kirk edwards las colinas energy partners
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D. Kirk Edwards Las Colinas Energy Partners, LLC April 2, 2013 Midland, Texas
The Hydrocarbon Hat Trick
How Energy is Impacting The Texas Economy Where we are and where are we going!
Austin
San Antonio Houston
Midland/Odessa
Midland/Odessa
Extraction Refining Petrochemicals
The Hydrocarbon Hat Trick
Oil & Gas Extraction
0
20
40
60
80
100
120
140
Jan-1974 Dec-1978 Nov-1983 Oct-1988 Sep-1993 Aug-1998 Jul-2003 Jun-2008
Prices Diverge* Natural Gas Wellhead (BOE) Refiners Acquisition Cost of Crude: Imported
* Adjusted using consumer price index: all urban consumers. SOURCE: Energy Information Administration. Author's adjustments.
Oil & Gas Extraction
U.S. Oil Production Growth
30
40
50
60
70
80
90
100
110
120
Jan-1981 Aug-1985 Mar-1990 Oct-1994 May-1999 Dec-2003 Jul-2008
Jan 1981=100 After 30 years of decline,
tight oil drives production growth
New Mexico
U.S.
Texas
SOURCE: Energy Information Agency.
Most States Below Peak Employment
Texas Basin Drilling on Different Trends
0
20
40
60
80
100 Barnett
0
50
100
150
200
250
300
02
/04
/11
04
/04
/11
06
/04
/11
08
/04
/11
10
/04
/11
12
/04
/11
02
/04
/12
04
/04
/12
06
/04
/12
08
/04
/12
10
/04
/12
12
/04
/12
02
/04
/13
Eagle Ford
0
100
200
300
400
500
600
02/0
4/11
04/0
4/11
06/0
4/11
08/0
4/11
10/0
4/11
12/0
4/11
02/0
4/12
04/0
4/12
06/0
4/12
08/0
4/12
10/0
4/12
12/0
4/12
02/0
4/13
Permian Vertical
Horizontal
Directional
EF shale production growing rapidly
EF shale production growing rapidly
EF shale production growing rapidly
EF shale production growing rapidly
Shale Boosts State Tax Revenues
Production & Regulation Tax Revenues:
Natural Gas up 53% in 2011 & 38% in 2012
Oil up 46% in 2011 and 43% in 2012 Oil Well Service Taxes up 54%
Over a dozen other mining related licenses and fees saw well into double digit increases in net revenues, as did Royalty Payments
Retail sales in energy regions Midland & Odessa Sales Tax up 15-18% ytd in 2013.
UTSA: 2011 EF generated $312 million in state taxes
Total Wages In Texas Shale*
*Growth rates are year-to-year. Adjusted using U.S. Personal Consumption Expenditures. SOURCE: Quarterly Census of Wages and Employment; Bureau of Labor Statistics
-10
-5
0
5
10
15 Barnett
-5
0
5
10
15
2006 2007 2008 2009 2010 2011 2012
Eagle Ford
-15
-10
-5
0
5
10
15
2006 2007 2008 2009 2010 2011 2012
Percent Permian
Employment Wages
Permian
Eagle Ford
Cline?
Refining & Petrochemicals
0
2
4
6
8
10
12
Jan-1974 Aug-1979 Mar-1985 Oct-1990 May-1996 Dec-2001 Jul-2007
Oil rises while shale and weather crush natural gas
*Refiners acquisition cost of imported crude / natural gas wellhead price (BOE). SOURCE: Energy Information Administration. Author's Adjustments.
Refining & Petrochemicals
Refining
70
75
80
85
90
95
100
0
5
10
15
20
25
30
Feb-2000 Dec-2001 Oct-2003 Aug-2005 Jun-2007 Apr-2009 Feb-2011
Percent Dollars per bbl
Utilization and margins are up
Total Utilization
Refining
the U.S. becomes a net exporter of gasoline and diesel
-2000
-1000
0
1000
2000
3000
4000
5000
No
v 0
9, 2
00
1
No
v 0
9, 2
00
2
No
v 0
9, 2
00
3
No
v 0
9, 2
00
4
No
v 0
9, 2
00
5
No
v 0
9, 2
00
6
No
v 0
9, 2
00
7
No
v 0
9, 2
00
8
No
v 0
9, 2
00
9
No
v 0
9, 2
01
0
No
v 0
9, 2
01
1
No
v 0
9, 2
01
2
Advantage U.S. Ethylene
2011 Nameplate Capacity
tonnes/year
Asia 29,242,000
Middle East 24,059,000
United States 27,593,206
Western Europe 24,384,000
* Percent of capacity reporting feedstock usage for each region was: Asia-82%, ME-46%, U.S.-99%, WE-89%, ROW-56%. 73% of global capacity reported feedstock use.
SOURCE: 2012 International Survey of Ethylene Steam Crackers. Author's calculations.
0.0
0.1
0.2
0.3
0.4
0.5
0.6
0.7
0.8
0.9
1.0
Asia MiddleEast
UnitedStates
WesternEurope
Share 2011 Ethylene Feedstock Mix*
NGL
Naptha
Gas oil
Other
New Ethylene Capacity
Company Location Capacity (mm lb/yr)
Start-Up
Dow Chemical US Gulf Coast 4,200 2014-2017
Ineos Lake Charles, LA 3,000 2018
CP Chem Baytown, TX 2,500 2016/2017
Braskem/Idesa Mexico 2,200 2015
Shell Chemical Northeast US 2,000 2016+
Formosa Point Comfort, TX 1,760 2015
LyondellBasell Texas, Illinois 1,450 2012-2014
Dow Chemical Hahnville, LA 800 2012Q4
Williams Lake Charles, LA 600 2013Q3
Westlake Chemical Lake Charles, LA 230 2012
Ineos Chocolate Bayou, TX 230 2013
Source: Chemical Week, December 2011
Oil and natural gas have separated Midland and Odessa from the rest of the
country for the last four years …
90
100
110
120
130
140
150
160
170
180
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
20
13
Source: BLS/ Haver Analytics
Non-farm employment, Jan-1990=100, SA
Midland Odessa US
Midland & Odessa outperform US by wide level in job growth since 2000
-25
-20
-15
-10
-5
0
5
10
15
20
2007 2008 2009 2010 2011 2012 2013
Source: BLS/Haver Analytics
3-mo-moving average of % job growth
Midland Odessa US
Midland Odessa job losses have disappeared Lowest Unemployment in the country!
-15
-10
-5
0
5
10
15
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012
Source: BLS/Haver AnalyticsNote: Dec/Dec SA data
Midland Odessa
Percent change in Midland and Odessa Employment, 1996-2012
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013*
Source: BLS/Haver AnalyticsNote: Dec/Dec SA data, 2013* Jan/Jan
Midland-Odessa US
Annual percent change in Midland-Odessa Employment compared to US, 1996-2012
Unemployment rate(%)
0
2
4
6
8
10
12
14
19
90
19
91
19
92
19
93
19
94
19
95
19
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19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
20
05
20
06
20
07
20
08
20
09
20
10
20
11
20
12
SA, %
US Midland OdessaSource: Haver Analytics
0
2
4
6
8
10
12
0
100
200
300
400
500
600
700
800
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
Source: Haver Analytics, Baker Hughes
Rig Count, Jan-1990=100, SA
Rig count Unemployment rate
Unemployment Rate, Percent, SA
Baker Hughes TX district 8 rig count and Midland-Odessa unemployment rate
Outlook
Outlook
• Hydrocarbon Industries continue to drive Texas growth rates ahead of the U.S.
• Is the Global Economy Slowing?
• Uncertainty: Regulatory, Fiscal, Eurozone
Outlook is Positive
Short Term Risk is All Downside
Outlook
Map Contents Clear All
Layers
Current Week
Drill For
Gas
Gas
Oil
Oil Thermal
Thermal
Trajectory
Depth
Well Type Location
Cultural
Major_Cities Imagery
Basins
Geology Counties Highways
States
MMS_AREAS MMS_BLOCKS
Working rig location information provided in part by Rigdata.
The GIS system was developed by Petris.
Baker Hughes Investor Relations
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For additional information on the active rigs, contact Rig Data
0
8
16
32
48
64 miles
Rig Count: 1748 28-Mar-2013
CFV0402CFV0402/wEPDwU392px100%
THE WORLD VIEW
WHERE WE HAVE BEEN, WHERE WE ARE GOING IN ENERGY
D. Kirk Edwards Las Colinas Energy Partners, LLC April 2, 2013 Midland, Texas
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