Wednesday, July 26, 2017

If OXY Can Lift Oil In The Permian For $28, Using Same Accounting Methods, Bakken Operators Doing Even Better -- And Making OPEC Nervous -- July 26, 2017

From a comment at an earlier post, in full (I'm moving it here as a stand-alone post because it fits my worldview of the Bakken):
Some interesting comments on the Bakken in this article. From the article, it looks like shale is the only place where Hess and Anadarko are making money.

--- Hess Holds On to Mixing it Up ---

"Yet, also like Anadarko, Hess is holding its own where it counts: U.S. shale.

Production in Hess’s core Bakken basin beat guidance handily, at 108,000 barrels of oil equivalent per day. That should rise to somewhere between 110,000 and 115,000 in the fourth quarter.

More important than that is how Hess is getting to those higher levels….

With four rigs operating in the Bakken, the company had indicated it might add another two if oil prices warranted it — the implication being that those two might be needed in order to maintain momentum.

Hess now says that a move to more intensive fracking methods meant it could meet its targets with just four rigs. The company says its Bakken operations generate free cash flow even at today’s prices and that it would require only 2.5 rigs, on average, to hold production flat, down from 3.2 rigs a year ago.

That a U.S. E&P company is holding steady at sub-$50 oil in the Bakken — and not the red-hot Permian shale — should cause some nervous twitching over at OPEC’s offices. At $60 oil, which still wouldn’t salve the economic wounds of many petrostates, it’s a fair bet those other two rigs would be put to work quickly….

In short, Hess is increasingly a story of grinding out further productivity gains in the Bakken but using the cash this generates for now to fund the Guyana venture."
I've also read that some operators in the Bakken can meet their 2017 contractual agreements in the first six months of the year. Anyone following "wells of interest" can understand why I say that "new" bbls in the Bakken are being lifted for a lot less than $28/bbl, using OXY's accounting methods.

Disclaimer: I am inappropriately exuberant about the Bakken. Take my worldview with a grain of salt.


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