Shale Oil Fiasco

[Tom Kirkman + 8,860]

18 minutes ago, Douglas Buckland said:

Hey Mike, never under estimate the power of ritual dancing and dead chickens on the drill floor!

Probably as effective as some of this ‘new technology’ we keep hearing about, yet never see.

 

[Boat + 1,315]

12 hours ago, DayTrader said:

DING, gold star for Gerry please.

Thankyou for strengthening my point Gerry! 

Happy New Year buddy  x  ❤️

Read this instead, it will save you some time ...

 

Shale is great

No it isn't

Yeah it is, look at the stats

I don't agree with those stats

No it's great, I'm under 40

Well I'm over 40 and disagree

There are new technologies

What are they?

Did I mention shale is great?

No seriously what are they?

These ones ...

They aren't new technologies!

No they are, trust me

They are just renamed but pretty much the same technologies

But look at the stats

Those stats are nonsense

What about this presentation from shale people?

That's rubbish too

Shale is great

Nah it isn't

Yeah it is, look at the stats

This thread is ridiculous

Then why are you here DT?

It's comical seeing the circles you are all in, and how no one has changed their mind one bit. Why are you here?

I like circles ... and shale, did I mention it's great?

Do you have stats?

Yes, here you go

I don't agree with those

ZZZZZZZZZZZ

 

55,000 views. F**king incredible. 

Oil in the Permian pumps at 100. But then fracking took that number to 800. But it all comes out so fast now. Yea, waiting used to be bad but now it’s good. But oil is unprofitable. At $33 rig counts did drop off. But at $40 rigs were added. At $45 dollars more rigs were added. Huge amounts of oil were produced. $55 oil happens. Oh, time for consolation, crying and consolidating. But oil is at $58, America is now oil independent. Doesn’t matter, eat your loses while I continue my 10 year view of a failed oil experiment. But what about the fact ultimate recovery kicks ass over pre fracking. Well craps, I can tell you one thing, it had nothing to do with new tech, we been fracking for decades. 
But what about most of those wells still have 70% of the oil still left in the rock. Rock is bad, tech is bad. A guaranteed fiasco we should rant against for at least another decade. 
But my god, can those poor investors lose yet more trillions. Yes they can and it’s the feds fault. 
 

[Mike Shellman + 548]

23 hours ago, AcK said:

Hey Mike,

 

Edited January 1, 2020 by Mike Shellman

[Mike Shellman + 548]

22 hours ago, Tom Kirkman said:

Hey Mike

 

Edited January 1, 2020 by Mike Shellman

[Mike Shellman + 548]

22 hours ago, Douglas Buckland said:

Hey Mike

 

Edited January 1, 2020 by Mike Shellman

[James Gautreau + 86]

If a re-frac cost $5 million, doesn't look like that's the way to go unless you already own the well. And if it didn't play out the first time, why would you re-frac? No you would sell it to one of those guys born every minute for say $2 million to cover your sunk costs, and leave him with a snowball's chance in hell of paying out. I'm sorry, most of what I read here doesn't pan out with a modicum of inspection.

[James Gautreau + 86]

https://oilprice.com/Energy/Crude-Oil/The-Worlds-Most-Vulnerable-Oil.html

[James Gautreau + 86]

[James Gautreau + 86]

Production from about 21,500 wells in shale plays (primarily the Bakken and Eagle Ford) accounted for 2.7 million bbl/d of U.S. production, with each well averaging 125 bbl/d. Another 558,000 wells averaging less than 10 bbl/d produced the other 5.3 million barrels. In contrast, Saudi Arabia’s 9.7 million bbl/d total came from 3,200 wells averaging a little more than 3,000 bbl/d. Capacity is 12.5 million bbl/d, or about 3,900 bbl/d per well. The two countries are on the same planet, but not in the same ballpark, or even same league. Iraq and KRG are in Saudi Arabia’s league, with many wells capable of producing 10,000+ bbl/d.

[wrs + 893]

1 hour ago, Mike Shellman said:

In that I have drilled oil and gas wells for the past 45 years, with my own money, I am a "fin type" too, but one that checks the EBITDA bullshit at the door and works out of a checkbook; money out v. money in. Nothing is "sunk," regardless of accounting methodology, when you are up to your ass in debt (CLR has a net debt of +$4B) nor is there a such thing as "free" cash flow when you are in debt and have literally destroyed shareholder equity. 

Participating in this thread for me has been enlightening. Its clear to me that "analysing" shale oil and shale gas is a fun hobby for most and well economics, or corporate finances, is very hard to understand. I am also clear  that once one's mind is made up, one typically seeks out only those facts and fellow believers that support their conclusions. They focus on one thing, and ignore others. Facts like realized production data filed with the the TRRC or the NDIC are ignored completely and, incredibly, people seem to still believe if you read it on the internet, it has to be true...like investor presentations, etc. It is also clear to me that people trying to monetize the shale oil phenomena, particularly royalty owners getting boat loads of free money, don't want people messing with their lucrative gig. Lastly, making predictions about the future based on a model that shows product prices increasing is about as big a waste of time as one can make, IMO. 

All royalty owners make money in the shale biz because they pay no costs. When folks say 400,000 BO of recovery equals $36MM of revenue and the well, or a well, is a money maker...my hair stands up. That's when I know people are clueless. Take, for instance, Bakken wells; after marketing differentials, royalty burdens, production and ad valorem taxes, incremental production costs, or lift costs, interest expenses per incremental BO (Whitting, I think, has some $5 per BO debt costs), and G&A costs per BO the netback price is now around $23 per BO and has been as low as $13 per BO in the Bakken since 2014. Mr. Kramer is starting to get it.  People with agenda want gas included in revenue estimates, including NGL; it doesn't help too much, or not at all when a well is getting flared, which there are a lot of, everywhere.  

So a $4.5-5.0MM MM refrac with lateral preparation and new perforating, etc. will take 200,000 plus BO to payout the frac, what about the original well costs that did not payout. What about all the other lousy Mountain Gap wells in the same unit that don't look like they are going to pay out?  Cherry picking some wells that have been re-frac'ed and ignoring others is part of the "agenda."

Productivity is not the same as profitability and I would advise people to no longer assume this shale thing is going to go on for another decade without making any money, like it did the last decade. People need to fully understand shale economics if they have any kids and think they might live another 10 years; discussing all this is important and I applaud those that do. It makes more sense than day trading Revlon, or Fossil shares for $50 a day and ranting about Middle Eastern politics, for sure.  

 

 

 

How many LTO wells have you actually drilled and carried through production with?  You badmouth royalty owners but then that's a business too, buying and selling royalty interests is a big business on it's own but also a huge part of the E&P businesses you badmouth.  Of course you call it free money but it's payment for the resource owned by the land/mineral owner.  This country does allow for individuals to own what's under their land and that's a good thing because it doesn't work that way in many other countries.  A royalty allows the operator to exploit the resource witout having to pay full price/burden for the land which might be and usually is prohibitive given how land is chopped up.  

I have to wonder why XTO now has 16 wells drilled on one of my sections and the independent just completed three more on another to bring his total to 5 producing on that section now, if the business is as unprofitable as you keep saying.  You and the other anti-shale people are running around with your hair on fire but the business keeps going, irrespective of your flaring hair.   Results matter and apparently in the case of shale, one of the most important results is copious production and the consequent cash-flow.

Cash flow is important and just off my last three months royalty statements from XTO I can see that they have netted after royalty and severance taxes, $21.4m.  That is for three months of continuous full production on the lease without any decline.  Why no decline?  Because they have enough wells to maximize their water takeaway without reaching full production capacity on all of them.  Their income is increasing each month right now because of a rising price of oil.  You keep yip yapping about $50 oil but that's another canard.   The price right now is $61 and rising.  We hope it keeps rising and if it does, maybe you can put out the fire on top of your head finally.

 

Edited December 31, 2019 by wrs

[wrs + 893]

22 minutes ago, James Gautreau said:

Production from about 21,500 wells in shale plays (primarily the Bakken and Eagle Ford) accounted for 2.7 million bbl/d of U.S. production, with each well averaging 125 bbl/d. Another 558,000 wells averaging less than 10 bbl/d produced the other 5.3 million barrels. In contrast, Saudi Arabia’s 9.7 million bbl/d total came from 3,200 wells averaging a little more than 3,000 bbl/d. Capacity is 12.5 million bbl/d, or about 3,900 bbl/d per well. The two countries are on the same planet, but not in the same ballpark, or even same league. Iraq and KRG are in Saudi Arabia’s league, with many wells capable of producing 10,000+ bbl/d.

James, maybe you don't know it but the stuf that comes out of those wells in the ME is mostly water.  Different geology and different production methodology.  That oil in the middle east isn't coming up on it's own BTW, the fields are pressured by water and nitrogen being pumped back into them.  Without the artificial pressure, the production would be miniscule in comparison.

Edited December 31, 2019 by wrs

[Douglas Buckland + 6,308]

1 hour ago, James Gautreau said:

The fuse has been lit in Iraq. There's a slow burn that's going to explode. Trump will be faced with the ultimate irony-invade a Middle East country and start a useless war that he always rails against or watch oil prices skyrocket and his presidency go down in flames. If America does invade Iraq again I think Iran will join the battle, just to send oil prices higher. That's what Trump does not understand, nor does his base. When it comes time to get re-elected, you need friends and allies, and not just Russia. Practically the whole world wants Trump gone. All of Nato. Most of the Middle East. China. All of them will play their geopolitical cards to knock Trump from power. 

Perhaps, but you fail to consider those poor misguided souls who elected him the first time, the souls that are sick unto death of the never ending Democratic shennanigans and those souls who may have been sitting the fence who now have a job or a higher standard of living.

These are the people you need to worry about in regards to Trump getting re-elected. Not those pissants in NATO who did not honor their financial committments to the organization, not China and their attitude towards trade and definitely not those in the Middle East that alternately love the US or hate the US depending on what they get out of the deal.

The last I heard, NATO, China and the Middle East were not allowed to vote in US elections.

[Douglas Buckland + 6,308]

48 minutes ago, Mike Shellman said:

...and never, I repeat never, let a bit, BHA or float shoe go thru the rotary table without a good 'ol slobbery spit on it, right ?

😂 Anything that keeps it turning to the right!

[James Gautreau + 86]

6 minutes ago, Douglas Buckland said:

Perhaps, but you fail to consider those poor misguided souls who elected him the first time, the souls that are sick unto death of the never ending Democratic shennanigans and those souls who may have been sitting the fence who now have a job or a higher standard of living.

These are the people you need to worry about in regards to Trump getting re-elected. Not those pissants in NATO who did not honor their financial committments to the organization, not China and their attitude towards trade and definitely not those in the Middle East that alternately love the US or hate the US depending on what they get out of the deal.

The last I heard, NATO, China and the Middle East were not allowed to vote in US elections.

You miss my point entirely. America is a country of immigrants. Most of the white immigrants came from Europe. French, German, Spanish, English, Polish etc. Most of these people are Trump's base.Trump turning his back on NATO and aligning with Russia will not be something people will become inured to. For decades America's major alliance on the world stage made all those Old World people certain their home countries were protected. Not any more, and because of the most crass of reasons. Money. Americans enjoy cheap energy because of the Middle East, save for the last couple years, but LTO has peaked and will decline soon and we will be dependent on the Middle East once more, and Trump has not help stabilize the region. He has withdrawn troops, and recently he let Iran attack Saudi Arabia without any consequences. Finally America likes cheap goods from China. Trump's tariffs have only made Chinese goods more expensive and is essentially a new tax on the American people. 

[Gerry Maddoux + 3,627]

10 minutes ago, James Gautreau said:

Production from about 21,500 wells in shale plays (primarily the Bakken and Eagle Ford) accounted for 2.7 million bbl/d of U.S. production, with each well averaging 125 bbl/d. Another 558,000 wells averaging less than 10 bbl/d produced the other 5.3 million barrels. In contrast, Saudi Arabia’s 9.7 million bbl/d total came from 3,200 wells averaging a little more than 3,000 bbl/d. Capacity is 12.5 million bbl/d, or about 3,900 bbl/d per well. The two countries are on the same planet, but not in the same ballpark, or even same league. Iraq and KRG are in Saudi Arabia’s league, with many wells capable of producing 10,000+ bbl/d.

I think we all get it, James: We should give up, dance once again to the puppet strings of Saudi Arabia. Why on earth would we have been so foolish as to think we should produce the oil that drives the machinery of our commerce and military? What were we thinking? Damn!

I may not understand the commerce of this "fiasco" like Mike Shellman, and it's true that I am guilty of overlooking "sunken costs" and debt and all the faulty gears that run this stupid enterprise, but I also understand that most of the terrorists who drove the airplanes into the World Trade Center and the Pentagon and tried for the White House but augured in somewhere in Pennsylvania, were from Saudi Arabia, the place that has sewn more terror than every other country in the Middle East, save maybe Iran. Those people had us by the short hairs for decades!

It may be a total accident of nature that shale, and this insane business of fracking, came along just about that time. I don't suppose for a moment that patriotism was the first word to jump into the minds of the early frackers . . . or even the ones who followed. However, it was at a propitious momentd, almost biblical. Consider for just a minute or two where in a holy hell our country would be if we were still almost 100% dependent upon those people whose kingdom is run by a man like MbS. If our energy needs were mostly derived from the KSA, as they were since about 1950, we would have had no recourse but to bomb the smithereens out of Iran when it sent missiles into those desulfurization bins. And that would have involved Putin, and so it goes.

There's a lot of information on the 35 pages of dialogue in this stream, and a fair amount of disdain directed from those who understand this matter from the inside, mostly directed toward those trying to understand it, and that's not a bad thing: sometimes it takes that to clear the air. What has been largely missing is the Big Picture of just where in the world the United States of America would be if totally energy-dependent upon foreign powers that hate us and consider us infidels. And yes, I also get the disdain toward this overused term, energy-independent. Let me take you back again. The Deepwater Horizon deal was blown out of proportion by the green people and the media, but it crippled GOM drilling for several years. Madura turned into a monster. Hugo Chaves hated us. Canada had insufficient oil, most of it heavy, to satisfy our refineries. Our conventional oil production was in the cellar. We were literally held hostage by KSA, which now would be MbS. Ponder the ramifications of that dystopian situation before spouting off about how wonderful their damn oil-wells are. The United States of Exxon basically built out the Saudi oil enterprise. Their gratitude was just overwhelming, brought a gown man to tears. 

My take! After 9/11, we invaded the wrong country. And that's pretty much my final word on this stuff. I have to agree with Shellman and Buckland: the shale fiasco is a mess. But you know, there for a while, it may have saved us from WWIII.    

[James Gautreau + 86]

I seem to only miss my target today. The point of the graph is to show how much cheaper Saudi Arabian oil is, and by extension Middle Eastern oil. That is the prize, as Dick Cheney was so fond of saying. Bottom line we used to import 12 mbpd from all over the world. Fracking has brought that down to maybe 4 mbpd. Some say count NGL's and it's 0. Whatever. Most of that oil that used to come to us went to China and India. China produces 4 mbpd and imports 8 mbpd. Bottom line when LTO we're going to fight over that 8 mbpd. Upstairs somewhere Mike was saying how boring it is to speculate. I disagree. The most important part of the oil game as I see it is when to bring your product to the market. Speculating on how this geopolitical game will play out is just about the most interesting thing in the world. The government subsidized drilling by making IDC 100% deductible in the first year. It was never about making a profit, it was about sheltering income. When the larger, publicly traded companies came in and gobbled up the small fish, all that must have ended. I mean you were there. Is that what happened. We have talked about how to invest in your own wells to shelter income. It certainly explained the frenetic pace, and the penultimate slowdown in 2014. This slowdown is the final slowdown because the majors want to bring that oil to market at higher prices, and they have no debt obligations that force them into a drill like crazy scenario. 

[Gerry Maddoux + 3,627]

10 minutes ago, James Gautreau said:

I seem to only miss my target today. The point of the graph is to show how much cheaper Saudi Arabian oil is, and by extension Middle Eastern oil. That is the prize, as Dick Cheney was so fond of saying. Bottom line we used to import 12 mbpd from all over the world. Fracking has brought that down to maybe 4 mbpd. Some say count NGL's and it's 0. Whatever. Most of that oil that used to come to us went to China and India. China produces 4 mbpd and imports 8 mbpd. Bottom line when LTO we're going to fight over that 8 mbpd. Upstairs somewhere Mike was saying how boring it is to speculate. I disagree. The most important part of the oil game as I see it is when to bring your product to the market. Speculating on how this geopolitical game will play out is just about the most interesting thing in the world. The government subsidized drilling by making IDC 100% deductible in the first year. It was never about making a profit, it was about sheltering income. When the larger, publicly traded companies came in and gobbled up the small fish, all that must have ended. I mean you were there. Is that what happened. We have talked about how to invest in your own wells to shelter income. It certainly explained the frenetic pace, and the penultimate slowdown in 2014. This slowdown is the final slowdown because the majors want to bring that oil to market at higher prices, and they have no debt obligations that force them into a drill like crazy scenario. 

This is just about the most bullshit I've ever seen in one paragraph. Some of the people on this site have sweated bullets waiting on a well to either come in with enough vigor to break even, or to go bust. I happen to be in that group. I'm really not into mental masturbation so if you want to post that stuff, please, do so. But as with all things in life, to thine own self be true-----what is your motive?  

[Douglas Buckland + 6,308]

51 minutes ago, James Gautreau said:

You miss my point entirely. America is a country of immigrants. Most of the white immigrants came from Europe. French, German, Spanish, English, Polish etc. Most of these people are Trump's base.Trump turning his back on NATO and aligning with Russia will not be something people will become inured to. For decades America's major alliance on the world stage made all those Old World people certain their home countries were protected. Not any more, and because of the most crass of reasons. Money. Americans enjoy cheap energy because of the Middle East, save for the last couple years, but LTO has peaked and will decline soon and we will be dependent on the Middle East once more, and Trump has not help stabilize the region. He has withdrawn troops, and recently he let Iran attack Saudi Arabia without any consequences. Finally America likes cheap goods from China. Trump's tariffs have only made Chinese goods more expensive and is essentially a new tax on the American people. 

We are not, and have not been, a ‘country of immigrants’ for a long, long time now. It is silly to perpetuate this myth. Granted, immigrants started and built the country (who else was available?), but the country has been proudly populated by Americans since at least the late 1800’s. Do you honestly believe that most Americans have a strong affinity to their ‘Old World’ home countries (?) which most have never seen and no longer speak the language or practice the traditions?

By your implied definition, most European countries are countries of immigrants! 

[Mike Shellman + 548]

deleted

 

Edited January 1, 2020 by Mike Shellman

[wrs + 893]

46 minutes ago, Mike Shellman said:

@wrs, I've drilled and participated in HZ, frac'ed wells. I am a royalty owner too; bought, not inherited. I don't "allow" Lessees to develop my minerals, I feel privileged they are willing to spend the money they do, at great risk, to help me get stuff out of the ground I am otherwise unwilling to get myself. Exxon, for instance, is spending a vast fortune on your  minerals  and they have a long way to go before they realize a dime of profit, which we understand, hardly matters to you. I am not anti-shale, I am anti-stupid and through my years of experience IN the business would like for people to understand there is whole lot of lying going on about the shale revolution and that we, most of us anyway, need to be rethinking stupid stuff like flaring, reducing mileage standards on vehicles, relaxing regulations of the use of fresh water, methane emissions and exporting our remaining resources away, extracted on credit. Otherwise, thanks for your comment; it is indicative of the type of entitled, self serving people I was trying to describe. Perfect timing, that was. Take a stroll around the MSM today, like the WSJ, Bloomberg, Rystad, etc. etc. etc. and you will find there are many others equally concerned about our hydrocarbon future, not just me.  

 

You think you could be anymore insulting, demeaning and dismissive?  What is your specific experience with Wolfcamp or Bone Springs?  When, where and how much did you lose your ass?  Finally, when has the MSM ever put out anything but propaganda for those who pay/own them?

One more thing you seem to fail to notice, XOM was willing to invest in my land because they hold the opposite opinion to you and clearly, they are far more successful and knowledgeable IN the business than you.  So you keep on bragging about keeping wells going that have only produced 530,000 barrels in 70 years while I will collect royalties now on wells that produce that much in 5 years.  Big difference there but somehow it goes by you, maybe because you haven't materially participated in wells that good and it pisses you off that some of us got rich because they did.

Envy is a bad thing to live with, it's a shame you clearly live with it on such a large scale.

Edited December 31, 2019 by wrs

[James Gautreau + 86]

No need to quit being a lady fellas.

[Old-Ruffneck + 1,177]

1 hour ago, James Gautreau said:

I seem to only miss my target today. The point of the graph is to show how much cheaper Saudi Arabian oil is, and by extension Middle Eastern oil. That is the prize, as Dick Cheney was so fond of saying. Bottom line we used to import 12 mbpd from all over the world. Fracking has brought that down to maybe 4 mbpd. Some say count NGL's and it's 0. Whatever. Most of that oil that used to come to us went to China and India. China produces 4 mbpd and imports 8 mbpd. Bottom line when LTO we're going to fight over that 8 mbpd. Upstairs somewhere Mike was saying how boring it is to speculate. I disagree. The most important part of the oil game as I see it is when to bring your product to the market. Speculating on how this geopolitical game will play out is just about the most interesting thing in the world. The government subsidized drilling by making IDC 100% deductible in the first year. It was never about making a profit, it was about sheltering income. When the larger, publicly traded companies came in and gobbled up the small fish, all that must have ended. I mean you were there. Is that what happened. We have talked about how to invest in your own wells to shelter income. It certainly explained the frenetic pace, and the penultimate slowdown in 2014. This slowdown is the final slowdown because the majors want to bring that oil to market at higher prices, and they have no debt obligations that force them into a drill like crazy scenario. 

You really show your ignorance of the "whole oil scheme" and if your an investor good luck. If your truly trying to learn about oil go to West Texas for a couple weeks to a month and observe ask questions. Your basic lack of understanding geo-political and why Kuwait oil is free flow. Remember when Sadam took over and lost that battle in 72 hours upon leaving fired up the wells? Deep-water Horizon same basic principle, under 15k pounds pressure. Free flow oil. 

A lot of  folks here have valuable info and you seem to question every turn. I am not real eloquent with words but there are a few that have the been in the oil business either on the investment side or actual workers in the field. I am old school but me thinks connections and tripping pipe, chunkin' a chain are still in use. And righty tighty lefty loosy. Take the cotton out or your ears and put in mouth!

Edited December 31, 2019 by Old-Ruffneck
add

[Gerry Maddoux + 3,627]

9 minutes ago, Old-Ruffneck said:

You really show your ignorance of the "whole oil scheme" and if your an investor good luck. If your truly trying to learn about oil go to West Texas for a couple weeks to a month and observe ask questions. Your basic lack of understanding geo-political and why Kuwait oil is free flow. Remember when Sadam took over and lost that battle in 72 hours upon leaving fired up the wells? Deep-water Horizon same basic principle, under 15k pounds pressure. Free flow oil. 

A lot of  folks here have valuable info and you seem to question every turn. I am not real eloquent with words but there are a few that have the been in the oil business either on the investment side or actual workers in the field. I am old school but me thinks connections and tripping pipe, chunkin' a chain are still in use. And righty tighty lefty loosy. Take the cotton out or your ears and put in mouth!

Well said! 

And you're plenty eloquent. 

[James Gautreau + 86]

Oil up 36% this year.

https://www.cnbc.com/2019/12/31/oil-markets-us-china-trade-supply-cuts-in-focus.html

[James Gautreau + 86]

3 minutes ago, Gerry Maddoux said:

Well said! 

And you're plenty eloquent. 

Erudite as an erudolt.