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Page added on September 7, 2019
No, Shale’s Not Dying, It’s Just Maturing
Recent headlines heralding the death of the U.S. shale boom are greatly exaggerated.
But the fever pitch pace of shale development and U.S. production growth is slowing and it’s difficult to envision the sector returning to the same heights reached over the past two years.
A slowdown was inevitable. Annual production growth of 1.5 million to 2 million barrels a day is not sustainable, especially with so many producers burning through cash and relying on debt to fund their operations.
Even Wall Street has its limits, and investors finally grew tired of independent producers outspending their cash flows – even when they deliver impressive growth rates.
So shale stocks are in the doghouse with equity prices for the top players down more than 33 percent over the past 12 months and their smaller peers down by over 60 percent
Some smaller, highly-leveraged exploration and production firms likely won’t be able to refinance when their debts come due in the next two years.
Activity in bond markets has been ugly for shale recently. Average bond yields for mid-sized independents have jumped from under 8 percent last year to nearly 9.5 percent this year. The amount of debt issued by the sector year-to-date is down 80 percent.
The weakest companies will be forced into bankruptcy or be pushed into mergers with less-leveraged players. But any industry consolidation will be tempered by the current lack of investor enthusiasm for shale. Translation: Sellers should not expect big premiums for their assets.
Rather than an era of takeovers, we could see a trend of “take-unders” in the coming months. The PDC Energy recent $1.7 billion all-stock acquisition of rival SRC Energy could be the new emerging template for shale mergers and acquisitions. The deal involved no premium for SRC Energy’s shareholders, only the promise of a more efficient and larger owner
For shale companies this means that capital discipline and living within their means is a reality that is here to stay. Ignore it at your peril
This holds big ramifications for the future trajectory of domestic oil production, particularly since independent producers currently account for over 80 percent of output
What this means is that “short-cycle” shale production will be less responsive to rising oil prices. Any surplus cash flow from higher-than-expected oil prices will be diverted to the pockets of investors.
On the flip side, U.S. oil production looks more vulnerable to falling prices than previously thought.
If prices drop below budgeted leve
ls – around $50 for West Texas Intermediate (WTI) for most independents – companies will have to reduce their capital spending and trim back production targets. That’s just the new reality for producers who are seeing their access to capital markets close and their investors demand higher returns.
We can already see the effects of this new operating reality in oil production data.
The U.S. Energy Information Administration (EIA) forecasts domestic crude oil production will average 12.3 million barrels a day in 2019 – an increase of around 1.2 million barrels a day from last year – and 13.3 million barrels a day in 2020.
That’s impressive growth. But a closer look reveals that U.S. production has flat-lined at around 12 million barrels a day since late last year, with July output at 11.7 million barrels a day due to losses related to Hurricane Barry.
It would not be surprising to see EIA ultimately revise its forecasts downward, perhaps to a growth rate considerably under 1 million barrels a day for 2020, particularly with oil prices wobbling amid global economic concerns. The WTI benchmark is struggling to hold prices above $55 amid fears of falling demand due to the ongoing U.S.-China trade war
Drilling and fracking activity has slowed markedly in the second half of this year. The U.S. oil rig count now stands at 742, its lowest level since the beginning of 2018 and about 16 percent lower than where it was at the end of last year, according to Baker Hughes
Executives in the oil services sector, where my company Canary LLC operates, have started to take notice of the change on the ground. And when drilling and development action slows, a production response typically follows, albeit with a bit of a time lag
Capital investment is falling. Investment bank Barclays said in a report this week that it expects North American E&P spending to decline by 15 percent in the second half of this year compared to the first half, with capex seen as remaining flat to down 5 percent in 2020.
It’s not all doom and gloom for shale. Major oil companies, firms with some of the strongest balance sheets in the world, are increasingly committed to the sector. They have boosted their positions in shale substantially over the last few years and now count among the most active players in these basins, including the Permian in West Texas and New Mexico.
Companies like Exxon Mobil, Chevron, Royal Dutch Shell and BP are banking on shale to deliver significant production growth in the coming years, and they won’t be deterred by softening capital market activity or lower prices.
As these stronger players seize more shale assets, the entire sector’s production outlook will become more certain. The majors will bring greater predictability to a play that has surprised and confounded the member countries of the OPEC cartel in recent years.
OPEC, in turn, should have a better handle on how to manage the global oil market. This will be critical in the near term as the global economy slows and demand for oil falls.
Shale is saying goodbye to its fast-paced, high-flying glory days, but with stronger players in the driver’s seat it has a more secure future.
And with most experts believing U.S. oil production won’t peak until it hits 15 million barrels a day, there’s plenty of room for growth – even if it happens at a more measured pace in 2020 and beyond.
41 Comments on "No, Shale’s Not Dying, It’s Just Maturing"
dave thompson on Sat, 7th Sep 2019 1:34 pm
LOL Fracking has never turned a profit due to the red queen effect. This article is all about finding new investors for the fracking ponzie scheme.
print baby print on Sat, 7th Sep 2019 2:58 pm
Is this a beginning of the end ?
ANAL REAPER on Sat, 7th Sep 2019 4:37 pm
Fracking is as dead as a Dem winning come 2020.
MAGA 2020 niggers!
JuanP on Sat, 7th Sep 2019 7:17 pm
Please invest at least some of your wealth in fracking. I want BAU to last as long as possible!
Davy Sock on Sat, 7th Sep 2019 7:34 pm
JuanP on Sat, 7th Sep 2019 7:17 pm
Anonymous on Sat, 7th Sep 2019 9:26 pm
David Hughes presentation:
https://www.youtube.com/watch?v=4ODSLqxBi2k
Kind of the standard thing from him. No come to Jesus on his own failed predictions.
He had never heard of “zipper fracking”, which shows some ignorance of current techniques.
makati1 on Sat, 7th Sep 2019 10:36 pm
The sooner the fraking ponzi goes down, the better for humanity. Soon, I hope.
Davy on Sun, 8th Sep 2019 5:58 am
“The sooner the fraking ponzi goes down, the better for humanity. Soon, I hope”
Wow, makato, more deep thinking on your part. I am impressed. LOL
Davy on Sun, 8th Sep 2019 6:00 am
JuanP on Sat, 7th Sep 2019 7:17 pm
Please invest at least some of your wealth in fracking. I want BAU to last as long as possible!
LOL, JuanPaultard gives us a one sentence comment under his normal ID but it is only part of his lunatic sock and ID theft routine. He is just trying to stir the pot more by saying “here I am normal and all the other shit is not me”. FUCKNUT??? Yea
claes on Sun, 8th Sep 2019 6:51 am
Well, Davy, how should one respond to your humper pumper #9 red alert posts? Same as your post above.
What gives?
Davy on Sun, 8th Sep 2019 6:59 am
claes, this juanPaultard shit is obvious enough. If you are halfway intelligent then you will detect stupidity. If you can’t tell, sorry bud.
claes on Sun, 8th Sep 2019 7:57 am
OK, but remember I don’t have the history to understand everything.
Is this Juan Pablo character announcing pumper red alerts to try and trick you to respond to a volunteer fire department? Seems pretty stupid to me that you wouldn’t know the difference.
Davy on Sun, 8th Sep 2019 8:52 am
Claes, if you see a stupid Davy post it is JuanP aka JuanPaultard. Yea originally he went by Juan Pablo years back when he was not clinically mentally ill. The humper pumper #9 is one of JuanPaultard’s raunchy gay sex routines. The guy is a mentally retarded bisexual fool. He has lowered this forum to junk status.
supremacist muzzies freaks on Sun, 8th Sep 2019 9:13 am
i don’t do this forum anymore, not even a picosecond. in fact if you have sensitive measuring instrument down to this level of resulution i spent a total of 0.0000135 picoseconds here. i spend time upgradaing my learjet avionics and high resoluiton cameria to spot amputated muzzies on my 10,000 acres.
MOSCOW GREEN OUT.
supremacist muzzies freaks on Sun, 8th Sep 2019 9:19 am
imam suprtard glenn roberts pbuh featuers yucky big NASTY FGM muzzi postin video of her fiance. then the stupid muzzie got killed TWICE by her brothers.
that’s how peaceful muzzism is.
This NASTY FGM muzzie didn’t quite have 9 lives, only 2.
i’m tired of this forum, i spend time withmy goats.
supremacist muzzies freaks on Sun, 8th Sep 2019 9:21 am
juan did you locate my bean bags? two of them i gave u for the trip home but you didn’t. you still here in america.
btw, your old lady needs to stay in a nice house so she can bath or shower.
MOSCOW GREEN OUT
Davy on Sun, 8th Sep 2019 9:24 am
Claes, the first sentence of my previous comment should read:
Claes, if you see a Zero Fraud copy and paste or one of my stupid word salad delights, it is I.
supremacist muzzies freaks on Sun, 8th Sep 2019 9:41 am
imam supertard fitzgerald pbuh is shredding the document that imam fathertard francis signed and the catholic bishops agreed. according to the imams 1400 years of dialog did nothing to abate killings by supremacist muzzies.
imam supertard andrew harrod will fire back using disproportionate firepower, i’ll be waiting for his peace.
Duncan Idaho on Sun, 8th Sep 2019 9:51 am
The Fat Boy wants out of Afghanistan..
(really not a opinion, as a helicopter rescue from a rooftop will happen soon. }
“I’m shocked! Shocked do you hear! To read that the most powerful nation in recorded history may have to leave a backward, pre-industrial country, that is actually a geographical expression, with its tail between its legs. To those who supported that idiotic intervention in 2001, what the hell did you morons expect to accomplish? Didn’t you clods learn anything from the Vietnam debacle? Apparently not.”
JuanPaultard identity fraud on Sun, 8th Sep 2019 10:03 am
“Davy on Sun, 8th Sep 2019 9:24 am
Claes, the first sentence of my previous comment should read:
Claes, if you see a Zero Fraud copy and paste or one of my stupid word salad delights, it is I”
Claues, there you go juanPaultard at his finest. ID theft that is obviously not me.
juan paultard madness on Sun, 8th Sep 2019 10:04 am
supremacist muzzies freaks said imam supertard fitzgerald pbuh is shredding the do…
Davy said Claes, the first sentence of my previous comment s…
supremacist muzzies freaks said juan did you locate my bean bags? two of them i g…
supremacist muzzies freaks said imam suprtard glenn roberts pbuh featuers yucky bi…
supremacist muzzies freaks said i don’t do this forum anymore, not even a pi…
Davy on Sun, 8th Sep 2019 10:06 am
“The Fat Boy wants out of Afghanistan.”
That’s so not true. Im 100% in favor of woman’s rights, and Bin Laden had to be killed before he demolished any more buildings. Besides, we couldn’t have an opioid epidemic without Afghani poppies now could we.
JuanPaultard ID theft on Sun, 8th Sep 2019 10:17 am
Davy on Sun, 8th Sep 2019 10:06 am
Cloggie on Sun, 8th Sep 2019 10:22 am
“Bin Laden had to be killed before he demolished any more buildings.”
He repeatedly denied he did it.
There is not a shred of proof he did it.
There is not a shred of proof he was killed by US soldiers.
There has never been a 9/11 trial nor will there ever be one.
https://youtu.be/HXYswf3lzU8
Richard Gage in Holland:
https://youtu.be/nu2QqxpYcvA
9/11, even I AM THE MOB gloatingly and repeatedly admitted it was an inside job.
They got away with it but fortunately the Iraq safari failed, which came at the cost of trillions as well as global leadership. MAGA is going to fail as well, as third world countries by definition aren’t great. Pooping in the street is not great. Giant fiscal and trade deficits are not great. Planes falling out of the sky aren’t great.
Cloggie on Sun, 8th Sep 2019 10:30 am
ISIS may be temporarily defeated by Russia-Assad, the Taliban is winning:
https://www.economist.com/asia/2019/05/18/why-afghanistans-government-is-losing-the-war-with-the-taliban
“Why Afghanistan’s government is losing the war with the Taliban”
Expect ISIS to pop up again, somewhere…Libya, or SW-Iraq, East-Syria.
https://www.businessinsider.nl/pentagon-blames-trump-for-return-of-isis-syria-and-iraq-2019-8?international=true&r=US
“A scathing new Pentagon report blames Trump for the return of ISIS in Syria and Iraq”
Expect the KSA regime to be toppled sooner or later and Turkey and Iran dividing the loot between them/
Davy on Sun, 8th Sep 2019 11:06 am
“Expect the KSA regime to be toppled sooner or later and Turkey and Iran dividing the loot between them”
Stupid!
Oh, Cloggo, you don’t get an explanation when your comments are short, simple and stupid.
More Insane Davy Hypocrisy on Sun, 8th Sep 2019 11:12 am
“Stupid!”
“Oh, Cloggo, you don’t get an explanation when your comments are short, simple and stupid.”
The Lunatic is triggered on Sun, 8th Sep 2019 11:43 am
More Insane Davy Hypocrisy
Davy Sock Puppet on Sun, 8th Sep 2019 11:59 am
The Lunatic is triggered
Cloggie on Sun, 8th Sep 2019 12:00 pm
KSA regime threats:
This jewboy thinks KSA could be toast:
https://consortiumnews.com/2018/10/04/is-saudi-arabia-the-middle-easts-next-failed-state/
“Is Saudi Arabia the Middle East’s Next Failed State?”
Threats: ISIS, al-Qaida.
I would add: Qatar/Muslim Brotherhood. Obviously Iran.
Earlier this year, KSA, supported by Trump, tried to brand the MB a “terrorist organization”, where in the past they had been allies:
https://carnegieendowment.org/2019/05/03/nine-reasons-why-declaring-muslim-brotherhood-terrorist-organization-would-be-mistake-pub-79059
“Nine Reasons Why Declaring the Muslim Brotherhood a Terrorist Organization Would Be a Mistake”
Note that the MB did take over Egypt democratically a few years ago, but were toppled by the US-backed army and Morsi was jailed (US and democracy, /rolleyes).
Qatar is clearly playing the MB-card in an attempt to destroy the most important US-backed regime in the ME. Qatar has good links with Iran and Turkey, illustrating that they don’t care about the Sunni/Shia “divide”.
Hope this helps.
Davy on Sun, 8th Sep 2019 12:01 pm
I am spending less time on this lame unmoderated forum to concentrate on my own blog. I do want to thank all those who have attacked me with giving me material for growth. I have saved the best of my comments for my new blog. I have years worth of material. I have enjoyed moderating the worst of you and neutering your selfish useless agendas. I will still be here it is just I will be spending more time putting out a blog. I don’t expect much of a following with my blog. This is more a personal effort to assemble what I have learned over the last 10 years of formulating my REAL Green Deep Adaptation. Many of my ideas and lifestyles are not mine. I barrow what ever works. I do not claim anything either. It is an open source effort. Anyone can take what I am offering and use it however you want. Take my title if you like. For the stalkers here I hope you find my blog and visit the comment forum. It will be only lightly moderated to prevent juanpee identity theft and excessive cloggo spamming. LOL. There will be a prize for juanpee and annoymouse if you can stalk my blog. Double LOL. Anyway fuck my enemies and many thanks to those who contributed to my metamorphous.
I guess I could have joined the moderated section at PO dot com, but I knew I’d get my ass permanently banned. I’ll try not to let the door smack me up the backside on the way out.
Goodbye to ALL of you dumbasses.
juan paultard IDtheft on Sun, 8th Sep 2019 12:43 pm
Davy on Sun, 8th Sep 2019 12:01 pm
juan paultard on Sun, 8th Sep 2019 1:26 pm
Is one of dumbass Davy’s sock puppets.
JuanPaultard on Sun, 8th Sep 2019 1:33 pm
Is a lunatic and a fraud.
JuanPaultard on Sun, 8th Sep 2019 1:35 pm
Is Juan Pablo or JuanP.
a
s
s
Deport the illegal bastard back to his failed south america.
Davy on Sun, 8th Sep 2019 1:40 pm
All posts made under the handle juanPaultard are really me. Has anyone seen my mind? I can’t seem to find it anywhere.
Obviously dumbass JPaultard on Sun, 8th Sep 2019 2:00 pm
Davy said All posts made under the handle juanPaultard are r…
Davy said For anyone that cares. juanPaultard is one of my s…
Obviously Insane Davy on Sun, 8th Sep 2019 3:20 pm
Obviously dumbass JPaultard on Sun, 8th Sep 2019 2:00 pm
Green People's Media on Mon, 9th Sep 2019 9:53 am
The author doesn’t seem to recognize the part played by “legacy wells” production in the “premature death reports” about all the shale fields.
This chap, in a rather detailed piece, shows the “maturing” of each individual well drilled & fracked in these shale fields (see Fig. 5)
http://crudeoilpeak.info/2005-2018-conventional-crude-production-on-a-bumpy-plateau-with-a-little-help-from-iraq
That’s right, maturity is within 1-2 months of coming on production.
It sounds like the author of the story is gearing up his company’s public relations for a “Takeunder” by some bigger firm.
Oddly enough, the production profile for a completed well is the same whether a tiny company or a Brobdignagian corporation drilled it.
Robert Inget on Mon, 9th Sep 2019 12:20 pm
Or,’the end of the beginning’.
The FACT that so called ‘big oil’ is diving into shale (they know is only a short term solution)
confirms more that a million words we passed
peak oil when few were looking.
Deep water, Arctic, promise oil ok, but at what price?
By removing drilling restrictions where ever possible, Trump made exploration easier than
anytime in decades. To what result?
Hundreds, I write hundreds of new natural gas
electrical power plants are opening in the US
over the next two years.
Facts are in. Ground transportation is going electric. Most folks (around the world) live in
high-rise buildings unable to generate alt power on their own. We never give a thought to how
our (underground) subways are powered.
Our choo-choos went from coal to diesel to electric. So will ships. EVERYTHING is in place to transition first to NG, then renewables.
makati1 on Mon, 9th Sep 2019 5:53 pm
Robert, we passed peak CHEAP oil decades ago. We scraped the bottom of the barrel when we moved to deep sea locations. Now, we are under the barrel and digging deep to get the last, expensive, squeezings. NET oil energy is declining faster and faster. The Western BAU way of life is reaching terminal stage.
NG? No that is not the answer either. When the good ship debt sinks, so will a lot of energy sources. Wait and see.
As for “renewables”… wait until I stop laughing…they ALL depend on FFs to exist and that will always be true. If you believe in the “renewables fairy” you are either a techie dreamer or a delusional fool, or have your future, investments and/or career tied to a fantasy.
BTW: how much will climate change make “renewables” useless? It takes the right amount of wind or constant sunshine. And, how do you relocate them when drought and/or floods destroy the ability to live in their location, or they stop working? Not to mention that ALL of these dreams have to be PROFITABLE to exist or even be built. Just askin’.