewards aggressive growth
 Cheap capital permits an over leveraged market
 Nov 2014 - Saudi Arabia declines to cut production
 The downturn begins
THE DAMAGE
 Oil prices dropped to 18-year low
 U.S. rig count falls from 1,913 to a low of 404
 U.S. production declines 12%
 90 producers and 83 service companies declare
bankruptcy
 Industry wide layoffs
 “The Great Crew Change” in flux
POSITIONED TO “WEATHER THE STORM”
 Disciplined financial management
 Conservative business practices
 Focus on core competencies
 Manageable asset inventory
 Recurring revenue business model
MANAGING THE DOWNTURN
Cutting Cost without sacrificing service:
 Reduce non-essential personnel
 Leverage in-house talent
 Lower 3rd-party expenses
 Optimize technical expertise
 Work the numbers
Creating value
 Short-term incentives for long term commitments
 Aggressively seeking value-added optimization opportunities
 Becoming our customers go-to consultant
TRANSTEX TREATING
PREPARED FOR THE UPTURN
PEOPLE: OUR MOST IMPORTANT ASSET
 Retained skilled work force
 Continued emphasis on technical training & education
 Multi-disciplined roles
 Deliver value for our customers
STAYING ENGAGED
 With our customer
 With our industry
 With our team
A BRIGHTER FUTURE
 New technologies and improved methodologies drive economic development at
significantly lower oil prices
 Bloomberg reports that select parts of the Eagle Ford are profitable at $30 per barrel
NEW WELL OIL PRODUCTION PER RIG
Barrels per day in the first full month
1400
1200
1000
800
600
400
200
0
Bakken
Eagle Ford
2013
Source: EIA
2014
2015
Permian
2016*
NATURAL GAS OUTLOOK

EIA's forecast of total natural gas consumption averages
76.4 Bcf/d in 2016 and 77.1 Bcf/d in 2017, compared with
75.2 Bcf/d in 2015.

In 2016, increases in total natural gas consumption are
mainly because of electric power sector use of natural
gas, which is expected to increase by 5.4%.

Forecast industrial sector consumption of natural gas
increases by 2.3% in 2016 and by 1.0% in 2017.

Natural gas use positioned to overtake coal this year for
the first time ever (EIA).

U.S. power producers consumed a seasonal record
amount of natural gas in June, up 9% from a year earlier,
while coal shipments are down by more than 25% year to
date (Association of American Railroads).
UNTAPPED NATURAL GAS OPPORTUNITY

Mexican imports of U.S. gas have skyrocketed 92% since 2008

Export capacity projected to grow to over 7 billion cubic feet per day
(Bcf/d), Mexico could start taking 10% of U.S. production—in a very short
time frame,

The main growth in Mexico's appetite for natural gas is
expected to come from the power sector.

The CFE (Federal Electricity Commision) is reporting 1,600
MW of fuel oil to natural gas plant conversions for 2016.

In addition, over 12 GW of new build combined cycle power
plants are anticipated by 2020.

Mexico is shifting its dependence on fuel oil and imported
LNG towards natural gas, but since its domestic gas
production is in decline, US gas will be a big part of its energy
future

By 2020, power generation could account for almost 2.0 Bcf/d
of additional Mexican demand.
TRANSTEX TREATING
HANDLING ALL YOUR GAS TREATING & PROCESSING NEEDS
Stephen Morgan
[email protected]
www.transtextreating.com
713-654-4440