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Mike

Pick a Well, Any Well

Courtesy AFEleaks.com
Courtesy AFEleaks.com

At $80 WTI the Hockley well in Duval County will ultimately have a return on initial investment of 400% or more (4:1), produce for 35 years with an annualized decline rate of <4%. I've drilled them. I know what they cost.


The Diamondback wells cost $15 MM each, including land costs that occurred with the Endeavor M&A. They may require 3 strings of casing given where they are and if there are issues drilling thru the San Andres and Upper Spraberry. They'll be lucky to produce 20 years, max, before reaching economic limits and decline by 90% within 3 years. At $80, full cycle, those wells will have a 50% ROI (1.5:1). $15/$7.5.20=2.5-3.0 % annualized rate of return before taxes.


If you were working out of your own personal check book this is the way you would compare the economics; the shale sector, of course, will make those monster IP…


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srsroccoreport
srsroccoreport
yesterday

Mike,


Thanks for this simple comparison. When you see it right in front of your eyes, you can't believe how awful the economics of share oil truly are.


steve

Mike

DUC Season

"Surging" U.S. Shale Oil Production"

"Drill Baby, Drill Is Finally Working"

"Tight Oil Opens the Taps"


Those are some of the headlines the past two weeks as higher Iran induced oil prices are supposedly adding more rigs, completing more DUCs and coming to the aid of a desperate world in need of more cheap American oil.


The U.S. rig count for the week of May 20, 2026, was three more rigs than before the Iran conflict
The U.S. rig count for the week of May 20, 2026, was three more rigs than before the Iran conflict

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Mike
Mike
6 days ago

Here is an example of what I mean about people that can't count DUCs. The API is designed to over-inflate/exaggerate everything the industry does, to make it look better, but I will stick with the Novi and Enverus on this topic. Novi said 560 in all of the Permian and Enverus said recently 1,500 for the entire country. So I am unclear, as I mostly am, where the Exxon Petroleum Institute gets its information.


I will NEVER understand the business logic in borrowing CAPEX at 5.5% interest rates to drill $5 MM wells just to let them sit for years, generating NO revenue. Below $65 WTI, on a full cycle economic basis, wells don't make 5.5% annualized return on CAPEX. Buy $10 MM CDs at the bank and lock them in for 5 years and you make more money than a tight oil well with a 25% OWR, including NGLs.

Edited
Mike

Draining America First, As Fast as Possible


Click to read
Click to read
Oil Exports from Texas Are Indeed Up by 1.2 MM BOPD and Reducing Inventories Drastically. Production In Texas to Facilitate These Increased Exports Is NOT Up or Only Minutely Up Since 2H2025.
Oil Exports from Texas Are Indeed Up by 1.2 MM BOPD and Reducing Inventories Drastically. Production In Texas to Facilitate These Increased Exports Is NOT Up or Only Minutely Up Since 2H2025.

If you read the Midland paper article, you'll see that 50% of natural gas produced in Texas is exported either by LNG or by pipe to Mexico.


(Pressure) depletion in the Permian Basin is the real deal. Well productivity is falling and decline rates have never been higher. The crap in the article about increasing well productivity in the Permian is a stoopid EIA metric that does not account for DUCs being completed that require no rigs.


Eagle Ford productivity is down nearly 26% in 2025, BOE per perforated foot, or lateral foot, either one. From the Texas part of the Delaware Basin out West, down 14% in 2025 and down nearly 8% in the Midland Basin. Produced water volumes are pushing 28 MM BPD.


Exports do NOT lower hydrocarbon prices for the American consumer, that is a lie. Over half U.S. oil exports go to NATO countries in Europe,…


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