A few months ago, the EIA released its estimates for U.S. proven oil reserves as of the end of 2024 at 46 billion barrels.

The definition of "proven" has been changed/altered over the past two decades but here are the Society of Petroleum Engineers definitions:

I would like for the reader to fully understand the definition of proven undeveloped reserves. Everyone uses the SEC definition as to how the term pertains to undeveloped tight oil locations within a certain radius of existing tight oil wells. Proven undeveloped (PUD) drilling locations will require additional CAPEX to convert into proven developed producing reserves (PDP). Below $85 WTI the U.S. tight oil sector is heavily dependent on borrowed money to drill future wells.

So, CAPEX is scarce, dividends to investors now make up 50% of the public tight oil companies annual net revenue spend, and on a full cycle accounting basis, drilling PUDs in the future is going to be more expensive, even less profitable and very difficult.

40% of the theoretical reserves from a PUD well can be booked as proven reserves, however, providing the operator drill the PUD within 5 years. Lenders will loan on PUDs. This SEC proximity rule has led to extensive over-drilling in core areas of American tight oil basins, parent-child interference and well productivity degradation. SEC rules did little than to increase the rate of pressure depletion in tight oil basins and keep recovery rates of oil in place less than 10%.

Of the 46 billion barrels the EIA estimates for proven reserves in the U.S. in 2024 it also estimates that 27.5 billion barrels of that is from tight oil, see below. I've got a really big problem with that.

I've shown you this Raymond James/EIA/IHS chart before...

It is the base decline rate for all US tight oil production, or how much tight oil production declines on an annual basis every year. I've checked this annual decline to EIA reports for years and believe it to actually be something in the order of 42-43% in 2025. It was a good prediction that is essentially holding up over time.

Let's pretend then, for the sake of argument, no more PUD locations will be drilled starting Monday morning anywhere in the country and what we are left with is PDP from existing wells for our future. A bird in the hand is worth two in bush, so to speak.

How long will that PDP last?

Not very damn long. In any case I took current tight oil production in the US of 3.4 billion barrels per year out to economic limits at $70, gradually decreased the annualized decline rate from the low 40% range down to the low 30% range (because of no new wells being drilled) and by year 6 come up with 8.5 billion barrels.

That's the oil and condensate we can expect to recover from today's existing wells, and it's pretty much gone by 2032.

Reserve to production ratios (R/P) often exceeded 30 years in the good 'ol days, not with tight oil.

With US oil inventories including the SPR at a 20-year lows and the US exporting 52% of its total tight oil production to foreign countries, this should leave you feeling not very secure. It scares the hell out of me.

Now, let's go back to the EIA's estimate of proven tight oil reserves as of 2024...27.5 billion barrels. Those estimates less 8.5 B bbls. from existing wells (PDP), leaves us with 19.0 B bbls. of remaining undeveloped reserves in the US, the EIA says is "proven."

That is going to take 42,000 more wells than already exist to recover and will cost $420 B more in CAPEX, most of that borrowed.

Last thing, and sorry this has taken so long... I have shown you using three different sources, including Goldman Sachs and my own SEC K research that current long-term debt held by the US shale sector is around $219 billion. It has to pay that money back with 8.5 B bbls. of PDP reserves from existing wells. And it better do it with the next 6 years. That will take $26 per barrel more profit than the sector is currently making at $70 WTI and puts true breakeven prices near $100 per BO.

The tight oil sector is very dependent on debt to drill new wells and deliver on its promises. Private enterprise is charged with our country's hydrocarbon future; it has to be profitable, or it fails.

Effectively then we are living hand to mouth regarding our nation's long term hydrocarbon security. It's now going out the back door faster than its coming in the front door. And we've got NO savings account.