Idle Rambling On A Sunday Morning -- Thoughts On The Bakken -- December 15, 2019

First, this article from The WSJ: shale slowdown takes economic toll. I have not read the article yet. I will read it in a few minutes. These will be the story lines I will be looking for:

• is the article "shale-in-general" or is it focused on the Permian
• was all shale created equal, or is the Bakken different than the Permian and are the Permian/Bakken different from the other US shale plays
• will the writer corroborate my thesis that the only US shale plays that matter right now are the Bakken, the Permian, and the Eagle Ford, and the latter is slip-slip-slipping away
• does the writer understand the inherent nature of boom-and-bust in the oil patch
• several years ago, it was said that the Bakken would be entering the "manufacturing stage" -- probably about 2016 or thereabouts
• So, let's take a look at the article:
• the byline: Midland, TX
• the lede begins with mentioning the Permian by name
• operators now focusing on profits over expansion
• "the boom time is done at this point, unless oil prices go up significantly" -- senior economist at Federal Reserve Bank of Dallas
• the graphic, revenue change year-over-year, is hard to read
• shows very well the effect the Saudi surge had on US shale from 2014 - 2017
• shows very well the boom-bust cycle in the oil patch
• CAPEX forecast to fall 6% in 2019
• CAPEX forecast to fall another 14% in 2020, adjusted for inflation
• jobs are being trimmed; leading to a 5% decline in seasonally adjusted oil-field service employment in the 12 months ended in October, 2019
• Texas: energy-related employment dropped 2.1%, annualized, through September
• North Dakota: energy-related employment dropped9 %, annualized, through October, 2019
• Texas/New Mexico: regional unemployment at 2.4% in October, up from 1.9% in April, 2019
• Permian workers:
• hours cut
• hotel occupancy in Midland has fallen 14% the past ten months compared to the year earlier
• average cost of a room in Midland was about 55% higher last year (2018) than in 2017
• silver lining: less employee turnover
• companies have time to check references, etc

And then this near the end:

The slowdown is unusual because it hasn’t been driven by a sharp decline in crude prices, which have hovered around $57 a barrel this year. Rather, U.S. oil producers are paring growth and spending largely because many have struggled mightily to generate returns for shareholders and are facing tightening access to capital. Including reinvested dividends, a broad index of U.S. oil-and-gas companies’ share prices has fallen about 47% in the past three years as the S&P 500 index soared roughly 49%, according to FactSet.

“Investors are playing a large role here, and that’s the biggest driver of this cycle,” said Chris Wright, chief executive of Denver-based Liberty Oilfield Services Inc., which specializes in hydraulic fracturing. Companies such as Liberty that provide services or parts to shale producers have been among the hardest-hit by the pullback.

Takeaway / comments:

• simply a snapshot in time
• almost all of this pertains to the Permian; the Bakken went through the same (boom to manufacturing stage);  
• looks more like moving into the "manufacturing stage" than bust following a boom;
• 2020 will be a make or break year for many producers
• 2021 and farther out: will depend more on the new administration in Washington, DC,  than almost anything else
• the wild card is what Prince Salman does to prop up his hobby horse