If they were then why have so many companies not made any profit and why have so many gone bankrupt.
It’s called leveraging into a market that was at $100/bbl for 3 years and having to deal with the pain of a 50% drop in commodity price. Nothing to do with the ability of companies to make money now. The one’s who couldn’t survive have either been bought by stronger companies or have undergone restructuring. This has happened numerous times in the past, it is the way the industry strengthens itself. And as to profit once again you are trapped confusing paper accounting with cash accounting. The latter is all that counts in terms of whether a company continues to be going concern.
Where shale differs, as you quite rightly point out is that shale producers of oil and gas hope to increase the value of the company rather than pay dividends, or hold cash. Sadly for many this has not happened either. I would not label the management as crooks, although there have been some very dubious practices by some, but is clear that some have embellished their prospects somewhat and have looked for exit strategies to benefit themselves ahead of the shareholders
Complete BS. Please document your examples as to what you mean by embellishing. You do realize that a publicly traded company is required by law to disclose accurately. The SEC in the US, TSX in Canada etc are all over improper disclosure. I know this for a fact having had to deal with both over the years. By law mentioning something inaccurate in a corporate presentation or in a public presentation a press release etc is punishable by fines to the corporation, criminal charges to the Officers of the company and possible de-listing down the road.
Will drilling and completion costs continue to rise, rather than fall and what about resource quality.
It is a good thing you have stayed away from shale investments. Drilling and completion costs have been falling not rising. If you base your analysis on false pretenses you open yourself for a world of hurt in the market.
So as I stated before, and you confirmed, if at 36 months you have not paid down the cost of the well, you are probably royally stuffed. For an oil well ar a cost of $7 million that means about 135 000 bbls of oil give or take - 3750 bbls per month average. Far less than a Saudi well.
You didn’t read carefully. Current rates when they are in that sort of range are from wells in the exponential decline phase when the well has already paid out. IP rates in the Marcellus are generally pretty high. CHK drilled one in early 2017 that IP’d at 61.8 MMcf/d, Southwestern drilled one that IP’d at 37 MMcf/d in April of 2017, Rex drilled 2 in 2017 that IP’d at about 40 Mmcf/d. That results in an on average revenue per well somewhere between $20 and $30 million if you assume the $2.40/Mcf figure I quoted. These wells pay out in the first twelve months quite easily.