A huge "thank you" to a reader.
I breezed through it quickly. Some initial unedited comments from what I remember speeding reading. I may be completely off.
First, what I wrote to the reader who sent me the article:
Wow, that is a great article, and conforms almost exactly with my world view of the Bakken.It is interesting the article focused on OXY talking about pulling out to some extent from the Bakken, saying they have better prospects elsewhere, based on cost.What was not noted in the article was the absolutely dismal wells OXY has reported (one recent exception in Dunn County).If OXY was reporting wells with yearly production that BEXP and Whiting are reporting, OXY would be less concerned about costs.
Other things that made an impression, in no particular order, and not edited ("Economart talk"):
- OXY is not moving out completely. Why? "That's where the oil is."
- Whiting mentioned frequently. Reuters noted how quickly Whiting is drilling their wells. Did they say Whiting was reaching total depth in 15 days?
- Reuters thinks OXY's talk about costs is at the wrong end of the curve. Reuters thinks costs of drilling and completing a well are going down; but service companies are going to re-negotiate their contracts with eye on raising prices. (Some schizoid notes here: costs coming down in some areas, but may rise in other areas.)
- Reuters note that new state regulations on waste management will add $400,000 to cost of each well in North Dakota.
- Sand and ceramics will become more plentiful (prices to come down).
- Price point for Bakken oil: $68 oil provides a 15% rate of return. [Saudi, other sources, needs $87 to execute their state budget.]
If I have time, I might go back to the article and put in data points from the article, but since it pretty much conforms to my world view of the Bakken, I will probably move on.
Bottom line: both Reuters and I agree that OXY's worry about the cost of drilling in the Bakken tells us more about the efficiency/effectiveness of OXY's drilling/fracking than about the Bakken potential. Whiting and BEXP seem to have cracked the code. Newfield also expressed worries about costs but seems to be doing something about it. But "everybody knows" that the Bakken and the Eagle Ford plays are where the oil is.
Seems people say "price point" to replace "price" when they want to sound smart. It means the same thing in this instance.
ReplyDeleteYou are probably correct. I don't know. I try to stay away from jargon. I often get criticize for the lack of sophistication on this blog, but if one reads the welcome, the disclaimer, the opt-repeated purpose of the blog, it makes sense why there is a lack of sophistication.
ReplyDeleteIn addition, it would be very difficult for me to write differently and would take a lot longer. Information in a timely on this subject is more important than the writing per se, though I do try to keep spelling and grammatical errors to a minimum.