Interesting read on USA Shale

[captainjamestkirk]

I've had to precis this quite a bit as unfortunately the charts and diagrams didn't transmit across but none the less quite interesting:

... etc ....

The Opec oil cartel is waking up to an unpleasant surprise. Shale output from the Permian Basin in Texas is expanding faster than the world thought humanly possible.

The scale threatens to neutralise output cuts agreed by Saudi Arabia and a Russian-led bloc last November, and ultimately threatens break their strategic lockhold on the global crude market for a generation.

"People just don't seem to realise how big the Permian is. It will eventually pass the Ghawar field in Saudi Arabia, and that is the biggest in the world," said Scott Sheffield, founder of Pioneer Natural Resources and acclaimed 'King of the Permian'.

Moderator Message:
I am very sorry but I have edited this even further, and before I have had a chance to even read it myself. Firstly if you post such an interesting article please could you put a link so that readers can go to the original. Secondly please do not post anywhere near this much content unless the source explicitly gives copyright consent. It is important not to expose TLF to intellectual property lawsuits. You are most welcome to put up the link etc. Thank you for your understanding. Regards, dspp

[Nimrod103]

The quote comes from this article in today's Telegraph:

http://www.telegraph.co.uk/business/201 ... ting-opec/

An Ambrose Evans-Pritchard special.

[PeterGray]

An extra 8mmbopd over ten years, if it happens, is significant, but it's not that impressive when you place it against the IEA's estimates of 4% annual decline rate in conventional fields by 2020 - nearly 4mmbopd per year.

Peter

[captainjamestkirk]

Apologies for the long original post. Thought as part of the DT's "Premium" offerings, that it was pay walled.
Live and learn

[petroleum1]

Fitch Predicts Drop In Oil Prices By 2017 As U.S. Shale Output Soars

“The recovery in US drilling activity will drive up shale oil production in the second half of 2017, offsetting a portion of recent oil price gains,” the credit rating agency’s report released on Monday says. “We therefore expect average oil prices for the year to be below those in January and February.”

http://www.zerohedge.com/news/2017-03-0 ... tput-soars

[Lootman]

My plays in this area are Pioneer (PXD), Diamondback (FANG) and EOG Resources (EOG). I used to hold PBT for its income stream from the Permian Basin but that went sour. The other picks are up about 50% since I bought them.

[petroleum1]

My plays in this area are Pioneer (PXD), Diamondback (FANG) and EOG Resources (EOG). I used to hold PBT for its income stream from the Permian Basin but that went sour. The other picks are up about 50% since I bought them.

lootman

From Google the market capitalization of the above companies is as follows:

PXD $32,900M
FANG $9,461M
EOG $58,285M

Do I understand that the market cap of above companies would be $32.9million, $9.461million and $58.286million respectively?

[Lootman]

My plays in this area are Pioneer (PXD), Diamondback (FANG) and EOG Resources (EOG). I used to hold PBT for its income stream from the Permian Basin but that went sour. The other picks are up about 50% since I bought them.

lootman, From Google the market capitalization of the above companies is as follows:

PXD $32,900M
FANG $9,461M
EOG $58,285M

Do I understand that the market cap of above companies would be $32.9million, $9.461million and $58.286million respectively?

Affirmative, more or less. But I'd probably say $32.9 billion etc.

I have dabbled in the past with other E&P plays like Apache and Anadarko. From memory they are a similar size but less focused on shale.

[petroleum1]

lootman
I checked again and I believe the market cap is in billions rather than millions.
PXD $32.900billion
FANG $9.461billion
EOG $58.285billion
which makes it difficult for substantial rise in share price.
Regards

[Lootman]

lootman
I checked again and I believe the market cap is in billions rather than millions.
PXD $32.900billion
FANG $9.461billion
EOG $58.285billion
which makes it difficult for substantial rise in share price.
Regards

Yes, billions. They are considered large from a UK perspective, perhaps, but not from a US perspective. The smallest company that can be in the S&P 500 is a market cap of $4 billion, which would probably get into the FTSE-100.

Diamondback, for instance, isn't even in the largest 25 US energy companies.

If you want a tiddler where everything depends on one or two assets, then these aren't for you. But they are all up about 50% in a year, which isn't bad.

[captainjamestkirk]

Part 2
http://www.telegraph.co.uk/business/201 ... ts-deepen/

[dspp]

Art Berman expounds again as expected .... 1 Mar 17 (http://oilprice.com/Energy/Crude-Oil/Wh ... akken.html)

The decline in Bakken oil production that started in January 2015 is probably not reversible. New well performance has deteriorated, gas-oil ratios have increased and water cuts are rising. Much of the reservoir energy from gas expansion is depleted and decline rates should accelerate. More drilling may increase daily output for awhile but won’t resolve the underlying problem of poorer well performance and declining per-well reserves......etc...............

Investors should be worried. As analysts cheered the resilience of shale plays after the 2014 price collapse, nearly a billion barrels of Bakken oil were produced at a loss--about 40 percent of total production since the 1960s. Vast volumes of oil were squandered at low prices for the sake of cash flow to support unmanageable debt loads and to satisfy investors about production growth. The clear message is that investors do not understand the uncertainties of tight oil and shale gas plays.

And all major Bakken producers continue to lose money at current wellhead prices. If observations presented here hold up, there may be nowhere for the Bakken to go but down. Higher oil prices may not help much because the best days for the play are behind us. Future profits were sacrificed for short-term objectives that lost the companies and their shareholders money.

The early demise of the Bakken should serve as a warning about the future of other tight oil plays.

Worth reading the full article which does the res-eng data and maths. Art is a cool cat indeed.

regards, dspp

[captainjamestkirk]

To complete the trilogy;
http://www.telegraph.co.uk/business/201 ... n-spreads/