The Trouble With the Falling Oil Price

cells

Tippens 6HS well, for example.

Located in Monroe County in southeastern Ohio, it produced some 1.117 billion cubic feet of the resource in 80 days, according to Ohio Department of Natural Resources records.

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At $3/mmbtu

First 80 day production = $3.35m
Second 80 day production = $1.95m
Third 80 day production = $1.45m
thus first 240 days production = $6.8m

in less than 240 days they have paid everything off as the well costs some $6-7m

and they still have 30 years of production as profit for themselves. Total production is expected to exceed $30m and could be well over $50m....for an initial investment of $6-7m and very little maintiannce and upkeep after that.


Shale is very profitable. It has to be how else could they have gone from near zero to 13mbpd equivalent output in less than a decade?

Also costs continue to fall. Drillig gets faster and more productive yielding even mote gas and oil.


by the looks of it onshore shale will be the future of oil and gas. Current fields will ve worked out through their remaining lives and be replaced by shale in many nations.

Uxb

http://www.zerohedge.com/news/2015-01-10/north-dakota-mineral-resources-dept-admits-half-its-shale-regions-below-breakeven

Crashy_Time

cells wrote: »

Crashy_Time wrote: »

Bad for banks that have made the wrong bets on oil prices, bad for people wanting loans/mortgages from these banksmight elseQUOTE]


How do you make wrong bets on oil?

There is only so much physical storage which is relatively speaking trivial so any bet is one guy saying to another lets make a bet. one bank might win a little and one lose a little

not the end of the world or anywhere close to it


As for the common other argument that banks lent money to shale driller they may never get back...more Internet crap. Shale production is rapid and upfront so payback is very quick. At 0.2 mil barrels production for first year wells of a rig its $10m income just in that first year which pays the debt back at $50oil very rapidly.

:rotfl:
Pull the other one, it`s got subprime on it

cells

Uxb wrote: »

http://www.zerohedge.com/news/2015-01-10/north-dakota-mineral-resources-dept-admits-half-its-shale-regions-below-breakeven

The age of the Internet experts.

The EIA releases shale production figures monthly so within 2-3 months the impact to todays prices will be clear. The EIA true experts not Internet expects still expects production to increase. But whatever happens its not a long wait to find out

cells

Crashy_Time wrote: »

:rotfl:
Pull the other one, it`s got subprime on it

Must be true if someone on the Internet no less, said so

Meanwhile the oil men continue to pump out > 5mbpd of shale oil and > 8mbpd equivalent of shale gas each day. Quite something for a sub prime industry

cells

The biggest positive for shale gas and oil, and absurdly the Internet experts point to it as its biggest negative, is the rapid upfront production.

Of course thr naysayers call it rapid decline when the truth is rapid production

if a well is to produce 1 million barrels in its life what is better

0.5m of it in the first two years and the remaining 0.5m over 28 years

Or a flat 33.33k barrels a year for 30 years.

Output is the same 1 million. In the shale example its rapid upfront production and that is fantastic from an economic and a sustainability point for the industry. It is a massive cashflow advantage over 'conventional' wells which might be a hundred million and five year investment before the first barrel of oil and then its lottle and ramped up and then down. Shale production profile is as fantastic as you can really ask for. It could be better if the production was even more rapid upfront, it would be fantastic if it was 90% in the first year. Of course the fools wpuld point to that as ...look its rapid decline of 90% in the forst year this cant work...it must be a pozi scam