Cartoon Of the Week

January 24, 2019

 

2018 was a banter year for media bullshit about the shale oil industry, about increased productivity per well, 'resilience,' new "discoveries" of shale oil in the Permian from the USGS and America surpassing Russia and OPEC in the big, daily production race. Here's a doozy from Forbes  about how the shale oil industry was going to start raking in the big bucks in 2018. 

 

After over 40 years of making a living producing oil and natural gas, here is what I think: If a big independent company with a staff of thousands and 15 rigs running full time can't pay back "start-up" costs (debt) and become profitable, after a decade of being in business, it needs to quit. Its executives  can then start selling shoes at the mall for Sneakers  R Us.  WTI NYMEX (Cushing) averaged $69 and some change for 2018, even after a 30% drop in prices in late October; if you can't make money at those prices... the oil business is not your calling. 

 

Annual SEC filings for 2018 will be coming out soon and then we'll see a.) how much cash flow public shale oil companies "raked" in, b.) how much they were able to deleverage debt and, c.)  how many more barrels of reserve assets they were able to grow for the year without increasing debt.  At $69 oil, all of the above should have happened, along with some big dividends to happy shareholders. 

 

All of the above, or none of the above; whats the bet? 

 

 

 

 

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