2G

SUNDAY
January 10, 2010

Midland College
PETROLEUM PROFESSIONAL
basin oil
DEVELOPMENT CENTER
Special Events
To register, go to the PPDC Web site:
www.midland.edu/ppdc

PTTC/PPDC: What’s Your Bottom

Line: Assessing Operating Costs
Panel of Speakers: Bob Kiker, PTTC: Kent
Gantz, Schlumberger IPM Operations;
Calvin Turner, Fasken Operations; Ed Payne,
Whiting Field Operations; Ken Barker, Bak-
er Hughes; Rob Davis, Western Falcon;
Randy Krall, Wellkeeper Operations
Date & Time: January 14, Thursday, 8:30
a.m. - 4:30 p.m.
Fee: $195; Out of State, $220
Location: Midland College PPDC Build-
ing, 105 W. Illinois

C02 School
Instructor: L. Steve Melzer, Bob Kiker, Dr.
Bob Trentham, W. Hoxie Smith
Date & Time: January 25-28, Monday-
Thursday, 8 a.m. - 5 p.m.
Fee: $1,895; Out of State, $1,920
Location: Midland College PPDC Build-
ing, 105 W. Illinois

Courses
To register and see our complete
schedule, go to the PPDC Website:
www.midland.edu/ppdc or call 683-2832.

PETRA
Instructor: Greg Hinterlong
Date & Time: January 21-22, Thursday-
Friday, 8 a.m. - 5 p.m.
Fee: $570; Out of State, $595
Location: Midland College PPDC Build-
ing, 105 W. Illinois

Land Personnel and the Effective Use

of Due Diligence in the Acquisition and
Divestiture of Oil and Gas Properties
Instructor: Dr. Patrick Fitzgerald
Date & Time: January 21-22, Thursday-
Friday, 8:30 a.m. - 4:30 p.m.
Fee: $375; Out of State, $400
Location: Midland College PPDC Build-
ing, 105 W. Illinois
This program has been accredited for 13
RL/RPL continuing education credit(s), 13
CPL recertification credit(s), which includes
0 CPL/ESA recertification credit(s) and/or 0
Ethics credit(s), for a total of 13 credit(s).

Well Control School

Instructor: Larry Chapman
Date & Time: January 25-28, Monday-
Wednesday, 8 a.m. - 5 p.m.; Thursday, 8 a.m.
- Noon
Fee: $650; Out of State, $675
Location: Midland College PPDC Build-
ing, 105 W. Illinois

Polymer Gels for Conformance-

Improvement Treatments: What It Takes
to Be Successful and Illustrative Field
Applications - Registration Deadline:
January 25th
Instructor: Dr. Randy Seright
Date & Time: February 9, Tuesday, 8 a.m.
- 5 p.m.
Fee: $275; Out of State, $300
Location: Midland College PPDC Build-
ing, 105 W. Illinois

Exploring for Missed Pay in Old Wells

Using DST data - Registration Deadline:
January 28th
Instructor: Hugh Reid
Date & Time: February 15-17, Monday-
Tuesday, 8 a.m. - 5 p.m.; Wednesday, 8 a.m.
- Noon
Fee: $575; Out of State, $600
Location: Midland College PPDC Build-
ing, 105 W. Illinois
How to Use Multi Well Pressure/Depth
Plots in E&P - Registration Deadline: Jan-
uary 28th
Instructor: Hugh Reid
Date & Time: February 17-19, Wednes-
day, 1-5 p.m.; Thursday-Friday, 8 a.m. - 5 p.m.
Fee: $575; Out of State, $600
Location: Midland College PPDC Build-
ing, 105 W. Illinois
Petroleum Land Management
Instructor: Will Porter
Date & Time: February 16-25, Tuesdays
and Thursdays, 6-9 p.m.
Fee: $390; Out of State, $415
Location: Midland College PPDC Build-
ing, 105 W. Illinois
This program has been accredited for 12
RL/RPL continuing education credits, 12 CPL
recertification credits, which includes 0
CPL/ESA recertification credits and 0 Ethics
credits, for a total of 12 credit(s).
The Oilfield from Planning to Plugging
Instructor: T.E. Gill
Date & Time: February 16-17, Tuesday-
Wednesday, 8 a.m. - 5 p.m.
Fee: $350; Out of State, $375
Location: Midland College PPDC Build-
ing, 105 W. Illinois
PetroSkills: Practical Drilling Skills -
Registration Deadline: February 5th
Instructor: Dr. Leon H. Robinson
Date & Time: February 22-26, Monday-
Friday, 8 a.m. - 5 p.m.
Fee: $3,275; To register, contact: www.pet-
roskills.com or call (800) 821-5933. Fee is
paid directly to PetroSkills
Location: Midland College PPDC Build-
ing, 105 W. Illinois
Study concludes time is now for producers to develop hedging strategy
By Mella McEwen
Oil Editor
Independent oil and natural gas produc-
ers have ridden a price roller coaster the
past couple of years, watching commodity
prices climb to record highs and then
plunge 70 percent.
Commented Mike Corley, founder and
president of EnRisk Partners LLC in
Houston, “Given the significant volatility
in crude oil and natural gas prices over the
past two years, not to mention the state of
economy and the capital markets, the time
is ripe for oil and gas producers to develop
and implement a proper risk management
program.”
His company recently released the
results of a hedging study that surveyed
the current hedging practices of independ-
ent producers as represented by 38 inde-
pendent producers from across the United
States, Canada and Australia.
The study found :
- 41 percent of respondents regularly
hedge production while 29 percent never
hedge production
- The majority of those who regularly
hedge production hedge 51 to 71 percent
of their current proved, developed produc-
ing volumes
- 36 percent of respondents say the com-
pany chief executive, president or chief
ALEX MILLS
Variety of controversies brought about failure of Copenhagen climate conference
financial officer makes hedging decisions
- Swaps and collars are the most popular
hedging instruments among respondents
- 67 percent of the respondents charac-
terized the success of their current or past
hedging initiatives as ‘good’ or ‘excellent’
“It’s a company-specific decision,” Cor-
ley said from his Houston office. “They
have to weigh the consequences of hedg-
ing or no. Some companies want to cap-
ture all the upside while others hedge
because they want to know they have the
capital they need to operate. Too, some
lenders require hedging before they’ll lend
the capital.”
There are tools out there, he noted, to fit
almost every producer’s need.
Kirk Edwards, president of MacLondon
Royalty Co. in Odessa said his preference
is to buy floors so that, if commodity
prices fall below a certain level, the
finance institution pays the difference.
“Since I buy a lot of royalties, we place
floors to ensure a minimum rate of return,”
Edwards explained. “Buying a price floor
incurs costs but I’m assured a minimum
rate of return. I’d rather buy price floors
than collars or other hedging mechanisms.
Some banks, he noted will increase
lending capacity of the producer will
hedge production.
When prices reached record highs and
then fell to $40 as 2009 approached, “I
could sleep better at night with oil at $30”
because he had bought floors, Edwards
said. “Natural gas prices have fallen so
low, hedges I bought in 2008 are still pay-
ing off.”
Asked why independent operators may
be reluctant to utilize those tools, Corley
said “Many are reluctant because in their
mind they had a bad experience and the
sour taste lingers even though it may have
been 10 years ago.”
Edwards said some operators “have the
mentality that they feel they know where
prices will be.”
Others, Corley said, simply don’t know
all the options.
“I would argue that, for small to mid-
size producers it’s largely a lack of educa-
tion about what’s available. There are
numerous folks, like us or futures brokers
or banks that provide information on hedg-
ing,” he said. He is planning a series of
educational seminars for this spring to be
held around the country and said Midland-
Odessa “is on our radar.”
Several of his clients, Corley said, told
him that having their production hedged
last summer when prices were so low “was
the difference between being profitable or
not being profitable. Hedging may limit
your upside but it can bring peace of
mind.”
---
Mella McEwen can be reached at
mmcewen@mrt.com.

Natural Fractures in Hydrocarbon

Reservoirs - Registration Deadline: Feb-
ruary 5th
Instructor: Dr. John Lorenz and Scott
Cooper
Date & Time: February 22-23, Monday-
Tuesday, 8 a.m. - 5 p.m.
Fee: $695; Out of State, $720
Location: Midland College PPDC Build-
ing, 105 W. Illinois
February
Exploring for Missed Pay in Old Wells
Using DST Data
How to Use Multi Well Pressure/Depth
Plots
Natural Fractures in Hydrocarbon Reser-
voirs
Oilfield from Planning to Plugging
Oilfield Manager (OFM) - Introduction
Land for Non-Landmen - offered by PDI
Petroleum Land Management
PetroSkills: Practical Drilling Skills
Polymer Gels for Conformance-Improve-
ment Treatments
The Oilfield from Planning to Plugging
Understanding and Effectively Settling
Surface Damage Claims
Well Service and Pressure Control
The failure of the United
Nation’s climate-change con-
ference in Copenhagen comes
as no surprise. In addition to
the revelation to some pro-
global-warming scientist have
been manipulating the data for
several years, there is just too
much controversy surrounding
the proposed “solutions.”
The controversy comes in a
variety of forms all dealing
with the eventual economic
impact of the proposed solu-
tion discussed at Copenhagen.
First, the developing coun-
tries want the developed coun-
tries to pay for their past
“sins” of increasing man-
made greenhouse gases
through increased burning of
fossil fuels. The developed
countries, such as the U.S.,
have expanded their
and under what conditions.
Alex Mills is President of the Texas Alliance of Energy Pro- Even if these problems were
ducers, which represents more than 3,300 members across ironed out, the central issue is
Texas. The opinions expressed represent those solely of the economic competition. Who
author. are the winners and who are
the losers? What countries
have the most to lose and
economies. In doing so, they out – called “climate aid” – to what countries have the most
have emitted more greenhouse help them solve their prob- to gain?
gases than developing coun- lems. Developed countries A key component to the
tries. When the discussion agreed to pay $30 billion dur- economic advantage issue
turns to what countries must ing the next three years, involves the fact that fossil
reduce emission and the increasing to $100 billion a fuels are cheap when com-
amount of decline, the devel- year after 2020. This probably pared to other fuels and they
oping countries insist that was the only significant agree- are efficient. Cheap energy
most of the emission reduc- ment to come out of the con- gives countries an economic
tions must come from the ference and it has many prob- advantage right out of the
developed countries. lems. For example, the agree- starting gate. Many believe
that the abundance of cheap
Developing countries also ment probably is not legally
wanted and achieved recogni- binding in the U.S. Addition- crude oil in the U.S. during
the 1950s and 1960s led the
tion from developed countries ally, there is no agreement as
that they should pay for their to which countries will industrial revolution and the
past “sins” by giving the receive funds, the amount,
developing countries a hand- how countries would apply
Please see MILLS/3G