Cartoon Of the Week
I have no clue why the goofball in this cartoon has that shit eatin' grin on his face. The public and private US shale oil industry is something in the order of $300 billion dollars in long term debt; it owes almost as much as the total national debts of Russia [1] and the Kingdom of Saudi Arabia combined [2].
In the 3rd quarter of 2018 WTI oil prices averaged almost $70 per barrel and the shale oil industry's well productivity has never been higher in its decade long existence, yet only 11 of the top 32 shale oil producers generated free cash flow. For the group of 32, it collectively lost a little south of $1 billion for the quarter [3].
The shale oil industry, as a whole, is still adding rigs and still outspending revenue by a wide margin. The EIA STEO predicts US tight oil will grow 113,000 BOPD in December and possibly another 0.7MM BOPD in 2019. This with more borrowed money, while the rest of the world cuts its production in hope of stabilizing prices.
The reality of falling crude oil demand in China and elsewhere, and the fear of (LTO) oversupply, has now driven the price of WTI down to below $53.43 per barrel, down $22.29 per barrel in less than five weeks. With current market differentials the Permian Basin is now getting less than $44 per barrel and the Bakken less than $37 per barrel at their respective well heads. I don't see how sending $2MM per day of associated gas up flare stacks is making America too great again, but maybe that's just me.
If the wanker in the cartoon represents the US LTO industry he is not 'hurting' anyone but himself and the rest of our nations domestic oil industry, including the Gulf of Mexico.
If you are a consumer in America and think the shale oil industry is neater than sliced bread, enjoy it while you can. The way this important resource is being exploited, it probably won't last long.
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Courtesy Art Berman
We're currently in the lead and beating Russian and Saudi Arabia in the daily production race. But its a marathon, not the 440, we're running.
Unfortunately were kicking both countries asses in the 'debt race.' I mean, we're stomping them! They'll never catch up to us now: