As I have been telling you .....
Posted: Sat Feb 07, 2015 6:48 pm
Stunning growth in US oil production may come to a halt by mid-2015 as low oil prices begin to constrain US tight oil production, which has been the dominant engine of world oil supply gains in recent years, according to a new report by information and analytics provider IHS. Growth is still expected in the early months of 2015 but that momentum will level off in the latter half of the year amidst prices at lows not seen since the 2008-09 Great Recession.
The new report, based on an IHS study of 39,000 wells, points to the possibility of month-to-month US oil production growth coming to a halt in the latter half of 2015, assuming that West Texas Intermediate (WTI) prices remain below $60.
Article: http://www.ogfj.com/articles/2015/02/ih ... sc=SBeJtQj
I have seen several articles that say hedging programs will keep production up. LET ME BE CLEAR: Hedges have nothing to do with actual production. Hedges are financial derivatives that are tied to WTI, Brent or other indexes. Physical production is sold at field prices. Hedges are "settled" based on their terms, which have nothing to do with physical production. For example, if a company has in-the-money hedges they will get paid even if they have no production. They are just like Puts and Calls on stock.
The new report, based on an IHS study of 39,000 wells, points to the possibility of month-to-month US oil production growth coming to a halt in the latter half of 2015, assuming that West Texas Intermediate (WTI) prices remain below $60.
Article: http://www.ogfj.com/articles/2015/02/ih ... sc=SBeJtQj
I have seen several articles that say hedging programs will keep production up. LET ME BE CLEAR: Hedges have nothing to do with actual production. Hedges are financial derivatives that are tied to WTI, Brent or other indexes. Physical production is sold at field prices. Hedges are "settled" based on their terms, which have nothing to do with physical production. For example, if a company has in-the-money hedges they will get paid even if they have no production. They are just like Puts and Calls on stock.