Blackstone Oil and Gas
2321 Rosecrans Avenue, Suite 1295, El Segundo , California, United States

Blackstone Oil and Gas was established in 2007 to invest in Texas, Oklahoma and California oil and gas opportunities. The original company mission has evolved, and Blackstone Oil has become a workout and turnaround specialty company for distressed oil and gas companies. Blackstone consults with such companies to facilitate their restructuring, secure financing as well as asset acquisition. Blackstones considerable experience working with companies before and throughout the complex reorganization process, makes the Company uniquely situated to capitalize on opportunities and acquire distressed oil and gas assets with significant upside potential. These acquisitions are substantially more lucrative because they are coupled with managements knowledge and  experience in the oil and gas industry, natural resource infrastructure and the turnaround process.  Blackstone Oil is expanding its portfolio by seeking investment in or acquisition of other oil and gas, and energy ventures throughout the United States, with particular focus on the oil rich states of  Texas, Oklahoma and California. To that end, the Company has established valuable working relationships with top level petroleum engineers, geologists, counsel and advisers. These industry professionals who consult on potential projects for Blackstone, have worked in oil and gas production in Texas, Oklahoma and California for the past 50 years, totaling more than 200 years of collective experience.

WHAT IS OIL AND WHERE IT COMES FROM 

According to the most widely accepted theory, oil is composed of compressed hydrocarbons and was formed millions of years ago in a process that began when aquatic plant and animal remains were covered by layers of sediment. Over millions of years of extreme pressure and high temperatures, these particles became the mix of liquid hydrocarbons that today is called oil. Different mixes of plant and animal remains, coupled with pressure, heat, and time, have caused hydrocarbons to appear today in a variety of forms, which are crude oil, natural gas, and coal.  Oil is found in reservoirs in sedimentary rock and these tiny pores in the rock allowed the petroleum to seep in. These reservoir rocks hold the oil like a sponge, confined by other, non-porous layers that form a trap. The world consists of many regions with different geological features formed as the Earths crust shifted and some of these regions have more and larger petroleum traps. In some reservoir rock, the oil is more concentrated in pools making it easier to extract, while in other reservoirs it is diffused throughout the rock. The Middle East is a region that exhibits both favorable characteristics, resulting in large and numerous petroleum traps and the reservoir rock holds the oil in substantial pools. This regions dominance in world oil supply is the clear result. Other regions also have large oil deposits, however, the oil is more difficult to identify and more expensive to produce. The United States is an example of such a region.

DRILLING  FOR OIL 

To identify a prospective site for oil production, companies use a variety of techniques, including core sampling -- physically removing and testing a cross section of the rock -- and seismic testing, where the return vibrations from a man-made shockwave are measured and calibrated. Advances in technology have made huge improvements in seismic testing. After these exploratory tests, companies must then drill to confirm the presence of oil or gas. A dry hole is an unsuccessful well, one where the drilling did not find oil or gas, or not enough to be economically worth producing. A successful well may contain either oil or gas, and often both because the gas is dissolved in the oil. When gas is present in oil, it is extracted from the liquid at the surface in a process separate from oil production.  Historically, drilling a wildcat well (searching for oil in a field where it had not yet been discovered) had a low chance of success. In fact, relatively few wildcat wells found oil or gas and the rest were dry holes. Better information, especially from seismic technology, has improved the success rate of drilling wildcat wells. After a successful well identifies the presence of oil and/or gas, additional wells are drilled to test the production conditions and determine the boundaries of the reservoir. Finally, production or development wells are put in place, along with tanks, pipelines and gas processing plants. so the oil can be produced and then moved to markets and sold. Finally, once extracted the crude oil is refined into usable products.

HOW OIL IS PRODUCED 

The naturally occurring pressure in the underground reservoir is an important determinant of whether the reservoir is economically viable or not. The pressure varies with the characteristics of the trap, the reservoir rock and the production history. Most oil, initially, is produced by natural lift production methods: the pressure underground is high enough to force the oil to the surface. Reservoirs in the Middle East tend to be long-lived on natural lift, meaning the reservoir pressure continues over time to be great enough to force the oil out. The underground pressure in older reservoirs, however, eventually dissipates and oil no longer flows to the surface naturally. It must be pumped out by means of an artificial lift using a pump powered by gas or electricity. The majority of the oil reservoirs in the United States are produced using some kind of artificial lift. Over time, these primary production methods become ineffective and continued production requires the use of additional secondary production methods. One common method uses water to displace oil, using a method called waterflood, which forces the oil to the drilled shaft or wellbore. Finally, producers may need to turn to tertiary or enhanced oil recovery methods. These techniques are often centered on increasing the oils flow characteristics through the use of steam, carbon dioxide and other gases or chemicals. In the United States, primary production methods account for less than 40 percent of the oil produced on a daily basis, secondary methods account for about half, and tertiary recovery the remaining 10 percent. Both the varying reservoir characteristics and the physical characteristics of the crude oil are important components of the cost of producing oil. These costs can range from as little as $2 per barrel in the Middle East to more than $15 per barrel in some fields in the United States, including capital recovery.

GLOBAL OIL SUPPLY BY REGION 

The Middle East remains the largest oil-producing region. Middle East dominance in oil reserves -- the estimated amount of oil that can be produced from known reservoirs - is even more pronounced: the region holds about two-thirds of the one trillion barrels of global proved oil reserves, so the regions critical role in world oil supply will continue and will grow. (The United States, by contrast, holds only four percent of global proved reserves.) Several core developments have shaped the pattern of regional oil production.  The higher oil prices of the 1970s and early 1980s afforded a strong economic incentive to explore for and produce oil, and production rose in many areas. At the same time, oil demand declined -- the expected response to the high prices. Saudi Arabia became the "swing supplier," reducing its production as necessary to balance supply and demand. Its rejection of that role in mid­-1985 -- its output had fallen to about 25 percent of its 1980 peak -- brought the full force of the supply/demand imbalance onto markets and resulted in the price collapse of 1986. Prices did not return to the 1986 level until the Persian Gulf conflict of 1990-91, and then only briefly. When in 1998 Asian demand faltered with the regions economies, and northern hemisphere demand faltered with the warm winter, the high production levels resulted in another price collapse. The market reaction in 1998, however, was not the same as in 1986 -- demand did not recover as quickly and supply did not fall as quickly. Hence, the low price period lasted longer and showed lower prices in 1998 than in 1986. In early 2000, oil prices exceeded the levels of the Persian Gulf conflict in nominal terms. Sharp as the price increases were in early 2000, however, crude oil prices remained less than half of the early 1980s peak in terms of real buying power.  Saudi Arabia, the market balancer in the early 1980s, was the worlds largest producer during the 1990s. Not only did Saudi Arabia increase its production to fill the gap left by the loss of Iraqi and Kuwaiti supplies after Iraq invaded Kuwait in 1990, but production declined in the other two large producers, Middle East production would have been higher throughout the 1990s if Iraqs production had not been constrained by the United Nations sanctions imposed after Iraq invaded Kuwait in 1990.  Middle East production also would have been higher at various times if it had not been for the market balancing role played with varying degrees of success by the Organization of Petroleum Exporting Countries (OPEC). OPEC currently includes Algeria, Indonesia, Iran, Iraq, Kuwait, Libya, Nigeria, Qatar, Saudi Arabia, the United Arab Emirates and Venezuela.  Ecuador and Gabon withdrew their membership at the end of 1992 and 1994, respectively.  North America is the second largest producing area after the Middle East. The United States, the second largest producing country in the world, accounts for almost 60 percent of the North American regions total. Canada, the United States and Mexico all have long production histories, and production from mature fields has been declining. However, a new surge in technology has benefited both new field development and more complete production from existing fields.  North Sea production, off the United Kingdom and Norway, began in the late 1970s. In contrast to predictions from the early 1980s of the imminent decline in the regions production, the North Sea has yet to see its peak. The regions success with new exploration and production technology, and hence its continuing volume growth, has been a central factor in world oil markets for a decade.  Production in the Soviet Union peaked at about 12 million barrels a day in the early 1980s when it was the top world oil producer. The regions demand collapse, in combination with its aggressive production targets set to maintain foreign exchange, masked its rapid production decline in the late 1980s as the Soviet Union broke up. The former Soviet Union has recently been the second-ranked producer, after Saudi Arabia. One of the most visible new production prospects has been the Caspian Sea in Central Asia, in spite of the enormous logistical and political hurdles involved in getting the oil produced to world markets.