American Oil and Gas Reporter - April 2021 - 27

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IssuesUpdate: Texas Alliance of Energy Producers

Texas Alliance Led By
New Generation
By Del Torkelson
FORT WORTH-From her standpoint
as chairman of the Texas Alliance of
Energy Producers, Cye Wagner is spotting signs of renewal in Texas' oil and
gas industry.
" Activity has picked up quite a bit
across the board, " reports Wagner, who
leads exploration and executive management
at Cooper Oil & Gas in Fort Worth. " Drilling
is coming back, and production that was
uneconomic at previous prices is being
brought back on line. Demand is slowly
increasing as the world economy re-opens.
No one thinks we are completely out of
the pandemic, but there is optimism. "
Alliance President Jason Modglin
agrees the mood is optimistic but acknowledges that is in part because Texas
has a relative lack of federal lands and
pipeline projects that require a presidential
permit. " Texas is more insulated than
some of the other states that are firmly
under the federal government's thumb
and more vulnerable to the administration's
actions and executive orders, " he says.
Even so, he continues, the Alliance
hardly expects the anti-fossil-fuel sentiment
to spare a state from which 45% of the
country's crude oil production originates.
After all, he notes, although Biden's
leasing and drilling moratorium has barely
dented the state's onshore inventory, it
has affected the state's Gulf Coast, where
he says an extended moratorium threatens
120,000 Texas jobs.
" If there is a real commitment to environmental progress, Texas oil and gas
have to be part of the mix, " Modglin argues. " We hope a federal administration
that is truly interested in environmental
progress will continue to look to oil and
gas producers, and Texas in particular,
for solutions. "
" People in our industry are very aware
of what is going on and what it may
mean for us, " Wagner assures. " We emerge
as a united front from a very down market
and difficult time. Those of us who have
weathered that storm hope to take advantage of some opportunities while we

" I have seen what the information and
advocacy the Alliance provides can do for
independent mom-and-pop producers and
also for large, publicly traded entities. When all
those voices unite on an issue, it makes a
difference and people listen. "
-Cye Wagner
Texas Alliance Chairman
push back against policies that do not
make sense. "
Better Business Model
According to Wagner, Texas' activity
uptick includes plenty of acquisitions and
divestitures. " A lot of properties are changing hands, and there has been some pretty
good investment in areas such as the Permian, " she describes.
The deal-making is fueled in part by
new faces. " There has been a changing
of the guard at certain companies, especially smaller producers, where people
who have weathered the last storm are
ready to retire. Their successors are investing, actively acquiring property and
looking to continue those businesses, "
Wagner relates. " That is what we are
doing in my company, and we see signs
of that in the broader market. "
Although drilling, completion and
workover activity is ticking upward, Wagner emphasizes that producers and their
backers have learned a few lessons from
the previous decade's shale gale that are
causing them to invest at a measured
pace. She says they are unlikely to take
on debt in a race to claim pricey acreage.
" Those days are gone, " she assures.
" We are seeing companies of all sizes
transition toward commonsense business,
with projects that work and make a nice
return for investors. That will continue
to make the industry attractive, which is
important. Companies with sound invest-

ments, good returns and responsible cash
flow are going to stay around. "
Of course, positive cash flow and attractive returns tend to be easier when
oil prices are strong, Wagner acknowledges. " Looking at $60 a barrel compared
with where we were a year ago is a welcome relief, " she says. " Being around
$2.50 for natural gas, and seeing prices
hit that $3 mark is another game-changer.
" But we are not comfortable yet, " she
adds. " That is why people are making
sure the limited money they have goes
into low-cost/high-return projects. The
outlook will be more cautious going forward, but that is simply good business. "
Member Service
Although the 87th Texas Legislature,
which began on Jan. 12 and is scheduled
to run through May 31, has been the
center of the Alliance's attention in recent
months, Modglin notes that the association
is developing other ways to help members'
bottom lines.
" The Alliance has been laser-focused
on finding solutions to help operators
shrink their costs, " he reports. " In addition
to making sure our traditional offerings
in property and casualty insurance continue
to provide a low-cost product with a high
level of service, we have expanded and
added health insurance. "
Then there is the partnership the Alliance announced late last year with Data
Gumbo to give members access to a
APRIL 2021 27
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