Saudi Arabia Still Calling the Shots

[dan_s]

This is why I have become a lot more bullish on the onshore drilling companies. We are now "addicted" to shale oil. As a result, we must drill more and more wells each year just to keep production flat. Shale oil production in the U.S. will increase for a few more year, five years at the most. Then it will be impossible to drill enough new wells to stay ahead of the declining production from the others.

Read our recent profiles on PTEN and PDS. You can find them under the Watch List Tab.

Something else to keep in mind: North America is the ONLY place with meaningful production growth. Recent talk of an "Oil Glut" is total BS when you look at the global picture. Unless peace breaks out in Iraq, OPEC will have difficulty keeping production flat. Saudi Arabia will not produce more than 10 million bbls per day. Saudi's largest fields are now on secondary recovery (water floods). They cannot increase production from those fields without massive capital investments.

Also, a lot of the shale "oil" is not crude oil. It is NGLs, which is not the same. You cannot make gasoline from NGLs.

There will be brief dips in the oil price, but there is now way the price of oil can stay down for long.

BTW these comments from HAL are very bullish for the sand companies. See EMES and HCLP.

[mikelp]

that headline should read:

"Saudi Arabia Still Calling the Shots, depending on what ISIS does"

if ISIS surrounds Baghdad and moves on the southern Iraqi oil fields, all bets are off in the oil markets. It will be every Shiite for himself in southern Iraq, don't count on the Iraqi Army to hold the line.

[dan_s]

Take a hard look at slide 17 from my presentation in Dallas on October 15. It is a map that shows how close ISIS is to several major oilfields in Iraq. There are already five smaller Iraqi oilfields within the ISIS controlled area. About 80% of Iraq's oil production comes from fields in the SE near Basra, an area that is now under the control of Iran.
If the major oilfields of Iraq become engulfed in a civil war, the threat to global oil supply is huge.

You have to log onto the website to see my October 15 slides.