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Thread: $30 barrel oil?

  1. #1121
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    Any prediction for rig count for USA for 2020? I'm thinking we see it dip under 600 for at least short term. Probably 500 makes more sense, but I don't trust the USA to be sensible.

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    Quote Originally Posted by ExtraSlow View Post
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    Any prediction for rig count for USA for 2020? I'm thinking we see it dip under 600 for at least short term. Probably 500 makes more sense, but I don't trust the USA to be sensible.
    The US is down to ~671 last I checked which is ~23% down in 2019. I personally see things getting worse in 2020 so another 20% drop gets you down to 530-550 range which is realistic in my mind. Getting under 500 is only a 25% drop so not out of the realm.

    This is not an exhaustive list but A few themes to watch for which all result in reduced unconventional drilling is:
    - Saudi’s 2020 plans - if they turn on the taps I believe oil will be back in the 30’s.
    - significant future volumes are expected from outside of the US. Norway, Guyana, new Brazilian blocks, etc. Couple that with sanctions potentially being lifted (Iran, Libya, etc.) and this all leads to oversupply.
    - both of the above cause the highest cost producers to slow down...the highest cost/lowest margin producers worldwide is US-Shale.
    - The flavor of the day is companies providing FCF, meaning lower 48 operators can’t continue on the same pace as US shale plays have not returned FCF. To get FCF you have to drop rigs and focus on your best acreage which companies have already started to do and will continue to do into 2020 to show a FCF/returns to shareholder story. growth is no longer important.
    - How do companies deal with maturing debt? Will they be able to replace it or are they going to get squeezed into non-traditional funding? There is a lot of debt maturing in US shale from 2020-2022 and it’s going to become a massive concern to industry.
    - potential industry consolidation is will likely result in reduced rig counts as companies optimize.

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    Invest in CNQ and laugh at us shale stupidity I guess.

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    Quote Originally Posted by ExtraSlow View Post
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    Invest in CNQ and laugh at us shale stupidity I guess.
    I don’t disagree, CNR/Suncor/Cenovus will be good buys at some point next year.

    What are you seeing on your end from your US work? Projected decreases?

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    My window into the US industry is pretty narrow. Significant restraint to the end of the year, but Q1 sounds busy-ish. Not as busy as Q1 2019 I guess.

    But yeah, the customers I talk to personally handle less than 10% of the rig activity. You need someone at a bigger company to have a better view.

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    Article that shows up in the echo chamber of my news feed:
    https://www.bloomberg.com/news/artic...-for-u-s-shale

    Can you take trends from one play and then extrapolate them to a basin, or a continent? I keep trying.
    Eagleford Shale Decline.PNG

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    how long ago were we talking about breakeven prices? It's been a while. Here's a survey the US Fed did:
    Breakeven Price of new oil well.jpg
    The range is something like $25 to $75/bbl for US shale according to this. It is my opinion that people overestimate their efficiency, and underestimate the price they need to really make money. Probably by $10/bbl or more. But that's just my guess.
    Last edited by ExtraSlow; 12-10-2019 at 02:10 PM.

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    2 years ago. I think that’s key.

    I feel like an incremental 2020 Well is worse than an incremental mid-2017 well.
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.

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    shit, I didn't notice how old that chart was. Yeah, I think you are right. Current wells are on average no better than they used to be in terms of full-cycle economics.

    Then again, I still know petroleum engineers who think payout period matters, so I wouldn't expect them to have an understanding of economics.

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    Quote Originally Posted by ExtraSlow View Post
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    Then again, I still know petroleum engineers who think payout period matters, so I wouldn't expect them to have an understanding of economics.

    Quote Originally Posted by killramos View Post
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    As long as you make enough in the first year to pay out the well who gives a fuck about the decline or eye beyond that.
    Burn

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    EUR is for companies who are too well capitalized for their own good.

    Them, and academics.
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.

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    Meadow creek is breaking ground right away.

    Imperial investment in cold lake, and an 80,000 bbl expansion in Kearl.

    Grizzly oil sands investment too.

    Husky cut, but 5 new 10k plants on the docket up to 2023.
    "The most merciful thing in the world, I think, is the inability of the human mind to correlate all its contents... some day the piecing together of dissociated knowledge will open up such terrifying vistas of reality, and of our frightful position therein, that we shall either go mad from the revelation or flee from the light into the peace and safety of a new Dark Age."

    -H.P. Lovecraft

    Kim Kardashian Sex tape:
    Originally posted by hadookin
    nice box... to bad that nigs face is in it

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    Just build all the damned LNG plants. Like a dozen of em. East coast West coast, gulf of Mexico, Hudson's Bay, sheep River, ghost River, nose creek, everything.

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    A coworker of mine was a petroleum engineer for pdvsa. He said they were damaging all of their major formations by not manging production and focusing only on initial production. Not even payback.. just some initial production number that made the officials wet.
    Quote Originally Posted by Gestalt View Post
    Im the one with a learning disability....

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    Quote Originally Posted by dirtsniffer View Post
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    A coworker of mine was a petroleum engineer for pdvsa. He said they were damaging all of their major formations by not manging production and focusing only on initial production. Not even payback.. just some initial production number that made the officials wet.
    I see no difference between this and what everyone in NA does.
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.

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    Quote Originally Posted by dirtsniffer View Post
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    A coworker of mine was a petroleum engineer for pdvsa. He said they were damaging all of their major formations by not manging production and focusing only on initial production. Not even payback.. just some initial production number that made the officials wet.
    There's some formations where that's a HUGE issue, but not all for sure. The reservoir engineers know about this stuff. Or the guys who sell the better Completions tools.

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    I haven't been following this thread much but I'm hearing from friends in Texas that it's going to be a bloodbath in the Permian and that the majority of wells drilled since 2015 didn't have a positive NPV.

    351D348F-1203-4D21-BC06-9BA3C511DCFB.png

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    Quote Originally Posted by davidI View Post
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    the majority of wells drilled since 2015 didn't have a positive NPV.
    But I bet they have nice short payouts!

    But in all seriousness, permian rig count needs to drop another 50 at least, which is a hell of a lot of jobs lost. Wish I knew a way to short Midland real estate.

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    Quote Originally Posted by ExtraSlow View Post
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    But I bet they have nice short payouts!

    But in all seriousness, permian rig count needs to drop another 50 at least, which is a hell of a lot of jobs lost. Wish I knew a way to short Midland real estate.
    If a project pays out in a year, but doesn’t have a positive NPV then you need to have a good hard look at your cost of capital.

    Aka. BS
    Originally posted by Thales of Miletus

    If you think I have been trying to present myself as intellectually superior, then you truly are a dimwit.
    Originally posted by Toma
    fact.

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