Energy Prospectus

Rystad Energy's Oilfield Service Newsletter - January 2018

Nearly 60,000 new wells were drilled and completed globally in 2017. This is a 14% increase compared to 2016, which represented the turning point following the downturn, and we expect continued growth in well demand towards 2020. An increasing number of wells being drilled and completed is undoubtedly good news for drilling and well service providers as this is a fundamental market driver for the industry. Only 3% of the wells drilled in 2017 were exploration wells, which is why we are likely to see supply shortages within a few years.

Read: http://communications.rystadenergy.com/ ... :NVAsnwV9L

From an EPG member:

· The top 33 shale oil producers need another $8.3B in funding plus $2.4B in debt refinancing to meet expected capital spending of $58.4B this year in a $60/bbl environment for WTI crude oil, according to analysts at Rystad Energy.

· Capex would be cut ~18% to $47.7B without the additional funding and any debt refinancing, which would bring down the amount of completed wells to 5,600 from 6,900 with external capital, according to the report.

· Rystad expects Anadarko Petroleum (NYSE:APC), ConocoPhillips (NYSE:CO) and Marathon Oil (NYSE:MRO) "to have positive cash flow balances amounting to $2.3B in 2018 [but] unless these companies acquire the acreage of cash negative operators, the gap between capex and available funds without additional financing will come to $10.7B."

· The report also identifies seven U.S. shale producers that would take the biggest hit from hedging losses: Concho Resources (NYSE:CXO), Encana (NYSE:ECA), Diamondback Energy (NASDAQ:FANG), Devon Energy (NYSE:DVN), Pioneer Natural Resources (NYSE:PXD), QEP Resources (NYSE:QEP) and WPX Energy (NYSE:WPX).