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Page added on December 18, 2018

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Oil Plunge Threatens to Leave Even Parts of Permian Under Water


The plunge in U.S. oil prices has wells in some parts of the Permian Basin below break-even levels, threatening to put the brakes on the record flow from the prolific field.

Oil produced from the Permian in Midland, Texas, is now trading below $40 a barrel for the first time since August 2016, according to data compiled by Bloomberg, as West Texas Intermediate futures dropped more than 6 percent Tuesday.

U.S. oil production is set to rise by 1.18 million barrels a day to 12.06 million next year, according to a U.S. government forecast, with Permian growth expected to lead the way. While U.S. shale producers could make money at $50 oil, industry analysts say, sub $40 oil may be a different story.

Breakevens for new wells among various counties in the Spraberry area currently average between $32 to $47 a barrel, according to Bloomberg NEF data. Even then, much depends on performance of the well. In Upton County, for example, top-quartile of wells make money at $31 a barrel, while the bottom quartile need $65.54 a barrel.

Outside of the Permian, things are even more stark.

“BNEF’s break-even model calculates that an average Permian well can produce oil for under $50 a barrel, but only the top performers in the Denver-Julesburg or Bakken can match that,” BNEF analyst Tai Liu said Friday in a research note.


7 Comments on "Oil Plunge Threatens to Leave Even Parts of Permian Under Water"

  1. Pete Bauer on Tue, 18th Dec 2018 8:51 pm 

    Methanol as a fuel is slowly catching up.
    India is replacing LPG & Kerosene as cooking fuel with Methanol which comes mostly from Natgas.

    Already 10% content in Petrol in China is Methanol.

    Even shipping companies are planning to blend Methanol with bunker fuel in ships to cut the pollution.

  2. Chrome Mags on Tue, 18th Dec 2018 11:53 pm 

    “U.S. oil production is set to rise by 1.18 million barrels a day to 12.06 million next year”

    For all the information on losing money and the sweet spots being used first, the total just keeps rising. Where will it top out?

  3. I AM THE MOB on Wed, 19th Dec 2018 5:42 am 

    Someday at Christmas, there’ll be no tears
    When all men are equal and none have fears
    One shining moment, one prayer away
    From our world today

    Someday all our dreams will come to be
    Someday in a world where people are free
    Maybe not in time for you and me
    But someday at Christmas time

    Probably one of the most beautiful, hopeful songs ever written

  4. Darrell Cloud on Wed, 19th Dec 2018 7:24 am 

    You Are, the only time people are equal is when they are in the grave. There is a reason why at five six, I am not a pro basketball players.

  5. twocats on Wed, 19th Dec 2018 7:24 am 

    Most of these companies were barely CASH FLOW positive at prices above $50. Only the majors can disguise the true cost in their maze of books. From the bond companies to the issuing banks to the service providers this is just hemorrhaging time. good riddance.

    whether this will stop the flow of capital is and will always be up for debate until the moment it’s not there and the whole thing blows away in a soft wind. ooo, excuse me.

  6. wildbourgman on Wed, 19th Dec 2018 7:27 am 

    Chrome, it will top out when they can’t get the cash to drill and complete. Then the price will go up, and investors will come back and it will start up again.

  7. anke saini on Tue, 15th Jan 2019 5:29 am 

    There are lots of spots which are for the easy and real hints and give you many of the excited options for the easy browsing Here are lots of possibility for the best tricks.

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