Earlier this post:
Update on the Permian -- Mike Filloon.
Link here.
Part 2 here.
- Occidental, Chevron, EOG, and RSP Permian have the top oil curves of operators with multiple completions
- Delaware well design improvements have increased oil production per
location by 18% yoy. We believe there is greater upside in the Delaware
in 2017 than in Midland. It is possible the Delaware has more upside
than any other US play
- Lea County is starting to separate itself as the best county, although northern Loving has had a few mammoth results
- the drop in world oil inventories is enough to start pushing short pops
in prices. We think WTI will push above $70/bbl by June, but pushing
above $75 will be difficult
There was something else Mike mentioned in that article -- in fact, he led with it:
In our previous article, we provided oil production data from the
Midland Basin. From 2016 to 2017, this improved 32.5%.
Oil bears have
stated that they believe operators will run out of core geology, and
this will seal the fate of unconventional US oil producers. It is
inevitable that shale will eventually dry up, but it doesn't seem to be
occurring in the near future.
In a recent article, we provided an oil
price estimate for the 2018 driving season. US operators continue to
increase oil production, but it probably will not meet increased demand.
We expect relatively large oil draws, and WTI to eclipse $70/bbl and
peak at $75. This should push the US Oil ETF
higher by 12% in just a few months. Oil prices should drop after and
trade in the $60 to $70 range throughout 2018. It will be difficult to
push oil prices above $75, as the resultant oil production could outpace
demand.
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