Ok, it seems like forever since I've written a blog post. Unfortunately, this whole summer I've been full of ideas to write about but short on time and focus because of summer school and work. I just finished my last law school exam though, so hopefully these next few months will see more prolific blogging from me. Because this is my first time to add to this blog in a while, I'm not real optimistic about it's content. Nonetheless, I need a slump-buster. So here's what I have:
As I mentioned, I'm in law school right now, and that actually has some connection to what I want to write about today - timing. I began law school in the fall of 2010. Typically law school lasts three school-years (6 semesters). So, if you do the math (2010 + 3 =2013), you should come to the conclusion that my pace in school is a little off, and that I should have graduated this May. I can hear you're thoughts, reader. "Have you been taking you're time, Matt? Slacking off?" Well, the answer to your inquisition, dear reader, is no. I have not been slacking off. I was given the opportunity to get two graduate degrees while at Texas Tech, a JD and an MBA, and I decided "why not?" Two is better than one, right? Well, the answer to that rhetorical question is "not necessarily," especially if time is of the essence. The added classwork of the MBA is going to keep me in school an extra semester, which will delay graduation, taking the bar exam, and finding a job by about 6 months. I'll take the Texas bar exam next February and get the results in May 2014.
I haven't always been keen on graduating a semester late, but lately I've been of the opinion that it's not such a bad thing. Why? Because I'd like to land a high paying oil and gas related job. But, like most people who want to live and work in west Texas, I don't want to move to the desert: Midland. I'd prefer Abilene. In Abilene the cost of living is much cheaper, the city is surrounded by picturesque ranches, and its not too far away from major cities: Dallas and Austin. However, Abilene doesn't have much of an oil industry right now. In fact, the few people I've asked have said there aren't but a few oil and gas lawyers in Abilene - maybe not even ten. But that could be changing fast. Some analysts have predicted that the activity from the Cline Shale should really heat up in the third quarter of this year, and because of the capacity issues in Midland due to the multiple producing formations in the Permian Basin, Abilene should receive a substantial amount of the Cline's economic activity.
So far the tax revenues in Abilene tend to support this theory. The taxes collected in Abilene from sales in the month of April this year showed an increase of 7.88 percent over the April 2012 sales figure. And the May total came in at 9.26 percent above the previous year. Now this increase in economic activity is almost certainly not directly due to Cline Shale exploration - the Cline Shale formation doesn't even reach as far west as Taylor County where Abilene sits. Plus we're still really early in the development of this formation; it's only been about a year since the blogs started to run with the story of this exciting new play. Rather, the increased activity in Abilene is probably due to infrastructure spending by companies, and maybe the City of Abilene, getting ready for what's coming. Devon Energy, the largest holder of interest in the Cline has built a field office in Abilene. It wouldn't surprise me if the other big players like Apache Corporation and Laredo Petroleum were in the process of doing the same. The movements of these giants can spur smaller companies to follow suit and the net effect this pre-production cold-war can have on the economics of a mid-sized rural city like Abilene can be quite substantial.
Other cities in and around the Cline Shale showed mixed data. The city of Sweetwater, which sits at a very strategic location in relation to the Cline showed a slight decline in year over year sales tax receipts for the month of May, while Coleman and Anson, two small towns outside the formation, both showed over a 17% increase. These towns are significantly smaller than Abilene, though; and in my opinion their size makes them poor economic barometers. Heck, Sterling City showed a 127% increase in year over year sales tax revenues collected in April, but that city (village rather) has less than a 1000 residents. Whoopty do.
Let me conclude this post by saying anything could happen between now and next May. I've seen some Cline-followers on twitter reporting on the amount of drilling permits issued to the big operators in the area. That's exciting stuff, but drilling permits don't equal oil in a pipeline headed to market. At least not yet while we're still in the speculative stage of the game. Time will tell if this is really the biggest inland discovery of oil in the lower 48, and for now that's ok with me. Time is a resource I have a little bit too much of right now. Here's hoping the next 9 months produce some real gushers and a chance of a decent job for this debt-laden future-lawyer.
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