Cartoon Of the Week

August 14, 2018

 

I always get a big kick out the American MSM's dung heap about how "scared" OPEC and Russia are of the US shale oil phenomena and the frac'ing "revolution." Drillinginfo.com, IHS, shaleprofile.com, the Texas Railroad Commission, the North Dakota Industrial Commission and a host of other information sources are available to everyone throughout the world with internet service and a tip-toe thru realized production data vs. EUR's in shale oil investment presentations would give any 5th grader some clue that things are not jiving up between fact and fiction.  

 

Then there are corporate SEC filings available on line that show long term debt for the LTO industry, lack of cash flow, interest on debt and that the shale oil industry has outspent revenue since the get go. Also, for  good measure, anybody in the world can read about shale oil E&P stock performance and how pissed off shareholders are. 

 

So it comes as no surprise, at least to me, that there are analyses like this recent one floating around Riyadh and elsewhere in the world:  http://www.alrajhi-capital.com/en/research/Market/Oil%20Market%20Update%20Jan%202018.pdf. Does this report read like OPEC is  concerned much about the American shale oil phenomena?

 

No. The rest of the oil producing  world is not stupid, as most Americans seem to think. Regardless of whether OPEC is trying to drive the price up, or drive it down, its patiently pulling for low interest rates all the while watching the US shale industry get deeper in debt drilling its reserve inventory up like a house of fire. If you think that is not already happening I suggest you look at well densities in sweet spots in all three of America's shale oil basins, read about well interference, bottlenecks, flaring, declining well productivity and take a gander at 2Q 2018 earnings reports that just came out. 

 

In the mean time the two fellas in the photo below (my fellow Republicans, I might add), seen here discussing how many Big Macs and Diet Cokes to order for lunch, are currently in charge of America's hydrocarbon future. They are oblivious to oil well economics, corporate finances, the ramifications of debt on reserve assets that decline 85% in the first three years of existence and still believe America is capable of "dominating the world with near limitless supplies" of shale oil. They'll keep printing money to make that happen until there are no more trees in America to make paper

out of.

 

 

 

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