Down the Rat Hole
Here's an "in between" post from 04:30 this morning, and a tub of hot coffee, before driving to the field today to oversee a wash out. Dark to dark today. One of the best parts of OilyStuffBlog for me is being able to get stuff said, off my chest, without being lectured to by internet experts who have never written a check for working interest in their sheltered lives. I may be wrong, often, and am told as such, but all I can hope is that countering the bullshit from cheerleaders still trying to make money from this HZ tight oil, makes people think for themselves.
This quarter's earnings reports are showing shale oil companies kicking ass on "free" cash flow ( in spite of enormous derivative losses on hedges, etc.) and every press release needing to will tout this as an amazing feat, the rally point for the future.
Cash flow, however, is not profit; a quote from Twitter...
Replying to @WAR527 "profits" are merely (small) partial recoveries of prior losses.
Diamondback 2021 Guidance; a 40% decline in reinvestment rate will NOT replace PDP; courtesy Eric Nutthall,
Why is all this cash flow suddenly, magically appearing out of nowhere for shale oil? Its been cut off at the bank and for the first time, ever, its not spending more than its earning. Lenders want their money back and they want to see debt paid back, so shitco's have whacked their capital spending. It ain't voluntary, I assure you.
What are the ramifications of slowing down the drilling hamster wheel for shale oil, of not replacing proven developed reserves that decline 85% in the first 32 months of production life?
Its going to be a disaster. Read the stuff on the Forum Page about actual required reserve replacement ratios for shale oil.
This chart, above, is NOT good. When reserves are not replaced, production revenue will ultimately go down accordingly. The window for paying down significant debt is not open for long. Right now DUC's make everything look okeedokee, like the tight oil space can maintain, and pay down debt; those DUCs are dwindling and won't last much longer.
Done. 30 minutes and 3 cups of coffee; Pootie even got a belly rub. Off to work. Have a "cool" day, y'all.
Right, drilling rig rat hole with a conductor sleeve and pre-driven shuck. The shuck is covered to keep shit from falling in it. This is where the kelly goes during connections. Not to be confused with a mouse hole, but on a rig with a top drive the rat hole can double as a mouse hole too. The setting of the rig substructure is based entirely on where the rat hole is pre-drilled.