"The EIA’s data on the changes in 'legacy' production—a measure on the decline rate of existing wells—suggests that if no new rigs were drilled, production would drop by a million barrels per day every quarter," writes Exarhos. "U.S. production is now forecast to decline by 500,000 barrels per day over the next six months, a reason to expect at least some price recovery in 2016."
Is Chevron selling due to the expectation that oil prices will be slow to recover? Less than $1/bbl net profit from this operation?
Figure Chevron just cleaning out its closet of properties that fall in the lower part of their portfolio
How much net profit was it generating at $80 oil? I suppose it could be losing money with $37 oil.
Especially with a high cost operation like this with all the corporate office overhead. Smaller operator will make money by lowering operating costs in the long run.
Wild card is the price of CO2 over time
This ongoing monthly video series continues to impress (me)
Is data for total shale oil production available?
EIA has published reports on " total shale" production, but it is difficult to agree on which plays are really “shale”
Per the article I linked, is shale oil production >/=500,000 bbl/day less than what is generally believed?
I don’t have all the resources and time to research actual production versus historical projections, but it is clear that unconventional oil production is decreasing due to lack of new drilling plus continued decline of older wells. I don’t know if these groups consider the Permian Basin plays to be " shale oil" or not. The Midland and Delaware Basins have stayed very active as compared to other areas and good wells are being made.
I thought you or someone else reading this might know more details offhand. It seems as though it is fairly important information to factor if shale oil production has fallen even more than is widely accepted. For instance, it might mean that the price could rebound more quickly than projected.
AJ and RockMan, thanks for your continuing posts to the forum.
I get the impression that the industry is digesting the large amount of information that it is generated and now the innovative players in the market are figuring out what needs to be done next.
The data gathering and integration has been going on for some time - trying to determine how to do drill wells longer, cheaper and faster to get more O&G out of the ground for better economics is the Holy Grail that is constantly being searched for.
Some operators will not be able to drill in today's price environment. Although operating costs have dropped significantly, they can only go so low. A "hidden" downside of the pricing downturn is the loss of quality workers and staff from the service companies. And parallel to that is the stacking of rigs and frac equipment - which can not be reversed overnight (especially with less quality staff at these service companies).
There is some great work being done by the Concho's, Pioneer's, RSP's, EnCana's, Diamondback's, etc of the Permian Basin oil patch. But even as these companies prosper and move ahead, others will be filing bankruptcy, looking to sell out at reduced prices or "hunkering down" by reducing staff and just trying to keep the doors open.
Those companies that have figured out how to maintain a financial discipline while maximizing their staff's abilities to optimize "best practices" will continue to win in the O&G game. But IMO this select group of operators is becoming a very small community.
Very cool stuff - BP has followed Amoco's lead in being technology leaders. Lots of $$$ invested in this but when playing areas like deep offshore, this pays off.
IBM's Watson is a wonder, too, and does consulting work.
"PIRA Energy group estimates the nation’s inventory of drilled, uncompleted wells at 3,600 wells...Analysts believe approximately a third of these wells will never be placed in production and that it will take up to two years to complete the viable DUCs."
Two years may be optimistic time frame considering how much frac and pumping equipment has been moth balled as well as how much quality operations staff has left to oil field to find other positions
Why would 1200 drilled but uncompleted wells never be placed in production? Other articles have suggested DUCs are essentially like a savings account. Do they holes degrade/collapse?
If casing is set and cemented properly, there will be no degradation. But the concept behind some wells not being completed may be tied to an inferred perception that it may not be economic to complete certain DUC’s based on idea that they would be economically marginal. The author of the comment on the 1200 not to be completed wells should expand on this issue