BHP Billiton (BHP), in search for increased earnings from existing assets, is looking to its DUC wells to provide a boost.
The natural resources giant has some premium wells it has been sitting on that it can quickly complete and make a profit. It didn't reveal how many wells it has that can generate earnings at about $45 per barrel, but it does have about 1,400 it will complete if the price of oil approaches the $60 per barrel mark.
With iron ore expected to be subdued for the next decade, and coking coal producing some profits, BHP needs another profitable revenue stream to move its earnings. Shale oil is an excellent asset, with a relatively small investment needed to get them going.
If oil sustainably jumps past the $50 per barrel mark, it's also looking at developing new wells.
More on BHP Billiton and its DUC wells strategy
Showing posts with label Shale Oil. Show all posts
Showing posts with label Shale Oil. Show all posts
Wednesday, June 22, 2016
Oil Rig Productivity 4X what it was 2 years ago
Rig productivity may be a game changer very few investors are taking into consideration, as each rig can produce over 4X what it did a couple of years ago, according to Capital Economics.
In 2014 a rig could pump out about 6,000 barrels of oil per day. Today, a new rig can pump out an average of 27,000 barrels per day. That of course doesn't necessarily mean each well can meet the capacity of the rig, but with the improvement in identifying top-producing wells, it's almost a guarantee they'll come close to it.
What this suggests is the new rigs being added in the U.S. may be pumping out far more oil than the market is looking for, which would offset the decline in production from low-cost shale producers much stronger than expected.
When combined with the increase in production from some OPEC countries, it could be a strong headwind in the months ahead if the new rigs contribute a lot more supply than is being priced in.
More on new oil rigs and increased productivity.
In 2014 a rig could pump out about 6,000 barrels of oil per day. Today, a new rig can pump out an average of 27,000 barrels per day. That of course doesn't necessarily mean each well can meet the capacity of the rig, but with the improvement in identifying top-producing wells, it's almost a guarantee they'll come close to it.
What this suggests is the new rigs being added in the U.S. may be pumping out far more oil than the market is looking for, which would offset the decline in production from low-cost shale producers much stronger than expected.
When combined with the increase in production from some OPEC countries, it could be a strong headwind in the months ahead if the new rigs contribute a lot more supply than is being priced in.
More on new oil rigs and increased productivity.
Wednesday, December 16, 2015
How Bad Can It Get For Shale Oil?
Summary
There is nothing Saudi Arabia or OPEC can do about shale oil over the long term.
At best they can only delay the inevitable.
Millions of barrels of shale oil will be introduced into the market over the next decade.
Companies with shale exposure, over time, will take market share away from OPEC.
From some of the headlines I've read recently, you would think the U.S. shale industry has been defeated by Saudi Arabia and OPEC, and everything in the oil sector going to return to where things were before shale producers entered the market.
Not only is this a fallacy, it is the exact opposite, which is why the strategy of oversupplying the market will remain in place for now in order to keep the price of oil low, which in turn makes it more difficult to invest in new exploration and development.
The idea of market share being the battleground being fought over is a misguided one because, that would suggest shale oil can be defeated around the world. It's not going to happen. It won't even happen in the U.S., let alone the world.
In the short term there will continue to be pain in the shale segment of the oil sector, as more companies will be forced to go bankrupt, and those that are stronger will have to put development on hold until more favorable market conditions emerge, which of course means a higher oil price.
more on worst-case scenario for shale oil
There is nothing Saudi Arabia or OPEC can do about shale oil over the long term.
At best they can only delay the inevitable.
Millions of barrels of shale oil will be introduced into the market over the next decade.
Companies with shale exposure, over time, will take market share away from OPEC.
From some of the headlines I've read recently, you would think the U.S. shale industry has been defeated by Saudi Arabia and OPEC, and everything in the oil sector going to return to where things were before shale producers entered the market.
Not only is this a fallacy, it is the exact opposite, which is why the strategy of oversupplying the market will remain in place for now in order to keep the price of oil low, which in turn makes it more difficult to invest in new exploration and development.
The idea of market share being the battleground being fought over is a misguided one because, that would suggest shale oil can be defeated around the world. It's not going to happen. It won't even happen in the U.S., let alone the world.
In the short term there will continue to be pain in the shale segment of the oil sector, as more companies will be forced to go bankrupt, and those that are stronger will have to put development on hold until more favorable market conditions emerge, which of course means a higher oil price.
more on worst-case scenario for shale oil
Tuesday, March 6, 2012
Chesapeake's (CHK) and McClendon's Shale Revenue Alternative
The announcement from Chesapeake Energy (CHK) CEO Aubrey McClendon and Kohlberg Kravis Roberts & Co. (KKR) that they are entering a $250 million joint venture received mixed responses from pundits and analysts.
As for the deal, KKR will supply $225 million of the investment while Chesapeake will invest the remaining $25 million.
The purpose of the joint venture is for the two companies to acquire more oil and gas shale plays in order to generate royalties from the properties.
Chesapeake will do the majority of the lifting because of its expertise in the sector; owning and managing the shale assets on behalf of the venture.
With KKR putting up 90 percent of the capital, it has to stand to reason that they will almost assuredly, after some management fees, take in that same amount in royalties.
Aubrey McClendon has an insatiable drive to own more and more shale assets. But with the capital spigot running dry for Chesapeake, he's extending the reach of the company through the joint venture.
KKR director Robert Antablin said this, "Driven predominantly by the recent advancements in unconventional oil and gas technology, we continue to see attractive opportunities to invest behind the domestic exploration and production of oil and gas."
On Chesapeake's part, they must get more access to oil assets because the low price of natural gas has pressured the company's margins and earnings.
In 2011 they spend upwards of $1 billion to make acquisitions to that effect. This venture gives them access to more land and oil assets without having to cough up money it simply no longer has to make the deals it needs for shale oil acreage.
This assumes McClendon isn't blind or foolish enough to buy up even more major gas holdings with the additional capital in his hands.
The market wasn't impressed with the announcement of the joint venture, as many investors and onlookers believe Chesapeake is already in way over its head. They've already sold off some of its properties and made deal with other parterns.
So the idea of pursuing even more acreage doesn't sound too good for those who have watched Chesapeake with consternation as its debt soared and gas prices plummeted.
If this capital isn't used to acquire significant oil assets, it'll be a shock, and the future of Chesapeake would look as bleak as it ever has.
The good news is if they keep focused, Chesapeake is a good at sourcing and managing resources as anyone out there, and lower risk plays like this could help them gain some respectibility and bring back some significant profitability back to the company.
KKR closed at $13.61, down $0.25, or 1.80 percent. Chesapeake ended the session at $23.56, plunging $0.67, or 2.77 percent.
As for the deal, KKR will supply $225 million of the investment while Chesapeake will invest the remaining $25 million.
The purpose of the joint venture is for the two companies to acquire more oil and gas shale plays in order to generate royalties from the properties.
Chesapeake will do the majority of the lifting because of its expertise in the sector; owning and managing the shale assets on behalf of the venture.
With KKR putting up 90 percent of the capital, it has to stand to reason that they will almost assuredly, after some management fees, take in that same amount in royalties.
Aubrey McClendon has an insatiable drive to own more and more shale assets. But with the capital spigot running dry for Chesapeake, he's extending the reach of the company through the joint venture.
KKR director Robert Antablin said this, "Driven predominantly by the recent advancements in unconventional oil and gas technology, we continue to see attractive opportunities to invest behind the domestic exploration and production of oil and gas."
On Chesapeake's part, they must get more access to oil assets because the low price of natural gas has pressured the company's margins and earnings.
In 2011 they spend upwards of $1 billion to make acquisitions to that effect. This venture gives them access to more land and oil assets without having to cough up money it simply no longer has to make the deals it needs for shale oil acreage.
This assumes McClendon isn't blind or foolish enough to buy up even more major gas holdings with the additional capital in his hands.
The market wasn't impressed with the announcement of the joint venture, as many investors and onlookers believe Chesapeake is already in way over its head. They've already sold off some of its properties and made deal with other parterns.
So the idea of pursuing even more acreage doesn't sound too good for those who have watched Chesapeake with consternation as its debt soared and gas prices plummeted.
If this capital isn't used to acquire significant oil assets, it'll be a shock, and the future of Chesapeake would look as bleak as it ever has.
The good news is if they keep focused, Chesapeake is a good at sourcing and managing resources as anyone out there, and lower risk plays like this could help them gain some respectibility and bring back some significant profitability back to the company.
KKR closed at $13.61, down $0.25, or 1.80 percent. Chesapeake ended the session at $23.56, plunging $0.67, or 2.77 percent.
Thursday, February 19, 2009
The Myth of Peak Oil
It's sometimes hard to look at all the nonsense being perpetuated by people with agendas, as it seems there's almost nothing important any more that isn't politicized in some way, and so ultimately lied about. Gold is one of those things, and another major one, which I want to talk about is peak oil.
So by definition, what is peak oil? It simply means that oil that was relatively easy to reach and extract has been depleted. The question then becomes if that is in reality the case. The answer is absolutely no. The peak oil myth is just that - a myth. That doesn't mean there won't come a day when that becomes the reality, it's just that it isn't the case now, and won't be any time soon.
So why is the myth continually perpetuated? Because it takes the eyes and minds of people off of why oil prices sometimes surge and the caused behind it. The major reason there's the beginnings of an artifially induced oil peak is because of consequences of political actions put into law which forbids access and drilling on easy-to-drill and extract oil. Think of Alaska and off the coastlines of the U.S. There are billions of barrels of oil available, yet not allowed to be drilled for because of pressure from radical environmentalists and lawmakers looking to curry favor from the media which loves this type of idiocy.
This is mostly brought about from the endless introduction of fear as the key tool used by these liars in order to manipulate public policy to their hidden agendas.
These manipulators even try to ask the types of irrelevant questions that herd people a certain way so, again, they don't look at the facts, realities and agendas behind them. For example, they use terms like what is going to happen "after oil." Or other statements like "surviving peak oil," or "life after peak oil. The implication is that peak oil is reality that we must now deal with, rather than the fact that there's absolutely no basis for concern at this time if the current regulations were removed. That's what is trying to be hidden from the minds of people.
Besides the obvious billions of barrels of oil in Alaska and off American coastlines, where else is there oil available? In the United States itself there is enough oil in shale to make it the largest oil reserves in the world; far beyond what Saudi Arabia has. That is a proven fact. There are of course also have billions of barrels of oil in the Canadian sands area, which will also last for decades. These are just a couple of areas which don't include many other areas in the world.
So why imply an oil shortage, what is the hidden agenda behind it. Some of it is philosophical, as ignorant people literally think of the earth as their mother, and to drill into their mother is actually hideous in their warped minds. Another reason for asserting oil depletion is in order to promote agendas related to radical environmentalists and their business allies, who want to try to cash in on the misguided focus on what is called "alternative energy," where billions of dollars are being wasted because of the fear mongering people who make it look like the world is falling in order to gain access to public and private money to further their purposes. It's nothing more than that.
There's no oil crisis, we're not close to losing easy access to oil supplies.
While I do agree that oil prices will eventually have to go up, especially until ways of figuring out how to extract oil from shale is made cheaper, there is still so much oil available that to say we're in any type of crisis is dishonest at best, and ignorant at worst.
Even new ways of scouring the ocean floors and seeing what lies beneath the salty residue has resulted in billions of barrels of oil being discovered by Brazil, and their just getting going on that, as Petrobras continues to look for more deposits. Granted, it's far below the ocean floor and will be more costly - at this time - to extract, is does show how much oil there is that hasn't been discovered yet, and how much would be avaiable when restrictions on drilling for oil on coastlines are lifted.
The world oil supply is fine, and world oil reserves in a solid place. Oil consumption for now has cut back, as economic weakness causes consumers to drive less and stay around home more. That will extend signficantly the amount of oil available and its use.
So you don't have to worry or be fearful over the dishonest assertions by those with private agendas. There's billions and billions of barrels of oil available, it's just not being allowed to be drilled for because of existing laws which eventually will be withdrawn when real pressures from the population make it politically dangerous to keep people from cheaper oil and gas prices.
So by definition, what is peak oil? It simply means that oil that was relatively easy to reach and extract has been depleted. The question then becomes if that is in reality the case. The answer is absolutely no. The peak oil myth is just that - a myth. That doesn't mean there won't come a day when that becomes the reality, it's just that it isn't the case now, and won't be any time soon.
So why is the myth continually perpetuated? Because it takes the eyes and minds of people off of why oil prices sometimes surge and the caused behind it. The major reason there's the beginnings of an artifially induced oil peak is because of consequences of political actions put into law which forbids access and drilling on easy-to-drill and extract oil. Think of Alaska and off the coastlines of the U.S. There are billions of barrels of oil available, yet not allowed to be drilled for because of pressure from radical environmentalists and lawmakers looking to curry favor from the media which loves this type of idiocy.
This is mostly brought about from the endless introduction of fear as the key tool used by these liars in order to manipulate public policy to their hidden agendas.
These manipulators even try to ask the types of irrelevant questions that herd people a certain way so, again, they don't look at the facts, realities and agendas behind them. For example, they use terms like what is going to happen "after oil." Or other statements like "surviving peak oil," or "life after peak oil. The implication is that peak oil is reality that we must now deal with, rather than the fact that there's absolutely no basis for concern at this time if the current regulations were removed. That's what is trying to be hidden from the minds of people.
Besides the obvious billions of barrels of oil in Alaska and off American coastlines, where else is there oil available? In the United States itself there is enough oil in shale to make it the largest oil reserves in the world; far beyond what Saudi Arabia has. That is a proven fact. There are of course also have billions of barrels of oil in the Canadian sands area, which will also last for decades. These are just a couple of areas which don't include many other areas in the world.
So why imply an oil shortage, what is the hidden agenda behind it. Some of it is philosophical, as ignorant people literally think of the earth as their mother, and to drill into their mother is actually hideous in their warped minds. Another reason for asserting oil depletion is in order to promote agendas related to radical environmentalists and their business allies, who want to try to cash in on the misguided focus on what is called "alternative energy," where billions of dollars are being wasted because of the fear mongering people who make it look like the world is falling in order to gain access to public and private money to further their purposes. It's nothing more than that.
There's no oil crisis, we're not close to losing easy access to oil supplies.
While I do agree that oil prices will eventually have to go up, especially until ways of figuring out how to extract oil from shale is made cheaper, there is still so much oil available that to say we're in any type of crisis is dishonest at best, and ignorant at worst.
Even new ways of scouring the ocean floors and seeing what lies beneath the salty residue has resulted in billions of barrels of oil being discovered by Brazil, and their just getting going on that, as Petrobras continues to look for more deposits. Granted, it's far below the ocean floor and will be more costly - at this time - to extract, is does show how much oil there is that hasn't been discovered yet, and how much would be avaiable when restrictions on drilling for oil on coastlines are lifted.
The world oil supply is fine, and world oil reserves in a solid place. Oil consumption for now has cut back, as economic weakness causes consumers to drive less and stay around home more. That will extend signficantly the amount of oil available and its use.
So you don't have to worry or be fearful over the dishonest assertions by those with private agendas. There's billions and billions of barrels of oil available, it's just not being allowed to be drilled for because of existing laws which eventually will be withdrawn when real pressures from the population make it politically dangerous to keep people from cheaper oil and gas prices.
Sunday, November 9, 2008
Black Gold. Texas Tea! Parshall, N.D. Oil Boom
What is that southern accent we're hearing in the North Dakota reservation town of Parshall? It's the voice of money to many of the residents who own mineral rights to land in the area.
Approximately 400 of the towns 1,000 or so people will benefit from the growing oil boom in the area, which is part of the Bakken oil formation. Every home or business owner, along with the Fort Berthold Indian Reservation have leased land to the oil roughnecks for Oklahoma and Texas.
Estimates from the U.S. Geological Survey in April are that up to 4.3 billion barrels of oil are recoverable from the Bakken. A lot of the Bakken is in western North Dakota, about two miles below the surface.
On the Fort Berthold Indian Reservation, some of the tribal members have already received significant royalties, with one family taking in close to $800,000 over the last few months, said Mervin Packineau, a member of the Three Affiliated Tribes business council.
The original location of the first drilling began north of Parshall, but now they're moving south. So far the oil companies have primarily avoided the more populated areas because of the need to negotiate hundreds of individual contracts.
One of the owners of an oil company from Wichita, Kansas, Todd Slawson, said his company, Slawson Exploration Co., has been drilling around the edge of Parshall city limits, and next month has plans to drill partially beneath the town itself. In 2009 they'll probably drill directly beneath the town.
Slawson added that the wells just outside the city have been performing good.
Residual effects of the oil boom for the town has been the increase of sales in most businesses, including the one restaurant in town; the filling up of most available rental rooms on a daily basis; and the sale of water to the oil companies from the city for use in drilling in order to break up the shale to release the oil.
Some results from Gulfport Energy in Bakken area. Go to Bakken sub-headline for results in the region.
Approximately 400 of the towns 1,000 or so people will benefit from the growing oil boom in the area, which is part of the Bakken oil formation. Every home or business owner, along with the Fort Berthold Indian Reservation have leased land to the oil roughnecks for Oklahoma and Texas.
Estimates from the U.S. Geological Survey in April are that up to 4.3 billion barrels of oil are recoverable from the Bakken. A lot of the Bakken is in western North Dakota, about two miles below the surface.
On the Fort Berthold Indian Reservation, some of the tribal members have already received significant royalties, with one family taking in close to $800,000 over the last few months, said Mervin Packineau, a member of the Three Affiliated Tribes business council.
The original location of the first drilling began north of Parshall, but now they're moving south. So far the oil companies have primarily avoided the more populated areas because of the need to negotiate hundreds of individual contracts.
One of the owners of an oil company from Wichita, Kansas, Todd Slawson, said his company, Slawson Exploration Co., has been drilling around the edge of Parshall city limits, and next month has plans to drill partially beneath the town itself. In 2009 they'll probably drill directly beneath the town.
Slawson added that the wells just outside the city have been performing good.
Residual effects of the oil boom for the town has been the increase of sales in most businesses, including the one restaurant in town; the filling up of most available rental rooms on a daily basis; and the sale of water to the oil companies from the city for use in drilling in order to break up the shale to release the oil.
Some results from Gulfport Energy in Bakken area. Go to Bakken sub-headline for results in the region.
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