Part 2, T+58, January 3, 2019

See this post.

Fracking has a problem -- WSJ -- link here. It's the "Red Queen" argument all over again. Among many other arguments.

I don't know if the linked article is capturing much attention, but due to all the correspondence I got regarding that article, I thought I should add my own two cents worth.

The linked article is behind a paywall. You might be able to access it by googling ...

Two-thirds of projections made by the fracking companies between 2014 and 2017 in America’s four hottest drilling regions appear to have been overly optimistic, according to the analysis of some 16,000 wells operated by 29 of the biggest producers in oil basins in Texas and North Dakota

... or some part of that paragraph. I don't know. 

First of all, it's an "investment" article. It is written from the perspective of someone looking to invest in shale oil companies or associated activities. I'm not interested in the investment angle. This is not an investment site. One needs to follow "the money" to understand unconventional oil/tight oil/shale oil but again that does not mean this is an investment site.

I would not in a million years recommend anyone invest in the stock market. I would not in a million years recommend anyone invest in publicly traded oil companies. I'm not a financial advisor. I would not give advice to anyone on how to invest their money, even if they asked me. Everyone has different goals in life.

The article's audience, it appears, is/are investors, as far as I can tell. The article does not appear to be aimed toward: surface owners; policy makers in Washington, DC; the Williston Economic Development Office; truckers; mineral rights owners; roughnecks; electric utilities electrifying well sites, the North Dakota Dept of Transportation; or, Joe Six-Pack or Jane Handbag.

Second of all, it appears the gist of the article is that some/most/all oil companies exaggerated in their presentations to potential investors. Shocked! I'm shocked.

Not said explicitly in the article, but some things I have come to learn regarding unconventional/tight/shale (UTS) oil:

• it appears that no one really knows all there is to know about UTS; people don't even seem to agree on the definition of UTS (does it include western Canadian sands heavy oil, for example?)
• many/most/all folks are still using conventional metrics to measure UTS; we need new metrics to follow/track/understand UTS
• many different metrics are being used to measure UTS oil to compare UTS with conventional oil; very few of those metrics are very good for comparing apples to oranges
• the writers suggest fracking and horizontal drilling have been around for decades; that may be true, but "modern" horizontal fracking -- the Bakken revolution -- is a completely different animal than what it was in 1940, and the Bakken revolution is exactly 10.5 years old; a lot more is yet to be learned about horizontal fracking

After reading the article, my questions and comments:

• does it really matter how long a well will produce? If I invest $10,000 in that well, and I get a return of $1 million in five years, do I really care if the well continues to produce for another 30 years or only another five years? I'll gladly take the million dollars and run.
• does it really matter if the payzone is a thousand feet thick or forty feet thick? If a 1,000-ft payzone has a(n) EUR of one million bbls and a 40-foot payzone has a(n) EUR of one million bbls, I would prefer to "own" the 40-foot payzone. It's going to take far fewer wells to drain a 40-foot seam than it will take to drain a 1,000-foot seam. And it will happen a lot more quickly.
• have folks noted that UTS is completely different from conventional drilling? Hubbert peak oil theory says that once production from a conventional well starts to decline that won't change; that is absolutely not true for UTS; I have hundreds of examples that clearly show that min-fracks; major re-fracks; neighboring fracks will "reinvigorate" an old well. MRO has proved that beyond a shadow of a doubt in the Bakken

I'll leave it at that. But I would take the linked WSJ article with a grain of salt, as they say.

Except to say -- with regard to investing: caveat emptor.

And again, this is not an investment site. Do not make any investment, financial, job, travel, or relationship decisions based on what you read here or what you think you may have read here.

By the way, Joe Sixpack and Jane Handbag can be followed here.

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