Reserves
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jmwSeattle
- Posts: 16
- Joined: Wed Jan 16, 2019 10:34 pm
Reserves
Shale oil field reserves are declining 30% / yr. and aren’t large enough to pay back the $250 billion borrowed and spent so far to develop them, according to Oil Geologist Art Berman. I think you know the import of that assessment if accurate. I wonder what your opinion is on the issue?
Re: Reserves
Oil shale reserves are not declining by 30% per year. Maybe you mean production decline rates. Reserves and production are two different things.
Horizontal shale wells are completed with massive multi-stage frac jobs. They come on VERY strong, payout quickly and generate very strong well level returns. In the Tier One areas, wells payout in less than a year (even at $50/bbl oil) and they will produce for decades. Spend some time on EOG Resources website. EOG's 2017 drilling program paid out by 9/30/2018. That is an incredible return on investment. I was at Hess Corp. for 18 years and we NEVER had an annual capex program payout in less than a year. We were thrilled to get three year payouts.
Art makes some wild claims from time-to-time. I will leave it at that.
I can tell you that our Sweet 16 companies are extremely profitable, even if oil stays at $50/bbl (but I doubt it will).
Here is your homework: Rather than believe Art's wild claims, download one of the Sweet 16 company forecasts (I recommend EOG because it is the largest) and look at how profitable they are. Take a look at the forecast for Q1 2019 where the oil price assumption is $45/bbl. Come back and tell us how profitable EOG is or is not. Take a look at Concho Resources (CXO), which is a pure play on the Permian Basin.
Note that on each forecast model I also show First Call's estimates for future revenues, earnings and cash flow from operations. < So you can see if my forecasts are "way out there".
Horizontal shale wells are completed with massive multi-stage frac jobs. They come on VERY strong, payout quickly and generate very strong well level returns. In the Tier One areas, wells payout in less than a year (even at $50/bbl oil) and they will produce for decades. Spend some time on EOG Resources website. EOG's 2017 drilling program paid out by 9/30/2018. That is an incredible return on investment. I was at Hess Corp. for 18 years and we NEVER had an annual capex program payout in less than a year. We were thrilled to get three year payouts.
Art makes some wild claims from time-to-time. I will leave it at that.
I can tell you that our Sweet 16 companies are extremely profitable, even if oil stays at $50/bbl (but I doubt it will).
Here is your homework: Rather than believe Art's wild claims, download one of the Sweet 16 company forecasts (I recommend EOG because it is the largest) and look at how profitable they are. Take a look at the forecast for Q1 2019 where the oil price assumption is $45/bbl. Come back and tell us how profitable EOG is or is not. Take a look at Concho Resources (CXO), which is a pure play on the Permian Basin.
Note that on each forecast model I also show First Call's estimates for future revenues, earnings and cash flow from operations. < So you can see if my forecasts are "way out there".
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
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jmwSeattle
- Posts: 16
- Joined: Wed Jan 16, 2019 10:34 pm
Re: Reserves
I have read quite a few posts and have no reason to doubt your analysis.
My father was a WWII aviator with 2,200 hours in the logbook who who was a real estate appraiser for more than 40 years so I understand a lot about how things are evaluated.
Art Berman is thought of highly by some CTAs I follow who themselves think oil might revisit $42 barrel this year, despite Art telling them oil is likely to breach $60 ahead.
This world is all about who do you trust.
My father was a WWII aviator with 2,200 hours in the logbook who who was a real estate appraiser for more than 40 years so I understand a lot about how things are evaluated.
Art Berman is thought of highly by some CTAs I follow who themselves think oil might revisit $42 barrel this year, despite Art telling them oil is likely to breach $60 ahead.
This world is all about who do you trust.
Re: Reserves
"Forecasting is difficult, especially when it is about the future." - Yogi Berra
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group