The "machine's" textbook is whatever data it can find - this iteration of AI seems to just be a faster way to come up with looks a lot like a regression model. Always backward looking, always assuming the future is more of the same. Those work until something changes and then they don't. It's possible that Novi's found this out and is coming up with a way to shift the narrative to keep the same forecast.

In the forecasting business it's not unusual to be wrong. You have to keep your eyes and ears open to proof that things may have changed. If they have, and you don't, the argument of being data driven no longer holds. At that point you're basically going on emotion, don't want to be seen as wrong, or you're talking your book. The usual sign that rationality has gone out the window is name calling and insults. Once we get to that point I figure it's a sign that I'm still on the right track. Just trying to point myself and clients in the right direction when spending a lot of money. High oil prices are good at least for awhile for operators and others who benefit, but it's a sign that supply is tight and longer term won't be good for the economy because we still use oil for something like 85% of our mobility needs. Short term enjoy it while it lasts, longer term hedge your bets if you want to stay in business.

It's why midstream has been a great business. Producers focus on what "lies beneath" and since oil and gas are a commodity there's not much lipstick you can put on it to make it look better to a customer. Until now of course since we have "responsibly sourced" labels if you pay for even more paperwork. Using BOE as some sort of metric to put all the hydrocarbons on the same footing sounds like a great idea but doesn't really mean much. Just for starters 50% of an NGL barrel goes into chemicals, not energy. It's not equivalent if you're not using it for the same thing. The analysts will fight to the professional death over how they estimate production declines but don't seem to put much effort into figuring out what actual revenues are once it hits the surface.

Unfortunately there are costs for gas, probably why it gets flared. Runs from $1.50/MCF and up to get it gathered, compressed, treated, processed, compressed again, and sent to Houston. There's some offset to this for the sale of the NGLs but right now even if you can get it in a pipeline you're net losing on a netback basis. The new EPA regs on flaring/venting won't apply to "old" wells in production as of Dec 2022 for quite awhile, but will apply to new ones. That adds more costs for monitoring, flyovers, and people to answer callouts and do reports when there's a leak. It'll be interesting to hear what royalty checks look like for March and April for nat gas.

After all these years in the industry it's still fascinating that the Prisoner's Dilemma still applies. If everybody drills when prices go up they push prices back down. Even if there weren't rules about getting together to agree not to do this they wouldn't work. So "dril baby drill" sounds great for everyone - the industry's happy not to have the government get in the way of our driving prices down as usual, and the consumers are happy because we do. All works out, until supply doesn't grow enough to keep up with GLOBAL demand since our next customer if overseas.

Yep, the growth in US "liquids" production isn't oil. A lot of it is ethane, which is actually gas, not oil.

It's pretty easy to do without being biased. As you know, Texas numbers aren't really solid for several months. The EIA is using whatever they decide to use for their current production estimates. I'm not sure you can go back and compare their original production numbers published to what's in the files now, so unless you are downloading their original data you won't know what's been the adjustment to production to true up to the State values. Just like the EIA was forecasting production would grow by 1 million b/d and save the midterms, they can try to say that US production is holding up to keep prices down. But unfortunately the situation with nat gas in West Texas is highlighting a lot of issues. As long as WAHA is negative, it's not likely that drilling will ramp this summer. So let's watch and see if the EIA reports falling production going forward in its original numbers. They should if they're being honest. And new gas lines won't save the day - production could fall off by 15-20% by fall, so it make be a case of too little, too late. But, a lot of people should be happy right? High oil prices are good for oil companies, high diesel and av gas prices help "allocate' demand and that should encourage people to switch over to those great affordable, clean alternatives that we are told are out there.

I did an NGL forecast for Chevron about 20 years ago for what was then their West Texas LPG pipeline (now owned by OneOk). That system originates in the Delaware Basin. At the time, they said they owned quite a bit of acreage that included the "Permian Barnett", but that out there it was deep and they assumed would most likely be dry gas. That could explain why they haven't been rushing around to target it yet. I doubt if the rock has changed during that time, so have to believe that this is a sign of reaching for something to drill.

Mike, I know you use Novi's data quite a bit. Wondered if you agreed with their latest comment about Permian Gas: "Thanks to slower declines for the gas stream, the Permian product mix is gradually shifting to more gas. And while part of me wants to just extend the arrow in this chart to see where the Permian would break 35 bcf/d, that is also dependent on the buildout of gas offtake in the basin (last time we modeled this, we saw 40% growth of gas in the Permian through the mid-2030s, with no constraints). I'm having a tough time supporting this forecast. If oil production rolls over why would companies drill for $0 gas and pay to export it? And why would a producer spend $1+/Mmbtu on new gas pipeline capacity?