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It looks like Mike has fallen into group think (note he does not mention Russia; worried about US shale production upsetting OPEC cuts; doesn't mention Kuwait adding rigs):
We see upside to 2016 oil demand and OPEC compliance has been better than expected. Lybia is an issue, as the war torn country continues to shut ports due to fighting. We are a little worried about the U.S. supply response, although good for the U.S. oil industry, it could be bad for prices. Productivity gains and access to capital have both been positive. This should lead to decent inventory draws in Q2. This should lead to a transition to a more backwardated curve. This transition to date points to more positive fundamentals. Gains are seen by that positive carry generated by backwardation. The problem is the wait.Three data points:
- laterals getting longer; 9,000 feet the current "normal': some wells to 10,000 feet; one well with a 13,000-foot lateral
- no mention of amount of proppant (unless I missed it)
- cost of representative well: $8.5 million