Permian Basin Update

[dan_s]

Impact of downturn on shale development: Permian success story
June 20, 2017

Author: Artem Abramov, Vice President Analysis, Rystad Energy

Publisher: Oil & Gas Financial Journal

In the beginning of the recent downturn (2H 2014 – 1H 2015), a general consensus in the market had been calling for a rapid collapse of the US Shale oil industry. Contrary to this belief, the industry was able to survive throughout the downturn. Indeed, total shale oil production declined by apr. 700 thousand barrels per day from March 2015 to September 2016. Nevertheless, given numerous efficiency and productivity gains accompanied by lower service prices, the most dedicated shale operators have been able to complete a successful transition into low-cost source of supply with sustainable activity in a sub-60 USD/bbl oil price environment. There is no doubt that the Permian Basin provided a major contribution to this transition, showing the earliest and steepest recovery in new drilling activity since mid-2016.

Full article: https://www.rystadenergy.com/NewsEvents ... cess-story


Lots of investors and Wall Street think we need oil prices of over $60 before upstream oil & gas companies can make money. That is no true. Well level economics are quite good at today's oil, gas and NGL prices. All in cash operating expenses are now $10 to $15 per BOE for all of our Sweet 16 companies.

If you attended the Lonestar luncheon in Houston, you know now that well results in the Eagle Ford are getting a lot better. Longer laterals, completed with better frac designs, have significantly improved well results.

BTW unless there is a SIGNIFICANT decline in the active rig count, the frac sand companies are going to do very well this year. Frac sand demand is tied to the rig count, not to the oil price. Every upstream company that I follow (over 50) is using a LOT MORE sand to complete horizontal wells this year.