Economics Improve As Costs Decrease And Enhanced Completions Improve Production -- Mike Filloon -- July 16, 2016

Link here.

Summary:

• Operator breakevens continue lower due to improved costs due to decreased drilling and completion times and better oil service contracts.
• Production improvements due to better well designs have also made core U.S. unconventional plays more competitive.
• Although estimates vary, plays like the core Midland and Delaware basins are profitable at today's oil price.
• High-grading and enhanced completions are improving production between 35% and 60%.

Before the price of oil fell, most thought the average shale focused E&P would need $80/bbl WTI to turn a profit. Now that oil is hovering around $50/bbl, and the US Oil ETF is trading below $11/share, those estimates are much lower. 

Estimates are deceiving, as analysts were averaging all acreage. Since most operators are focusing on core leasehold, estimates should do the same. Some acreage still needs oil at $80/bbl, but these fringe areas are not economic. Many fringe players have declared bankruptcy, and this trend is likely to continue.

Some analysts have changed estimates to $60/bbl, but some operators are adding rigs and increasing production. It is possible some operators are thinking ahead. It can take months before a rig is put to work and an operator sees a location turned to sales.

Again, at least in the North Dakota Bakken, the number of active rigs is of lesser importance than quite a few other things.

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Almost Too Easy

A Note For The Granddaughters

In today's WSJ, the first book review to catch my eye was Richard Conniff's review of David Hone's The Tyrannosaur Chronicles, copyright 2016. I looked at the "inside" of the book, noting that it was identified as a "Best Seller."

With Prime shipping, I will have it on Monday, and the shipping will be "free" (other than the annual Prime membership paid some months ago). For an extra $5.99 I could have the book delivered today, but I already have two books scheduled to arrive today.
 
And I get 5% cash back on a non-Amazon credit card. [A couple weeks ago, my $58 Amazon order cost me $3, the rest paid with cash back from purchases made on that credit card.] 

In the "old days," I would not place my Amazon order until I had "enough" to qualify for free shipping, which usually meant three or four items. Now, with Prime shipping, I order "immediately."

Amazon makes it almost too easy.

The other nice thing about Prime shipping: one can ship to any address. A lot of postage has been paid over the years sending gifts to others. Not so much any more. In addition, it eliminates all that re-packing and the delay associated with re-mailing. I've found most recipients are not upset that their gift does not come wrapped in pretty paper.

Pretty Paper, Roy Orbison
From wiki:

"Pretty Paper" is a song written by country music singer-songwriter Willie Nelson in 1963. After being signed to Monument Records, Nelson played the song for producer Fred Foster. Foster pitched the song to Roy Orbison, who turned it into a hit. Nelson recorded his own version of the song in November 1964.

Written by Willie Nelson, the song tells the story of a street vendor who, during the holiday season, sells pencils and paper on the streets.

In October 1963, while walking in his farm in Ridgetop, Tennessee, Nelson was inspired to write the song after he remembered a man he often saw while he lived in Fort Worth, Texas.The man had his legs amputated and moved with rollers, selling paper and pencils in front of Leonard's Department Store.

To attract the attention of the people, the man announced, "Pretty paper! Pretty paper!"

In 2013, the Fort Worth Star-Telegram identified the man as Frankie Brierton, of Santo, Texas. Brierton refused to use a wheelchair, choosing instead to crawl, as he learned to move while growing up after his legs were affected by a spinal disorder. Brierton sold pencils in Fort Worth, Dallas and Houston.