Graphic of the week?
COP / Concho Resources in talks. Link here.
US shale production to drop: will drop to 7.7 million bpd, down about 123,000 bpd; link here.
third consecutive month of declines
biggest decline forecast for Eagle Ford; to drop about 34,000 bpd about 1.0 million bpd, the lowest since May, 2013;
Permian: expected to drop about 17,000 bpd to 4.4 million bpd
Why operators like shale: one word -- flexible. Link here to S&P Global Platts.
- Chevron CEO Mike Wirth: doesn't see US getting back to record highs of 13 million bpd in the "next couple of years;
- reminded investors of Chevron's purchase of Noble Energy with its mideast footprint in Israel
- cutting CAPEX but growing the company with shale:
Wirth said shale had fundamentally reset Chevron's financial framework, noting the company had cut its annual capital expenditure from $40 billion in 2014 -- with no growth in the company -- to $20 billion going into the latest crisis in markets, and now closer to $12 billion, with the company on a growth path.
- short-cycle:
"From $40 billion to $12 billion a year [shows] incredible flexibility on capital, lower capital intensity, and we've got the ability to adjust our program to meet market conditions on a much more contemporaneous cycle," Wirth said.
long-cycle:
"We found ourselves in the last decade with many multibillion-dollar, multiyear investments which were hard, challenging, and the industry's experience broadly was not good," Wirth said."We'll always have room for some of these large, long-cycle projects," he said, noting the challenges of an expansion project at the Chevron-led Tengiz field in Kazakhstan, which has been hit by cost rises and coronavirus outbreaks. Deepwater projects in the Gulf of Mexico that could be tied into existing infrastructure would also remain attractive, but stand-alone "greenfield" projects less so, Wirth said.
OPEC basket, link here: $40.57.
Another price war? Link here. What's the definition of insanity .. doing something over and over and over and expecting a different result.
Is US shale bouncing back? Link to David Messler.
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Back to the BakkenIs US Shale
Active rigs:
| $40.04 | 10/14/2020 | 10/14/2019 | 10/14/2018 | 10/14/2017 | 10/14/2016 |
|---|---|---|---|---|---|
| Active Rigs | 14 | 58 | 67 | 59 | 31 |
- 36668, drl/A, Hess, TI-Ives-157-94-0601H-6, Tioga, t--; cum 53K 8/20;
RBN Energy: outlook for oil, gas, NGL supply / demand, and prices.
Six months on from the height of the crude oil price rout of April 2020 and the unprecedented market convulsions that followed, energy markets appear to be settling into a state of hyper-uncertainty amidst the ongoing pandemic. Crude oil prices have been downright equanimous, stabilizing near $40/bbl in recent months. Volatility has reigned in the gas market, but it has thus far managed to avoid a major collapse, and the NGLs market has dodged a complete derailment from norms, if barely.
The relative calm provides the perfect opportunity to assess how COVID-era energy markets are operating and what lies ahead — which is what we’ll be doing next week at RBN’s Virtual School of Energy. There’s a new order taking shape, and we’re rolling out RBN’s freshly updated outlooks for U.S. crude oil, natural gas and NGL markets. As always, we’ll pull back the curtain on the fundamental analysis and models behind our forecasts, so you can understand how we arrived at our answers, and gain the skills and tools to adjust the assumptions as markets evolve. As you’ve gathered by now, today’s blog is an unabashed advertorial for our virtual conference, but read on if you’d like to hear more about the underlying premise behind our latest outlook.
Since then? Not much has changed.
that oil price article threw me when i first read it...ie, this "The graph above shows the true impact of this trend, with frac crews more than doubling since May’s lows." cause as you know, i've been reporting an ongoing slump...
ReplyDeletethen i remembered that completions were down more than 80% YoY in May, and that even if they doubled from that level, they'd still be down more than 60%..
1. I went back to look at that article (the David Messler link) and I don't see "the graph above." Was that graph missing, or was it one of the graphs later on in the article?
Delete2. Over and over and over when I see comments about "shale," the analysts seem not to be seeing what I'm seeing. If that is correct, it's likely because I am focused on the Bakken and know almost nothing about either of the two big shale OIL plays.
3. The Bakken is incredibly small in terms of "activity" and "interest" right now. The Permian is where the "activity" is and where the "interest" is. When analysts talk about US shale, my hunch is they are mostly looking at data from the Permian. The analogy is OPEC/Saudi Arabia. When folks talk about OPEC, it's really Saudi running the show. (As an aside, OPEC+ includes Russia, but I'm getting the feeling that even Russia is becoming less important in the big scheme of things.)
4. As one example: I've not seen an unusual number of DUCs being completed in the Bakken -- something that David Messler suggests is happening across US shale. Again, I think he's looking mostly at Permian data. We'll know more tomorrow when North Dakota releases its monthly report, the Director's Cut, which is scheduled to come out Friday, October 16, in the afternoon, I believe.
5. Bakken DUCs: it appears to me that the only DUCs being completed are those driven by ND regulations.
no, i never saw the graph that line refers to...i thought he might have inserted the wrong graph, one for some solar stock, maybe because the trajectories looked similar....i have never seen a graph of completions, although with an EIA excel file of the data, it should be easy enough to generate one..
DeleteThank you for confirming that .... I often miss things ... I'm not disciplined in my reading ....
Deletedamn, it looks like Messler's article was made up of whole cloth...i finally got to the DUC data, expecting to see a jump in completions, & i find they were unchanged in September and not up by much more than a third since the bottom...even completions in the Permian were unchanged....i'll try copying the Excel file for you so you can see what i mean...
ReplyDeleteThank you. As you know, I don't track the data well at all. For me, the best I can is anecdotal and a "gut" feeling. It will be interesting to see the spreadsheet.
DeleteIt took me awhile, but I finally spent some time looking at the spreadsheet you sent me. I agree with you. If you just look at the spreadsheet and don't pay attention to what analysts are writing, you really wouldn't notice much difference in DUCs and completions over the past few years.
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