$30 barrel oil?

[ExtraSlow]

You'd be surprised how controversial that idea is Buster.

[Buster]

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You'd be surprised how controversial that idea is Buster.

really? I'm surprised by that.

[you&me]

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really? I'm surprised by that.

He said you would be...

[Buster]

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He said you would be...

that actually made me lol when i read it back

[ExtraSlow]

I'm like a prophet or a mind reader or something. Fucking amazing, IMHO.

[ExtraSlow]

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Good chart.

Production data dumped yesterday. USandA held strong at 12,800.

Do we see 13 by year end?

My favourite LiNkEdIn follow is David Ramsden-Wood, here's todays post:

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DUC me once: shame on you. DUC me twice: it must be important. When I started posting last November I spent a lot of time contemplating why every month industry was drilling more wells than we were completing. Half cycle returns (excluding drilling capital) make completions far more important (Paid for by the Completions Engineers of America. Now that I’m retired- I’m shamelessly plugging fake organizations).

Fast forward to Nov ‘19 and FINALLY the industry is drilling less wells than it is completing in every play in the US. But in the Permian as a for instance, there is $10b in capital stranded waiting on completions. Industry could shut every rig down for 6 months and completion pace wouldn’t have to change.

This is why when I said yesterday “we are close to the bottom” but not there yet. Drilling rigs can and should continue to drop. The Marcellus is down 30% since the end of the quarter and I suspect the Permian could drop another 10% by year end. Part of it is efficiency but most of it is all the DUCs.

Most importantly- what does this mean for production? Nothing. Completion pace is up 11% YOY and half the equipment is idle. Converting DUCs to cash plus slowing drilling will help fix balance sheets, not accelerate production growth.

#hottakeoftheday

I feel like i haven't been paying close enough to this, even though you guys have been mentioning it right here in this thread.

[ExtraSlow]

Also, I'm a few days late with this, but it's been a busy week yelling at customers.

[Buster]

preventing TMX gets us to the "sustainable development" line.

- Quebec

[Darkane]

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My favourite LiNkEdIn follow is David Ramsden-Wood, here's todays post:


I feel like i haven't been paying close enough to this, even though you guys have been mentioning it right here in this thread.

Great snip there.

It’s tough to really put a finger in what’s going on, but it seems like the bottleneck was always take away pipeline capacity for the last 6 months , not wells.

So now the pipes are online, let er flow. Wells can be competed that are sitting.

Sad, the great flood is coming. Flood of oil that is.

[ExtraSlow]

How crazy is it that permian producers were screaming about poor cash flow, but still drilling more than they could complete?

[pheoxs]

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How crazy is it that permian producers were screaming about poor cash flow, but still drilling more than they could complete?

Gotta spend the budget so you can justify an increase next year.

[killramos]

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Gotta spend the budget so you can justify an increase next year.

These guys aren’t the government lol that’s not how a real business works.

Free cash flow is poor, but companies are obsessed with valuation metrics like $/flowing or income/cash flow multiples that mean grow production at any cost so you can get bought for too much and do it all again.

The real problem is there are no buyers anymore and companies have to have a serious look at keeping spending within cash flow which means the companies never grow and equity never gets liquidated. This is compounded by the nature of unconventionals that require massive scale.

[ExtraSlow]

While talking about oil demand predictions, I always like to strip away the rhetoric and look at actual data. You can see there's a huge disconnect between consumer demand growth, actual government policies, and predictions of "the end of demand".

[Darkane]

Update from Nov 27, 2019.

The USA continues to climb and flex their muscle.

They’re producing 12,900 according to the EIA. More gains.

Pipeline active, wells coming online, Drowning the world in oil.

[ExtraSlow]

At some point the trend has to break. It just HAS to.

[ExtraSlow]

And, a neato graph I ripped from linkedin, I think it's from Art Berman. Obviously the forecast is just one opinion.

[Darkane]

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And, a neato graph I ripped from linkedin, I think it's from Art Berman. Obviously the forecast is just one opinion.

Perhaps.

If we don’t create Glut V2.0 in the next two years, there may be a chance. If OPEC decides they’ve had enough with sharing the market, we’re dead. Oil will be $5.

[msommers]

So CNRL aka The Empire boosts their budget by $250MM. A glimmer of hope for the industry for 2020?

[ExtraSlow]

Cnrl is the best run company in Canada. Raising budget, paying down debt, paying a sustainable dividend.

[Type_S1]

The DUC argument in the US is really a laughable one. Companies aren’t drilling wells and leaving them uncompleted for any more then a month or two. DUCs that have been sitting for any longer were left that way for a reason...these wells will not add significant, economic, volumes.

I know for a fact multiple large companies in the Permian in the past 2 years had to drop frac spreads because the drilling rigs couldn’t keep up (1 frac spread out paces a rig) and they either didn’t have the locations ready to drill or didn’t have enough CAPEX to add 2+ more rigs. Check corporate presentations, companies were calling them “frac holidays”.

2020 is going to be a bloodbath - the shale boom is over and the US will see peak oil in 2020.