Just curious as to how much Saudi Arabia's downward pressure on oil prices will effect permits and drilling in Reeves county. I have an ownership interest in some property already leased: AB 3460 BLK 58 SEC 19 PSLSW/4
Thanks for any information or thoughts you may have.
-Robert
Excerpt from one financial forecast:
Typically, when oil prices fall due to a supply-demand imbalance, OPEC countries look to Saudi Arabia to cut its output and help put a floor under prices. This time around, however, not only are the Saudis unwilling to play that traditional role, this week they cut their price for U.S. exports. The move is generally viewed as an attempt to slow the dramatic growth of U.S. shale oil production by driving the market price lower than the high cost to produce that oil.
It’s true that lower prices will make shale oil less profitable, but we think it would take at least a few years of suppressed prices before oil companies working in the shale formations of Texas, North Dakota and the eastern U.S. to start throttling back their capital spending and bring new crude to market. In the meantime, who knows what geopolitical events might occur that could threaten global oil supplies and put upward pressure on prices.
Thanks Mike! I was sort of thinking along the same lines. As an American, you can imagine how I feel about Saudi Arabia right now.
Another excerpt:
In the current cycle, though, prices will have to decline much further from current levels to curb new investment and discourage US production of shale oil. Most of the growth in shale is in lower-cost plays (Eagle Ford, Permian and the Bakken) and the breakeven point has been falling as productivity per well is improving and companies have refined their fracking techniques. The median North American shale development needs an oil price of $57 to breakeven today, compared to $70 last year according to research firm IHS
Source: http://www.valuewalk.com/2014/11/decline-in-oil-prices/
Scroll down a bit to get to the piece.
Does it matter what basin its in? For example "Delaware basin" would be comparable to the others?
Absolutely. Each Basin and sub-basin has it's own set of economics, which can vary widely based on costs, EURs, Price Basis-Differentials...and more.
Robert E Sullivan said:
Does it matter what basin its in? For example "Delaware basin" would be comparable to the others?