For The Archives -- Shale Is In Trouble -- Irina Slav -- December 12, 2022

Link here.  Archived.

In a recent analysis of the state of the U.S. shale oil industry, resource investors Goehring and Rozencwajg highlighted these three factors as drivers of the transformation of the industry from its pre-pandemic boom to today’s significantly more measured pace of both production and investment in future supply.

Natural depletion is not something that gets talked about very often when it comes to U.S. shale. In fact, most reports about the industry like to note the resource wealth of the U.S. shale plays, especially the Permian, but fail to add that these plays have been exploited for quite some time now, and in some of them, drilling is not as lucrative as it used to be.

In fact, Goehring and Rozencwajg note that drillers in the Eagle Ford and Bakken formations have largely run out of profitable drilling spots and production in these two plays is likely to plateau soon and start declining.

The resource investment firm mentioned the story of Oasis Petroleum which illustrates this trend: Oasis said in 2017 that it had 20 years’ worth of top drilling locations in the Bakken. But months later, the company quit the Bakken and moved to the Permian with the acquisition of acreage from Forge Energy. Three short years later, it filed for bankruptcy protection. A year later, in 2021, it sold its Permian acreage and merged with Whiting Petroleum in a $6-billion deal.

See this report regarding the Oasis bankruptcy.