Posted on 05/13/2015 3:38:49 PM PDT by abb
After slashing production for months, U.S. shale-oil companies say they are ready to bring rigs back into service, setting up the first big test of their ability to quickly react to rising crude prices.
Last week, EOG Resources Inc. said it would ramp up output if U.S. prices hold at recent levels, while Occidental Petroleum Corp. boosted planned production for the year. Other drillers said they would open the taps if U.S. benchmark West Texas Intermediate reaches $70 a barrel. WTI settled at $60.50 Wednesday, while global benchmark Brent settled at $66.81.
An increase in U.S. production, coupled with rising output by suppliers such as Russia and Brazil, could put a cap on the 40% rally in crude prices since March and even push them lower later in the year, some analysts say.
“U.S. supply could quickly rebound in response to the recent recovery in prices,” said Tom Pugh, a commodities economist at Capital Economics. “Based on the historical relationship with prices, the fall in the number of drilling rigs already looks overdone, and activity is likely to rebound over the next few months.”
One factor will be whether shale companies can quickly pump more oil.
Shale producers drill into oil-rich rock horizontally, then break it up with water and sand to extract the fuel.
The cost to get oil out of these wells varies widely. But producers can stagger outlays, for instance, by drilling but then waiting to pump the oil when market prices are optimal or extraction costs are lower.
snip
(Excerpt) Read more at wsj.com ...
ping
Thank goodness for hussein’s schemes failing. Go Texas go! Drill baby drill! Frack baby frack! Crush islam!
Bump.
The Saudis have blown it. They are producing heavy at a price they don’t like while we produce what’s profitable and keep the rest “in the bank” for better days.
Go ahead Saudis, you are playing right into our hands.
You were doomed the day our family friend George Mitchell invented the rotating drill bit that unleashed shale deposits.
They should borrow more money and go for it! Hopefully, the Saudis can drill more holes in existing pools and help out. Bring those oil prices back down, quickly!
There’s good money in fuels now, too. Borrow heavily, and invest in gasoline and diesel!
completions will last for the rest of the year,
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.