US oil ‘stripper well’ operators adopt new strategies to keep afloat amid crude slump



US “stripper well” operators, the nation’s smallest oil producers seen as most likely to succumb to the crude price slump, are hanging in tough, reducing the chances of near-term production cuts needed to rebalance the domestic oil market.

The conventional wisdom is that “strippers” would be the first to fold in the face of oil’s slide below US$40 given their tiny size – some may pump as little as few hundred dollars’ worth of oil a day – limited access to capital and high costs compared with bigger, more efficient shale producers.

Yet interviews with executives and experts show those smallest, often family-owned, businesses are also among the most resourceful, keeping the oil flowing even as prices near 11-year lows and a growing number of their wells lose money.

While hopes for a rebound are fading, “strippers” are doing everything they can to keep their “nodding donkey” pumps working so they can hold on to land leases that give them access to oil reserves.

“The small operators of the stripper wells are pretty resilient,” says Mike Cantrell, the head of the National Stripper Well Association. “They’ve always made it through and will still make it through.”

Stripper wells pump no more than 15 barrels of oil per day but together over 400,000 wells scattered across the nation’s oilfields produce over a tenth of US oil output, enough to affect the market supply-demand balance and prices.

Drawing analogies to the 1980s oil slump, some analysts had warned that half of stripper wells could shut if crude prices held below $40 a barrel, helping ease the supply glut and possibly underpinning the prices.

The tenacity of the stripper well producers is challenging that view.

For example, Nelson Wood who runs Wood Energy, a family business founded by his parents more than 60 years ago, has laid off 14 of his 32 employees and closed 10 of 150 wells in the Illinois Basin, but so far the production is down only 4 per cent.

He may have to shut more wells, based on electricity, labour, maintenance and salt water disposal costs, but said one key concern was meeting the requirements of oil and gas mineral rights.

“We run some wells at a loss to keep the lease active,” he said.

To be sure, many of these mom-and-pop shops have already cut production to conserve cash and the longer oil prices remain low, the harder it will be for them to keep pumping.

Darlene Wallace, who inherited her company Columbus Oil after the passing of her husband over a decade ago, has shut in four of her 25 wells in Oklahoma, cutting about a third of production, and is now focusing on overhead costs.

Ms Wallace says she has done everything from getting rid of a postage machine, which saves just $300 a year, to asking her three employees to cover 20 per cent of their health insurance costs, which she estimates could result in annual savings of $10,000.

“I hate to do that to my employees, but we’re all going to have to cut back,” Ms Wallace says.

Some stripper operators are even deferring necessary maintenance, others are turning to temporary workers to cut employment costs. Many are so small that their owners can roll up their sleeves and do the work themselves if necessary.

The stripper well operators who spoke with Reuters said many of their peers are taking similar measures to survive.

Ponderosa Advisors, a Denver-based energy, agriculture and water consultancy, reckons debt-free companies can cover their operating costs even with oil below $35 a barrel. Some produce at a cost as low as $18.

That means prices can fall further before any major shut-ins.

In the meantime, many stripper operators are manoeuvring carefully around clauses in their lease agreements to stay in the business. Most can only turn off their wells for a brief period without losing their rights.

In Texas, for example, the cessation period for which a well can get idled without the operator losing the lease is typically 60 to 90 days, according to Richard Hemingway Jr, the head of the oil and gas practice at law firm Thompson & Knight.

“I have clients that are masters at working that,” he said, referring to a technique in the industry known as “stop-cocking”, where producers wait until the very final day of the cessation period before turning back on production.

Ken Hunter of Vaquero Energy, a stripper well company with several hundred wells in California, says in some cases operators may chose to produce from just a single well on a lease that includes up to 10 to remain in compliance.

Such techniques could lead to deeper production cuts if the crude downturn persists, but as long as stripper producers keep their leases they should be able to crank up output again once prices recover.

“We could easily fill the void with production from incremental drilling as soon as the price rebounds to even $50,” according to Bernadette Johnson, a managing partner at Ponderosa Advisors.

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The smuggler

Eldarir had arrived at JFK in January 2020 with three suitcases, containing goods he valued at $300, when he was directed to a search area.
Officers found 41 gold artefacts among the bags, including amulets from a funerary set which prepared the deceased for the afterlife.
Also found was a cartouche of a Ptolemaic king on a relief that was originally part of a royal building or temple. 
The largest single group of items found in Eldarir’s cases were 400 shabtis, or figurines.

Khouli conviction

Khouli smuggled items into the US by making false declarations to customs about the country of origin and value of the items.
According to Immigration and Customs Enforcement, he provided “false provenances which stated that [two] Egyptian antiquities were part of a collection assembled by Khouli's father in Israel in the 1960s” when in fact “Khouli acquired the Egyptian antiquities from other dealers”.
He was sentenced to one year of probation, six months of home confinement and 200 hours of community service in 2012 after admitting buying and smuggling Egyptian antiquities, including coffins, funerary boats and limestone figures.

For sale

A number of other items said to come from the collection of Ezeldeen Taha Eldarir are currently or recently for sale.
Their provenance is described in near identical terms as the British Museum shabti: bought from Salahaddin Sirmali, "authenticated and appraised" by Hossen Rashed, then imported to the US in 1948.

- An Egyptian Mummy mask dating from 700BC-30BC, is on offer for £11,807 ($15,275) online by a seller in Mexico

- A coffin lid dating back to 664BC-332BC was offered for sale by a Colorado-based art dealer, with a starting price of $65,000

- A shabti that was on sale through a Chicago-based coin dealer, dating from 1567BC-1085BC, is up for $1,950

J%20Street%20Polling%20Results
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The finalists

Player of the Century, 2001-2020: Cristiano Ronaldo (Juventus), Lionel Messi (Barcelona), Mohamed Salah (Liverpool), Ronaldinho

Coach of the Century, 2001-2020: Pep Guardiola (Manchester City), Jose Mourinho (Tottenham Hotspur), Zinedine Zidane (Real Madrid), Sir Alex Ferguson

Club of the Century, 2001-2020: Al Ahly (Egypt), Bayern Munich (Germany), Barcelona (Spain), Real Madrid (Spain)

Player of the Year: Cristiano Ronaldo, Lionel Messi, Robert Lewandowski (Bayern Munich)

Club of the Year: Bayern Munich, Liverpool, Real Madrid

Coach of the Year: Gian Piero Gasperini (Atalanta), Hans-Dieter Flick (Bayern Munich), Jurgen Klopp (Liverpool)

Agent of the Century, 2001-2020: Giovanni Branchini, Jorge Mendes, Mino Raiola

UAE currency: the story behind the money in your pockets
Mountain%20Boy
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THE APPRENTICE

Director: Ali Abbasi

Starring: Sebastian Stan, Maria Bakalova, Jeremy Strong

Rating: 3/5

COMPANY PROFILE
Name: Kumulus Water
 
Started: 2021
 
Founders: Iheb Triki and Mohamed Ali Abid
 
Based: Tunisia 
 
Sector: Water technology 
 
Number of staff: 22 
 
Investment raised: $4 million 
Specs

Engine: Dual-motor all-wheel-drive electric

Range: Up to 610km

Power: 905hp

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Available: Now

Destroyer

Director: Karyn Kusama

Cast: Nicole Kidman, Toby Kebbell, Sebastian Stan

Rating: 3/5 

UAE release: January 31 

Key facilities
  • Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
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FINAL SCORES

Fujairah 130 for 8 in 20 overs

(Sandy Sandeep 29, Hamdan Tahir 26 no, Umair Ali 2-15)

Sharjah 131 for 8 in 19.3 overs

(Kashif Daud 51, Umair Ali 20, Rohan Mustafa 2-17, Sabir Rao 2-26)

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Yemen's Bahais and the charges they often face

The Baha'i faith was made known in Yemen in the 19th century, first introduced by an Iranian man named Ali Muhammad Al Shirazi, considered the Herald of the Baha'i faith in 1844.

The Baha'i faith has had a growing number of followers in recent years despite persecution in Yemen and Iran. 

Today, some 2,000 Baha'is reside in Yemen, according to Insaf. 

"The 24 defendants represented by the House of Justice, which has intelligence outfits from the uS and the UK working to carry out an espionage scheme in Yemen under the guise of religion.. aimed to impant and found the Bahai sect on Yemeni soil by bringing foreign Bahais from abroad and homing them in Yemen," the charge sheet said. 

Baha'Ullah, the founder of the Bahai faith, was exiled by the Ottoman Empire in 1868 from Iran to what is now Israel. Now, the Bahai faith's highest governing body, known as the Universal House of Justice, is based in the Israeli city of Haifa, which the Bahais turn towards during prayer. 

The Houthis cite this as collective "evidence" of Bahai "links" to Israel - which the Houthis consider their enemy. 

 

What%20is%20cystic%20fibrosis%3F
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COMPANY%20PROFILE
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How to wear a kandura

Dos

  • Wear the right fabric for the right season and occasion 
  • Always ask for the dress code if you don’t know
  • Wear a white kandura, white ghutra / shemagh (headwear) and black shoes for work 
  • Wear 100 per cent cotton under the kandura as most fabrics are polyester

Don’ts 

  • Wear hamdania for work, always wear a ghutra and agal 
  • Buy a kandura only based on how it feels; ask questions about the fabric and understand what you are buying
VEZEETA PROFILE

Date started: 2012

Founder: Amir Barsoum

Based: Dubai, UAE

Sector: HealthTech / MedTech

Size: 300 employees

Funding: $22.6 million (as of September 2018)

Investors: Technology Development Fund, Silicon Badia, Beco Capital, Vostok New Ventures, Endeavour Catalyst, Crescent Enterprises’ CE-Ventures, Saudi Technology Ventures and IFC

A MINECRAFT MOVIE

Director: Jared Hess

Starring: Jack Black, Jennifer Coolidge, Jason Momoa

Rating: 3/5

The specs

Price, base / as tested Dh1,470,000 (est)
Engine 6.9-litre twin-turbo W12
Gearbox eight-speed automatic
Power 626bhp @ 6,000rpm
Torque: 900Nm @ 1,350rpm
Fuel economy, combined 14.0L / 100km

MATCH INFO

Uefa Champions League semi-final, second leg
Real Madrid (2) v Bayern Munich (1)

Where: Santiago Bernabeu, Madrid
When: 10.45pm, Tuesday
Watch Live: beIN Sports HD

COMPANY%20PROFILE
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The specs

Engine: Two permanent-magnet synchronous AC motors

Transmission: two-speed

Power: 671hp

Torque: 849Nm

Range: 456km

Price: from Dh437,900 

On sale: now

ESSENTIALS

The flights

Emirates flies direct from Dubai to Rio de Janeiro from Dh7,000 return including taxes. Avianca fliles from Rio to Cusco via Lima from $399 (Dhxx) return including taxes. 

The trip

From US$1,830 per deluxe cabin, twin share, for the one-night Spirit of the Water itinerary and US$4,630 per deluxe cabin for the Peruvian Highlands itinerary, inclusive of meals, and beverages. Surcharges apply for some excursions.

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