U.S. Shale's Blows Leave Middle East Oil Producers Staggering. Sub-$50 WTI and $70 Brent may be more suitable for 2019.

[Dan Warnick + 6,100]

9 hours ago, Old-Ruffneck said:

I don't believe that is the case as several years now of continuous drilling would've already bankrupted the Oil Majors. While plausible that

the banks will keep lending for a 18 month to 2 year period their boards would like to see real return on their investments. I personally cant 

foresee your scenario playing out this long.  Just my opinion, but most the Permian is good break-even 33.00. So while 50.00 isn't a great 

profit, it is still a profit.  Time will tell, but how much more time before the banks start calling in their loans on top of loans etc.??

Based on other conversations we've been having around here, Wells Fargo must not be one of the big lenders, because they would have called their loans half way to term and tried to take ownership of the land, equipment and first son's of all the oil men and women.   

[Old-Ruffneck + 1,177]

On ‎12‎/‎31‎/‎2018 at 7:54 PM, Tom Kirkman said:

Excerpt from @Mike Shellman musings for year end:

 

To replace declining LTO reserves the US shale oil industry needs a constant influx of  capital to stay on the drilling hamster wheel. With oil prices of less than $55 per BO, 95% of the wells drilled in the future will be unprofitable, or marginally profitable, to  produce. The public and private shale oil industry in America has drilled 70,000 wells the past 10 years and has approximately $280 billion of long term debt; $85 billion dollars of long term debt as already been walked (Haynes & Boone). In other words, the shale oil industry has not even paid for what it has already produced yet. 

Please see my earlier post on greed. Shale does tend to decline rapidly on 1st frac, but when re-frac'd the production stays fairly steady 

for fair amount of time. Doesn't cost a lot too re-frac. They knew this many years ago.  I am an optimist when production numbers rise from 

the well head to the pipeline. Their are several major runs in pipeline, but will be end of year to see significant rise in output. Too many bottlenecks in the pipelines throughout. This will keep the Permian in the 3.5 mbd area then all hell will break loose. 

By 2023 - 2024 you'll see 40,000 new wells drilled with capacity for Permian only 6+mbd level.  Eagle Ford will be growing much slower.

I feel the U.S. could conceivably produce 14-15mbd by end of 2021/3 years from now. Even at 11mbd @ 46.00 is 21.252 billion dollars (gross.)

We'll see how all this plays as the oil market is a fragile entity. A lot of players world wide all want that cash. I hope is a good year for all!!!!

[Tom Kirkman + 8,860]

10 minutes ago, Old-Ruffneck said:

Please see my earlier post on greed. Shale does tend to decline rapidly on 1st frac, but when re-frac'd the production stays fairly steady 

for fair amount of time. Doesn't cost a lot too re-frac. They knew this many years ago.  I am an optimist when production numbers rise from 

the well head to the pipeline. Their are several major runs in pipeline, but will be end of year to see significant rise in output. Too many bottlenecks in the pipelines throughout. This will keep the Permian in the 3.5 mbd area then all hell will break loose. 

By 2023 - 2024 you'll see 40,000 new wells drilled with capacity for Permian only 6+mbd level.  Eagle Ford will be growing much slower.

I feel the U.S. could conceivably produce 14-15mbd by end of 2021/3 years from now. Even at 11mbd @ 46.00 is 21.252 billion dollars (gross.)

We'll see how all this plays as the oil market is a fragile entity. A lot of players world wide all want that cash. I hope is a good year for all!!!!

I admire your optimism, but I also remain skeptical.  And I would very much love to be proved wrong on U.S. Shale Oil financials (mostly losses so far, with some scattered profits).

[NWMan + 89]

28 minutes ago, Old-Ruffneck said:

Shale does tend to decline rapidly on 1st frac, but when re-frac'd the production stays fairly steady 

Production maybe steady after the 2nd frac but this will be at a very low level of production compared to the initial production.

It is not greed to expect a company that you have invested in, to produce a profit. 

If these companies are making money why is it not on their balance sheets after so many years?

The people who are making money are the directors and employees of these loss making firms, the service and drilling companies and the banks.

Money does not come from outer space, it comes from investors.  Investors money is being lost on the continued assertions from the directors of these companies that their companies are "going concerns" and that they have "proven reserves" when they clearly are not and have not.

This my opinion and I see this going down hill fast and there is going to be a lot of disappointed people and another pile of rigs.  I don't know of any other oil production which has had its profitability question so much over so many years.  People forget this all started when oil was over $100. 

 

 

 

 

 

 

[Old-Ruffneck + 1,177]

Please re-read this article from August 30th. Interesting now that 4 months passed and my point on earlier post is I haven't 

changed my opinion. Takeaway is no.1 issue with WTI. 

https://oilprice.com/Energy/Crude-Oil/Production-Growth-In-The-Permian-Approaches-Historical-Gains.html

 

[NWMan + 89]

Interesting article - Yep - shale oil production is increasing at a modest rate from its relatively small base because shale oil companies are drilling more wells or longer wells. 

The article also contains the usual assertion that horizontal wells (new technology) actually make more oil.  It also alludes to the unique shale oil feature that crap wells are not crap they are un completed because they are waiting for room in the pipeline!

I know they can drill further horizontally, they can frac with even more sand, build more pipelines and more refineries, it would however be good if they could also "turn a profit" sometime. 

I just don't understand it.  I could not go to investors or banks with an un profitable scheme and raise money but oil shale has raised large amounts of money and continues to raise money.  So there must be logic in it somewhere but having spent a few weeks asking the same question there has only been one feasible answer suggested so far.

It was suggested that America was working in a static manner to reduce the price oil.

 

[Dan Warnick + 6,100]

3 hours ago, NWMan said:

Interesting article - Yep - shale oil production is increasing at a modest rate from its relatively small base because shale oil companies are drilling more wells or longer wells. 

The article also contains the usual assertion that horizontal wells (new technology) actually make more oil.  It also alludes to the unique shale oil feature that crap wells are not crap they are un completed because they are waiting for room in the pipeline!

I know they can drill further horizontally, they can frac with even more sand, build more pipelines and more refineries, it would however be good if they could also "turn a profit" sometime. 

I just don't understand it.  I could not go to investors or banks with an un profitable scheme and raise money but oil shale has raised large amounts of money and continues to raise money.  So there must be logic in it somewhere but having spent a few weeks asking the same question there has only been one feasible answer suggested so far.

It was suggested that America was working in a static manner to reduce the price oil.

 

"Well you can't cross a bridge until it's built!"  JR Ewing

Edited January 2, 2019 by Dan Warnick