[AndyA]

Now that is a call to action.

[Quinny]

Think we need a new domain name.

DOM.com

https://www.youtube.com/watch?v=0atv9v2nNww

[SeaGypsy]

If Mrs Clinton gets elected the joke side of this thread might not be so funny. The man hating bitch has effectively declared adult only entertainment professionals are all victims of human trafficking.

[MD]

Already gets my vote for best thread of 2015.

[ROCKMAN]

Shallow - "How was Denny's ROCKMAN? LOL!" I was too tired to stop so I just got a jalapeño cheeseburger at the Whataburger.
drive thru.

Yes...already getting panic calls from landowners. I had been sending out $3.7 million/year in royalty checks to them on that one La. Well. That's going to fall by over $1.5 million/yr if prices stay where they are. Got one call from a local royalty owner who thought he saw the flare stack wasn't burning. Asked if we shut the well in due to low prices. We didn't but are thinking about cutting it back some. We have no debt and 20X the capex needed drill what we have on our plate right now.

That reduction in mail box is going to hurt some of them: we have 240 separate royalty owners in that one well. For some that royalty was a very big percentage of their total income.

[toolpush]

Everybody's focus seems to be on the US drilling market, but the international market is also into the cut backs. The small privately owned French oil company that was employing our rig, has cut its Capex by 75%. They bought some old Total production and have been very successfully reworking the fields, and have taken one field from 6 mbpd to well over 20 mbpd. Relatively cheap extensions to old platforms has them on a gold mine, yet a 75% cut in Capex. This type of thing doesn't need to be repeated too often, and natural decline will over take any surplus very quickly.
I can't wait for the catch up game, that is bound to come shortly afterwards.

[ROCKMAN]

Pusher - Yep...same ole same ole. We'll be focusing on those small "bread and butter" projects. You know what I mean but for the other folks here: during a collapse like this there are always a lot of small projects that can be done even at low prices. They don't make a lot of money but are low risk and, more important, tend to be the only game left. Reworking old wells, redrilling damaged wells, buying production cheap from wounded companies that are forced to liquidate, etc.

"Bread and butter" is actually the descriptive term we use in the oil patch: during good times you eat steak for dinner. In bad times you have bread and butter for supper. Not as nice as steak but you can survive off of it. Perhaps these days maybe "Ramen noddle" projects might be a better term. I recall during a down term long ago living off 3 packages a day for 2 months while waiting for an overseas gig to kick in. But I did treat myself to a Whataburger every Sunday. LOL

[ohanian]

Strippers should be able to continue their good work in the community without fear.

It's not easy being a stripper. It's grinding work and their client(s) are hard men to please.

[Tanada]

Does anyone have a good link for how much stripper well production there is now compared to what there was in say June 2014 before the recent price decline started?

[ROCKMAN]

T - Here's some rhetoric. Will dig for numbers after my meeting.

Is This A Death Sentence For U.S. Strippers?
By Michael McDonald - Aug 08, 2016

There were a lot of predictions last year that 2016 would lead to the disappearance of many strippers – the oil well producers who take nearly depleted “stripper” wells and keep them running and producing a few barrels a day. This year is proving that strippers are much tougher than many analysts gave them credit for. While many strippers have taken action to cut back some of their less profitable wells, by and large, stripper production is much more resilient than many had expected. That reality holds important implications for the industry at large - more on that later though.

Stripper wells are generally operated by very small firms – often family owned, with limited access to capital, and less economical operations than most large scale fracking producers. Yet unlike many of the large fracking companies which are large organizations with the associated bureaucracy and overhead, strippers are small firms that often have no choice, but to keep their nodding donkey pumps running. Strippers appear to be doing everything they can to hold on to their meager wells which produce a combined total of about 10 percent of U.S. output across the country.

The strippers are pursuing a variety of techniques to keep their leases active on wells and minimize their losses. The result is that while output has fallen from strippers, it is still significant as a portion of U.S. production according to the EIA. Getting reliable data on exactly how much production comes from stripper wells is nearly impossible because of the vast number of wells, and informality of the market.
Related: Activist Investors About To Shake Up The Oil Patch

Strippers are facing new problems from proposed federal oil and gas regulations though. The oil price crunch has failed to force strippers to their knees, but the new federal rules might. The rules come from the U.S. EPA and relate to the production of methane from wells. For larger companies and more productive wells, the new rules are a nuisance, but not a serious threat to economic viability. For strippers producing 5, 10, maybe 15 barrels of oil per day at each well using inexpensive, and often antiquated equipment, the rules could be a death sentence.

"These new rules will cripple stripper and marginal well owners and operators, and on top of historically low oil prices, we are looking at total disaster," according to National Stripper Well Association Chairwoman Darlene Wallace. "By requiring the addition of new costly equipment requirements and expensive leak detection the economics within the oil and gas industry as a whole will be fundamentally changed, severely and forever."

Yet, it’s too soon to count out strippers at this stage. The reports of stripper deaths last fall were greatly exaggerated, and the same may prove true again this year. Moreover, it’s important to realize that strippers don’t simply appear by magic – instead they come about as a result of old age in oil wells. All wells ultimately become stripper wells. If costs to be a stripper rise, the salvage value of wells will fall, but strippers will remain. The economics may change, but the players will not. Those looking for a drastic fall off in stripper production then may find themselves disappointed.

[penury]

Yhe title made me read it. Good info as always,

[ROCKMAN]

T - Here are some numbers from the EIA about US stripper wells. For instance guess how many fewer strippers were there in 2015 after the price crash? Whatever you guessed you are wrong...VERY WRONG!!! LOL. From 2005 to 2015 (latest data) the number of strippers INCREASED by 50,000 to 60,000.

https://www.eia.gov/todayinenergy/detail.php?id=26872

How the f*ck could that have happened??? LOL. Easy: what do you think the multi-hundred bopd shale wells turn into after they decline 60% to 80%? And another shocker: from 2008 to 2015 stripper production almost doubled to 900,000 bopd.

Now is that good news or bad? Another easy answer: not good when you understand this new stripper volume is from wells that transitioned from higher rate to lower rate. Simply put increasing stripper production is a trade mark of post-boom DEPLETION.

And of course a number of strippers are abandoned when the lower oil prices push them into a negative cash flow. Not an easy number to come up given the growing population of NEW strippers are adding production. Additionally an operator might shut in such a noncommercial well but it would still be counted for many months (even a year or more). It costs money to plug and abandon a well: a couple of $thousand to $10,000+ if lease clean up is included. A stripper operator who has already experienced a big net revenue loss is going to resist spending monies that don't increase revenue.

Stripper operators work on a very narrow profit margin. But also consider this is a very good time for well capitalized operators. I've mentioned that $BILLIONS in PROVED PRODUCING reserves are being bought for up to $20 per producing bbl. But that's for relative high rate non-stripper wells. I don't function in that world but given the high Lease Operating Expense to net revenue ratio stripper wells might be selling for $5 to $10 per producing bbl. Sounds cheap but remember two critical facts. First, selling oil for $45/bbl that's costing $40/bbl doesn't leave much profit. Second, if something on the well breaks (not uncommon with old wells) the cost to fix might not be justifiable.

So why buy stripper wells? Selling oil for $45/bbl that costs $40/bbl to produce nets you $5/bbl. And when oil increases from $45 to $50 per bbl your incomes increases 100%. An old oil patch hand bringing home $60k per year doing all the work yourself can see his income jump to $120k per with a $5/bbl price increase.

[KaiserJeep]

Well, at least this is not a thread about Donald Trump's taste in women.

[ROCKMAN]

T - And if you want to see the details of production rate distrtibutions:

https://www.eia.gov/pub/oil_gas/petrosy ... table.html

Spoiler alert:
Total # of wells: 364k
Average per well: 13 bopd

Less then 15 bopd: 310,500 wells.
Greater then 400 bopd: 1,215 wells.

Also notice these are boe's and not bo

[Tanada]

Thanx ROCKMAN appreciate the links and analysis!

[ohanian]

A stripper told me that almost all her clients are hard men to please.