Posted on 04/29/2015 4:30:27 PM PDT by bananaman22
The U.S. oil production decline has begun.
It is not because of decreased rig count. It is because cash flow at current oil prices is too low to complete most wells being drilled.
The implications are profound. Production will decline by several hundred thousand barrels per day before the effect of reduced rig count is fully seen. Unless oil prices rebound above $75 or $85 per barrel, the rig count won’t matter because there will not be enough money to complete more wells than are being completed today.
Tight oil production in the Eagle Ford, Bakken and Permian basin plays declined approximately 111,000 barrels of oil per day in January. These declines are part of a systematic decrease in the number of new producing wells added since oil prices fell below $90 per barrel in October 2014
Deferred completions (drilled uncompleted wells) are not discretionary for most companies. Producers entered into long-term rig contracts assuming at least $90 oil prices. Lower prices result in substantially reduced cash flows. Capital is only available to fulfill contractual drilling commitments, basic costs of doing business, and to complete the best wells that come closest to breaking even at present oil prices.
(Excerpt) Read more at oilprice.com ...
Ping.
we need to subsidize them.
I hope the missing /sarc tag was just an oversight.
Personally, I can't wait to get beck to paying $4.00 a gallon so all the folks up in North Dakota can buy a brand new F-350 every year.
This isn’t really news... it was a planned action by OPEC to shut down the US oil patch. Presently the pendulum will swing the other way, and we’ll be booming again.
nope. By the time it goes back to $4.00/gallon, the only people who will be profiting from it will be OPEC.
The Saudis were open about their intent to neutralize the threat to OPEC from the fracking of U.S. oil shale. They said they would do whatever it took to keep the price of oil low enough to kill off the economic incentive.
this article misses out in several areas as it concludes all deferred completions are due to cash flow.
Not true.
A lot of completions are deferred due to suppliers’s not reducing costs. Also, there is a lot of synergy when multiple completions are made to optimize costs and to ensure frac complexity is maximized.
We are also witnessing some practical aspects related to completion deferral::
1. no ad valorem taxes are collected as there are no reserves until completion occurs.
2. some operators are betting that oil prices will increase in the future when completion costs have lowered, thereby raising profits.
Ford can't wait, either. :)
Buying the Chevy high Country, who in their right mind would buy a deeply inferior diesel which is Ford? The interior is also sub standard not to mention the ride.
I know about bailouts, but I spend a lot of time in my truck, and Ford doesn’t cut it.
I know, I missed the point heh. The point is that Saudi wants prices to come back up now, I think they’re running out of cash reserves.
The Saudis could care less about your high country.
The are just trying to survive.
Obama helping Iran is not helping things
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