Shale worm is turning...

[James Regan + 1,776]

It now seems to be a daily occurrence which has flipped 180 from BOOM to BUST, are we finally beginning to see reason?

https://www.rigzone.com/news/shale_oil_pioneers_say_the_boom_is_ending-6-nov-2019-160255-article/?utm_source=GLOBAL_ENG&utm_medium=SM_LI&utm_campaign=SHARE_DESKTOP

[Jabbar + 465]

14 hours ago, James Regan said:

It now seems to be a daily occurrence which has flipped 180 from BOOM to BUST, are we finally beginning to see reason?

https://www.rigzone.com/news/shale_oil_pioneers_say_the_boom_is_ending-6-nov-2019-160255-article/?utm_source=GLOBAL_ENG&utm_medium=SM_LI&utm_campaign=SHARE_DESKTOP

Remember not to long ago Pioneer Resources Scott Sheffield bragged that " U.S. would be producing 14 to 15 million barrels a day if we had the pipelines" . You could not shut Sheffield up.  He (and others) were supper cheerleaders for the Shale Industry. He even stated one large discovery in Permian could produce oil at $2.00 barrel.

THEN SCOTT WAS TOLD THAT HE NEEDED TO STOP.  

HIS BRAGGING WAS TAKING THE PRICE OF OIL DOWN. HE WAS SHOOTING HIMSELF IN THE FOOT.

Sheffield did a 180° turn. He NOW is the number one critique of shale highlighting all the "problems".

Shale will slowdown. The strong (smart) producers will grow the others will fold. So 2020 should be the year of transition/consolidation. 

Think about this note. Occidental overpaid, way overpaid for Anadarko. The CEO gave Warren Buffet 8% on a $10 Billion note (8% = $800,000,000.) . As a result they are cutting Capital expenditures by 45%, BUT WILL STILL GROW PRODUCTION by 2%. Only 2% but that's with 45% reduction in capital expenditures. They may make up some production by completing DUCs.

Don't get fooled by a 2020 lull. Many predicting tight market in 2021.  But OPECs own report projects U.S. should produce 20 million barrels day by 2025.

Financial decision are fueled by "greed" and "fear". Watch what happens when the producers start to fear the growth in Electric Vehicles and Green legislation.  

Best guess starts 2023 - 2024.

Oil is not for investing anymore.  Oil is for trading.

 

Edited November 8, 2019 by Jabbar

[James Regan + 1,776]

17 minutes ago, Jabbar said:

Oil is not for investing anymore.  Oil is for trading.

I would change that to conventional, there are a lot of opportunities right now from the contractors to the smaller companies who are helping to streamline the business, one thing about this downturn it has brought a lot of very smart people out of the corporate evil empires and have enabled them to spread their wings unrestrained by big policy and fear of risk exposure. This should have been the case for LTO if ever it was required it was in this segment but while the LTO industry was faking results and misleading lenders, conventional were digging their way out of the ditches by adopting the healthy attitudes grown by years of hard work and healthy business models. Thats why Conventional will be here in 40 years and the unconventional will still be that, just unconventional...

[Jabbar + 465]

4 hours ago, James Regan said:

I would change that to conventional, there are a lot of opportunities right now from the contractors to the smaller companies who are helping to streamline the business, one thing about this downturn it has brought a lot of very smart people out of the corporate evil empires and have enabled them to spread their wings unrestrained by big policy and fear of risk exposure. This should have been the case for LTO if ever it was required it was in this segment but while the LTO industry was faking results and misleading lenders, conventional were digging their way out of the ditches by adopting the healthy attitudes grown by years of hard work and healthy business models. Thats why Conventional will be here in 40 years and the unconventional will still be that, just unconventional...

I agree. Most offshore. 

LTO mindset was, oil price would forever go up. Even after downturns the produces told themselves "oil is cyclical, always goes back up".  The producers believed this AND the bankers that lent them the money believed this.

They both understand differently now.

James are the cost coming down for conventional inland ?

Will efficiency help known reserves cost reductions or is there new conventional to be discovered as a result of more efficient E&P ?

Maybe Africa ?

 

Edited November 7, 2019 by Jabbar

[Rob Kramer + 696]

Colombia has alot of oil. Conventional in land but it's small pockets not the major stuff the big fish eat. A stock I have pays 220m for capex to drill 40-50 wells. They cleared 28$ a barrel usd in q3. Gotta go out on a limb to grab the fruit. High risk high reward ( tho they have zero debt and now 280m available of 350m usd banked cash). The very efficient companies will thrive. And if you cant be paid out in 10yr I wouldn't buy any stock oil or not so I still think oil is investable. 

[Gerry Maddoux + 3,627]

9 hours ago, James Regan said:

but while the LTO industry was faking results and misleading lenders

Not to be argumentative, but I'm not sure this was all "faking results and misleading lenders" though there was some of that. A lot of these guys were relatively new to the oil business, never once stopping to think about the limitations of getting oil out of rock. It has been--in my estimation--an exceptional bridge tool for energy independence. But you're right: there will never be a substitute for drilling a well into a vast pool of oil under a decent pressure head. I figure too much money is being spent drilling the bejiggers out of the Delaware and not enough attention paid to the Buzios, Vaca Meurto and Africa. Oh well, it'll sort its way out.

[ronwagn + 6,290]

11 hours ago, Jabbar said:

Remember not to long ago Pioneer Resources Scott Sheffield bragged that " U.S. would be producing 14 to 15 million barrels a day if we had the pipelines" . You could not shut Sheffield up.  He (and others) were supper cheerleaders for the Shale Industry. He even stated one large discovery in Permian could produce oil at $2.00 barrel.

THEN SCOTT WAS TOLD THAT HE NEEDED TO STOP.  

HIS BRAGGING WAS TAKING THE PRICE OF OIL DOWN. HE WAS SHOOTING HIMSELF IN THE FOOT.

Sheffield did a 180° turn. He NOW is the number one critique of shale highlighting all the "problems".

Shale will slowdown. The strong (smart) producers will grow the others will fold. So 2020 should be the year of transition/consolidation. 

Think about this note. Occidental overpaid, way overpaid for Anadarko. The CEO gave Warren Buffet 8% on a $10 Billion note (8% = $800,000,000.) . As a result they are cutting Capital expenditures by 45%, BUT WILL STILL GROW PRODUCTION by 2%. Only 2% but that's with 45% reduction in capital expenditures.

Don't get fooled by a 2020 lull. Many predicting tight market in 2021.  But OPECs own report projects U.S. should produce 20 million barrels day by 2025.

Financial decision are fueled by "greed" and "fear". Watch what happens when the producers start to fear the growth in Electric Vehicles and Green legislation.  

Best guess starts 2023 - 2024.

Oil is not for investing anymore.  Oil is for trading.

 

My question is how will this price problem affect the OPEC countries and Russia. Natural gas pricing is even worse. 

[Zhong Lu + 845]

So.... time to buy for longer? Looking at CRK.  2-year chart gives off a nice fuzzy feeling.  

Edited November 8, 2019 by Zhong Lu

[cbrasher1 + 272]

On 11/7/2019 at 6:24 AM, Jabbar said:

 

Think about this note. Occidental overpaid, way overpaid for Anadarko. The CEO gave Warren Buffet 8% on a $10 Billion note (8% = $800,000,000.) . As a result they are cutting Capital expenditures by 45%, BUT WILL STILL GROW PRODUCTION by 2%. Only 2% but that's with 45% reduction in capital expenditures. They may make up some production by completing DUCs.

 

Oxy will be slowing down next year with their fracing.  They are currently running 7 crews, next year cutting down to 3 due to budget cuts, so production will grow slow this coming year unless they change later on.  I just hope the crew I am working with survives the cut.

[Jabbar + 465]

1 hour ago, cbrasher1 said:

Oxy will be slowing down next year with their fracing.  They are currently running 7 crews, next year cutting down to 3 due to budget cuts, so production will grow slow this coming year unless they change later on.  I just hope the crew I am working with survives the cut.

That makes sense regard announced 45% capital budget cut . They did say production will grow 2% ? 

Do 7 current fracing crews include Anadarko ?

CB are you fracing DUCs ? 

Thanks

Edited November 9, 2019 by Jabbar

[Old-Ruffneck + 1,223]

2 hours ago, cbrasher1 said:

Oxy will be slowing down next year with their fracing.  They are currently running 7 crews, next year cutting down to 3 due to budget cuts, so production will grow slow this coming year unless they change later on.  I just hope the crew I am working with survives the cut.

I hope you put some coin back, gonna be some rainy days in the not so distant future me thinks. South East N.M. still going okay but won't be long it'll be frac'd out. Good luck bro, and save yer paychecks.

[Douglas Buckland + 6,308]

4 hours ago, cbrasher1 said:

Oxy will be slowing down next year with their fracing.  They are currently running 7 crews, next year cutting down to 3 due to budget cuts, so production will grow slow this coming year unless they change later on.  I just hope the crew I am working with survives the cut.

Good luck mate! I’ve been out of work for awhile now...forced retirement sucks!

[cbrasher1 + 272]

2 hours ago, Jabbar said:

That makes sense regard announced 45% capital budget cut . They did say production will grow 2% ? 

Do 7 current fracing crews include Anadarko ?

CB are you fracing DUCs ? 

Thanks

yes Jabbar, some of the fracs are Anadarko wells also.  We are doing some ducs and some new wells, single well we are currently on just got finished being drilled.

[cbrasher1 + 272]

1 hour ago, Old-Ruffneck said:

I hope you put some coin back, gonna be some rainy days in the not so distant future me thinks. South East N.M. still going okay but won't be long it'll be frac'd out. Good luck bro, and save yer paychecks.

You can tell things are slowing down, empty looking man camps, less traffic...I've been out now 4 months straight, hoping that will buy me some good mentions if we start downsizing.  I've been out here a year now, trying to play catchup from my previous crap job I was drowning in, so the putting back is slow.  I'm hoping for enough time to pay stuff off since I'm not buying stupid stuff I don't need.

[Old-Ruffneck + 1,223]

8 hours ago, cbrasher1 said:

You can tell things are slowing down, empty looking man camps, less traffic..

When I was in Ft. Stockton last week the RV parks are less than half full from March. I will be back in couple months. My guess is service industry will slow even faster with amount of wells getting completed and not enough new holes being drilled to support amount of manpower that's down there. Always a several month lag. Where are they stacking all the rigs? West Odessa still has a crap load from the 80's rusting away.

https://www.mrt.com/business/oil/article/Rig-count-down-to-lowest-level-since-March-2017-14822219.php

Edited November 9, 2019 by Old-Ruffneck
add

[El Nikko + 2,145]

Funny how the slow down is taking place while the oil prices have risen steadily for a month...these lags often backfire and by the time they've finished laying off they'll have a shortage of workers.

[Old-Ruffneck + 1,223]

3 hours ago, El Nikko said:

Funny how the slow down is taking place while the oil prices have risen steadily for a month...these lags often backfire and by the time they've finished laying off they'll have a shortage of workers.

The seesaw effect, been happening for 50 yrs.

[Gerry Maddoux + 3,627]

49 minutes ago, Old-Ruffneck said:

The seesaw effect, been happening for 50 yrs.

Exactly. Think about this for a moment: about two-hundred American rigs were laid down over 2019, 30 fracking companies went broke, oil exploration is at a 70-yr. low in the face of nearly flat global usage of oil and oil products, the sale of Teslas has been falling for the last two months, emerging countries are still popping out babies and the MARPOL mandate is coming. The impeachment thing has cast a pall across the US and the Brexit thing across the UK and EU. China is hurting, no matter what they say. I think 2020 is going to be rough. 

But I don't see anyone who can beat Trump, or has a better idea than Boris, and in order for Trump to carry himself over the finish line he has to stop the trade war with China and let Boris Johnson that the US will help them. In the deal with China he has to tell them that they need to buy American oil and gas. The chances are about a 100% that KSA is going to be attacked again. 

We're somewhere in the bust cycle right now, and it may well get worse. By 2021, I think we'll be entering the oil shortage cycle. I hate these boom and bust things and have never felt they had to happen . . . . . if only we had the slightest semblance of an energy policy. We've never had one. I wouldn't want guarantees, just someone--almost anyone--to tell the Saudis to go take a hike. 

[Gerry Maddoux + 3,627]

On 11/7/2019 at 1:40 AM, James Regan said:

It now seems to be a daily occurrence which has flipped 180 from BOOM to BUST, are we finally beginning to see reason?

https://www.rigzone.com/news/shale_oil_pioneers_say_the_boom_is_ending-6-nov-2019-160255-article/?utm_source=GLOBAL_ENG&utm_medium=SM_LI&utm_campaign=SHARE_DESKTOP

What exactly is "reason?" 

When Mr. Mitchell decided to frack for oil in the Barnett, the US was starving for natural gas. Then Devon bought out Mr. Mitchell and Aubrey McClendon picked up the baton for the Haynesville shale,  and all at once we had plenty of natural gas. When Harold Hamm decided to frack for oil, we were importing most of our oil from Saudi Arabia. Then, just like that, we actually had enough oil to see us through, should the world suddenly turn into a cauldron of war again. 

You seem to be on this hate shale bandwagon, which frankly gives me a pain in my piles, because the shale thing, no matter how expensive, water-consumptive, disruptive, or whatever, has provided the United States of America with a damn oil and gas supply that could sustain us in the event of a global crisis . . . . a far cry from where we were when this all began. Country first.

I'm a conventional guy, but to be honest, conventional wasn't doing so well when shale raised its ugly head. I'm also a deepwater guy, but they were doing very little better--especially with the morons running the Deepwater Project (BP, who is now whining like a little boy). There are a bunch of people out there trying to make a living, and some of them just happen to be working in the shale industry--I know a lot of them. Tell them that "reason" is about to come knocking on their door, that oh too bad, you chose the wrong horse, here's your pink slip. 

Damnit, enough is enough! There are a lot of industry lovers and haters out there. I think this shale disruption has been just fine, even though it has, net/net, hurt me financially. I own quite a few shale minerals so this can't be taken as the Lord speaking through the mouth of Harold Hamm, but I also own quite a few conventional wells that have been left like vapid tramps lying in the dust. 

This gloating over a bust is bullshit. I call out bullshit . . . eventually. People get hurt in things like this. You can say whatever the hell you want to say on a forum like this but man, I'd watch what I gloated about . . . . . there but for the grace of God go I.

There. I feel a little bit better. 

[El Nikko + 2,145]

2 hours ago, Old-Ruffneck said:

The seesaw effect, been happening for 50 yrs.

Yes but normally the cycles are longer, it's only been 4 years since the last one, my recollection is that normally it's more like 6-7 years.

I'm not looking forward to next year at all it's going to be painful

[Jabbar + 465]

4 hours ago, Gerry Maddoux said:

. . just someone--almost anyone--to tell the Saudis to go take a hike. 

I second the motion re Saudis

I think the World Economy is pretty close to bottoming out.  I believe 2020 will bump along the bottom and turn up by year end

Trump is correct to go after the China trade .  If not for the U.S. Democratic Party he would have had a deal last Spring. He will have to come to some accommodation to get the Chinese to buy agriculture and energy to get re-elected. Then turn the screws on them afterwards. 

I believe producers are miantaining production by eating in to the DUCs. You know better than I but I assume the smaller or the highly leveraged producers can't sit on DUC inventory and thus are in tougher shape than the mid to late producers. Those in the field probably have a grasp of that ?  Even when it comes back wouldn't the producers use somewhat less labor than the past for comp production due to greater efficiencies and technology ?

Another cause for pause may be the need for VLCC export terminals for U.S. oil to be competitive.  I have heard different estimates of U.S. crude export present capacity from between 4 to 5 million barrels day. A VLCC partial fill docked and then reverse lightering can take up to 10 days to losd.  Where a modern offshore terminal can turn it around on 24 hours.  Three new VLCC terminals not till 2022.

Interesting note. Last week's crude exports dropped to 2.3 million barrels,/day. Has been averaging between 3 to 3.5 for the longest time. 

 

 

 

Edited November 10, 2019 by Jabbar

[Old-Ruffneck + 1,223]

2 hours ago, Gerry Maddoux said:

Harold Hamm decided to frack for oil, we were importing most of our oil from Saudi Arabia. Then, just like that, we actually had enough oil to see us through, should the world suddenly turn into a cauldron of war again. 

You seem to be on this hate shale bandwagon, which frankly gives me a pain in my piles, because the shale thing, no matter how expensive, water-consumptive, disruptive, or whatever, has provided the United States of America with a damn oil and gas supply that could sustain us in the event of a global crisis . . . . a far cry from where we were when this all began. Country first.

We imported a lot from KSA for what it is, heavy oil. In turn we crack it, use some for ourselves and rest goes back to sea to other markets. Our crude goes to China, India, and Indo-China that have refineries that can refine our sweet crude. If the EPA wasn't such a pain in the arse we could build refineries for our own. But at present we are stuck buying Canadian and some mid-east oil. Damn shame but in the end selling our oil and importing others offsets the balance. As for natural gas, well I can tell you there has always been plenty, problem is east coast was/is so slow to build infrastructure. Dependent on coal-fired power along with nuke. They knew this problem 40 years ago and stuck their head in the sand because the powers that be with all the money were too heavily vested in those type of generation. Heating oil is still very much used and expensive. Capitalism self-checks....just takes awhile on some industries.

[Jabbar + 465]

20 hours ago, cbrasher1 said:

yes Jabbar, some of the fracs are Anadarko wells also.  We are doing some ducs and some new wells, single well we are currently on just got finished being drilled.

Thx

[El Nikko + 2,145]

2 hours ago, Jabbar said:

I second the motion re Saudis

I think the World Economy is pretty close to bottoming out.  I believe 2020 will bump along the bottom and turn up by year end

Trump is correct to go after the China trade .  If not for the U.S. Democratic Party he would have had a deal last Spring. He will have to come to some accommodation to get the Chinese to buy agriculture and energy to get re-elected. Then turn the screws on them afterwards. 

I believe producers are miantaining production by eating in to the DUCs. You know better than I but I assume the smaller or the highly leveraged producers can't sit on DUC inventory and thus are in tougher shape than the mid to late producers. Those in the field probably have a grasp of that ?  Even when it comes back wouldn't the producers use somewhat less labor than the past for comp production due to greater efficiencies and technology ?

Another cause for pause may be the need for VLCC export terminals for U.S. oil to be competitive.  I have heard different estimates of U.S. crude export present capacity from between 4 to 5 million barrels day. A VLCC partial fill docked and then reverse lightering can take up to 10 days to losd.  Where a modern offshore terminal can turn it around on 24 hours.  Three new VLCC terminals not till 2022.

Interesting note. Last week's crude exports dropped to 2.3 million barrels,/day. Has been averaging between 3 to 3.5 for the longest time. 

 

 

 

Do you really think the world economy has bottomed out?

I don't think it's started properly yet, we've not seen many countries entering recession yet but that is probably going to happen. I think you will see some serious pain happen in EU countries and other countries around the world. I'm not convinced the US or UK will but it could happen, my main reason for saying that is if there is capital flight from the EU (and other places) it will landing in London and New York.

 

[Jabbar + 465]

18 hours ago, El Nikko said:

Do you really think the world economy has bottomed out?

I don't think it's started properly yet, we've not seen many countries entering recession yet but that is probably going to happen. I think you will see some serious pain happen in EU countries and other countries around the world. I'm not convinced the US or UK will but it could happen, my main reason for saying that is if there is capital flight from the EU (and other places) it will landing in London and New York.

 

Yes, recession could happen

Like I said I believe it bottomed and will bounce along the bottom.  With recovery starting starting later next year.

More a "U" shaped World Recovery as opposed to a "V" shaped

Dont think we have to crash to recover. Smoother this time.

My opinion.

Edited November 10, 2019 by Jabbar