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Producers can offset some of the rapid declines in output associated with shale drilling from existing acreage (i.e., “squeezing more barrels out of what they already drill”), said Rich Tabaka, president of Allied Resource Partners, an independent oil-and-gas company. But it can “feel like a bust because shale production falls off a cliff right away,” he said.
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Stuff To Think About
With WTI oil prices at or below $65 these Midland Basin HZ wells do NOT payout on a full cycle, all in economic basis. People claim they do, like to the tune of 20% total ROI over 15 years because they are using funky definitions, moving goal posts, leaving out costs, forgetting M&A land costs, etc. etc. Real money in vs. real money back, they break even, at best,
and that is only because of NGLs.
The sector needs to make BIG bucks, quickly, to pay its debt before it runs out of stuff to drill.
Imagine investing in a $12 MM well, an asset, that declines in value 90% in three years. When that asset is depleted, there is no plant or property value to recover, the investor does not get its lease bonus money back, nor the $4.5MM it paid for a drillable location (Exxon); there is nothing left.
Except the cost to plug the well and clean up the mess.
Robert Flarherty Energy Landscapes
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The materials provided on this site are for informational and educational purposes only and are not intended to provide tax, legal, or investment advice. I may make data related mistakes occasionally; if you use my opinions about oil reserves or shale well economics for financial purposes, to buy or sell stocks, your nuts. Don't do that. If I have used a photograph incorrectly it was for educational purposes and I have done my best of to give credit where credit is due. My stories are all true, slightly embellished, perhaps, but true; I don't change names to protect the guilty. I am as accurate as possible about history and historical facts; I work very hard at that.All rights are reserved, whatever that means. Don't blame me, I didn't do it.
