I had heard the story. It breaks my heart. And makes me very angry at the same time. Do you suppose that Travis has lost sleep over this. Or Wayne Christian? Thank you, John.

Thanks, John ! I bet that was interesting. If I may, the spring in Pecos use to flow, no longer does, because why? I think I know the answer but I would really appreciate your "diplomatic" answer.

Thank you, Johh. I am quite certain those folks have never paid a lease operating expense or an AFE, and another cash call, nor another cash call after that, in their collective lives. . Based on the company's own data a Permian well, for instance, will now make 3 BCF of assocated gas and at $2.50 an MCF that gas would add another $6MM to net revenue for a well. It is the difference in making a 30% ROI and a 100% ROI over the life a typical well. Such comments are made with no regard whatsoever for pressure preservation, increasing RR, hydrocarbon conservation and our nations long term energy security. It suggests all that oil being produced in the Permian Basin actually benefits the American consumer, not foreign importers, and that gas is just a waste Americans need not care about. I am so tired of being lied to. I believe, truly, one of the marketing ploys for selling loans, shares of stock, political and regulatory favoritism, Federal support for exports, State support for flaring, data about tight oil and tight gas, consulting, ANALtical bulll shit and poor journalism etc, etc. is that everybody relies on the simple fact that the general public does not know they are all lying. I appreciate YOUR participation, John.

HERE WE GO AGAIN WITH THE ONE-YEAR PAYOUT CRAP... I am inundated with a flurry of correspondence about Permian Basin tight oil wells paying out in one year or less at $85 and negative gas. Thats dung heap. From Stipper Well Economics 101...   Conditions precedent: • I choose to leave natural gas and NGL's out of this excercise, at the moment. WaHa spot in the Permian is less than a buck and at the WH producers are making four bits a MMBTU, max. Gas helps the economics, a little. At $4 it helps quite a bit.Update @5.24, WaHa is -$2.40 • Every barrel of oil you see reported on niffty graphics from Novi, Enverus, Bloomberg, etc. are GROSS barrels...the people paying the bills to drill the well don't get that, they get net barrels after royalty deductions, with I believe are 25% of 8/8ths, about 75% of the time in the Permian. Thats a big deal that internet experts forget. • To run the company you use to drill these HZ wells you are relying 100% on production revenue to pay overhead, printer paper, jet charters, big tall buildings with glass windows, Petroleum Club dues, CEO salaries, etc. • If you owe $6 B at the bank (FANG) your paying $330 MM a year in interest on that debt, like it or not. Production revenue pays for that too. • These shale dudes have lost SO much money over the years their tax loss carryfowards will get them to their graves without ever paying Federal income tax. So NA on that. My tax deductions includes State severance tax, property tax due counties and school districts, and State franchise allocations, but not money paid to the government. The API likes to leave that part out. • I get to see lots of AFE's and lots of LOE's. I know what wells costs and OPEX, by the way, better include downhole maintenance and/or well intervention costs, or your lying to yourself and you your shareholders. Fishing a cooked ESP that has to be totally replaced can cost $300K. • Well costs in the Midland are $10.5 MM, +/-; longer laterals costs more money to drill and complete. • The price of oil you see on oilprice.com, or CNBC, is a NYMEX price, or a CME price and almost everybody, save integrated companies buying their own oil, has to pay $3-4 a barrel for transportation and marketing costs straight off the top. Sometimes Permian tight oil is so light there are even further deductions from a NYMEX quote. $75 NYMEX WTI oil = $71.50 at the WH Less 7.25%, taxes = $66.30 Less 22.5% royalty burdens = $50.30 Less $4.00 per incremental BO G&A and Interest Expense on Debt = $46.30 (mostly from 10'Q and K's. Less $14.00 incremental BO (NOT BOE!) OPEX, weighed over a 14 month period, including maintenance, water, chemicals, electriticy, etc. = $32.30 per BO, net back. If you want to use $80 NYMEX WTI, the net back is $38 dollars a barrel; breakeven less NYMEX WTI = net back. All AFE's I've seen within the past 4 months have all been pushing $11MM...NOT including M&A related costs for buying drillable locations (both FANG and Exxon paid over $3.5MM for the acreage to drill a HZ well on it, or several HZ wells to different benches. Rmember, please, the dog dookey about wells per section (WPS) is not correct, wells are HZ, not vertical, so its essentially wells per 2 1/2 sections. Divide $35 net back per BO into $11 MM well costs and I get 314,000 BO, that is what it takes to pay a well out. It you add $3.5 MM to that those well costs it requires 414,000 BO to pay out a new well in the Midland Basin. The BEST wells drilled in the Midland Basin were in 2021 and if those same quality wells could be drilled today (they can't!) at month 36...they still wouldn't be at payout. And save the $2.50 Henry Hub gas BS, please. Please!

I happened to catch Trump's rally in Wisconsin today when he reiterated that the US had more "liquid gold than any other country in the world," that he will "drill baby drill and lower energy costs for all Americans." I will vote for the sumbitch, I have NO choice, but this is a dangerous, dangerous lie he tells. Cruz knows no difference. Lines are drawn, Drill baby, drill has now taken the same level of signficance and Texas pride as Remember The Alamo. Nothing will change. In America we can only react and nothing is really EVER a problem until it is a disaster. I love my country, my State, oilfield jobs and one the best systems of higher education in the entire world, all thru oil and gas production, which I spent my entire life enedeavored in. But I abhor flaring, the unfettered use of groundwater for fracing, and SWD related earthquakes, all for the sake of crude oil exports to foreign countries. Shale oil and shale gas is a gift to our great nation and it's gross mismanagement will someday prove to have been a grave mistake, much of which will be blamed on the lack of regulations and the Texas Railroad Commission. Thanks for commenting, Gerry; I hope you will continue to visit. Mike Shellman

It depends on Texans and three Texas Railroad Commissioners. So the answer is yes. Its a waste, associated gas. Sorta like Permian tight oil, most all of which the America consumer never even sees.

You may click on this image and in real time gauge flaring intensity in Texas thru late last week. The really bright intensity NE of Midland, in the Midland Basin, is Martin County. Remember, please, there is more gas gathering pipe in the ground in the Permian Basin than anywhere in the country. Companies boast on the number of drillable locations they have in their sweet spots, their cores, often file drilling permits 12 months in advance knowing there is 99.5% of success, then file for flaring permits because they can't get hooked up after the well is completed. The TRRC hands those permits out like candy. If there is not enough gas takeaway out of the Basin now, WTF not? Since 2016 and the USGS assessments about recoverable oil in the Permian Basin, and all the abundance hype, after 8 years why is there not sufficient takeaway? The Permian is just going to get gassier and gassier. Why are not using LPG as a transportation fuel in the US instead of exporting it? Why, at $80 oil prices, is there not a more sorted effort to re-inject this wasted gas back into the rock for pressure maintenace, to increase recovery rates? We're stranding 90% of the oil in place. Who's in charge of this chicken shit outfit?

I consider myself a conservative Republican but am slowly dropping the Republican part of the description. These three Texas Railroad Commissioners, all far right wing Republicans, one of which we know benefits financially from a wide open, anything goes in Texas oil and gas regulatory scheme. These three Railroad Commissioners have personally taken it upon themselves to ignore Texas laws regarding the protection of rights for ALL Texans, the prevention of resource waste, pressure preservation and conservation. Those laws are as old as the Texas Natural Resource Code and our Constitution. They are being broken. It is criminal. Essentially just three people are determing the long term fate of our States natural resources, and our nation's future. It infuriates me. People vote for this political ideaslism on resources because they are lied to about hydrocarbon abundance. Its all predictable...big oil companies feel like they don't need to be regulated so they help elect people that will ensure them no regulations. Usable groundwater for frac'ing, earthquakes, flaring...mostly all for the big 10 tight oil operators in the Permian and for exports of US oil to foreign countries...

John, I am sure it is just a conicidence. For now. I would say, however, the probabililty of us ever knowing the truth is <20%.

Why is it not inconceivable that there is a direct correlation in a significant earthquake in an unusal spot in Loving County and pipeline movement to the south that caused these ruputures? It is more than conceivable. A 3.5 is nothing to sneeze at. This event is unusually east in the Delaware Basin and closer to the Platform Margin. Might not be the reason, yet, but it surely will be in the future. Look at the WSJ SWD map for the Delaware Basin, above; the SRA areas of concern are west, near Toyah, in Culberson County where they have been forced to reduce volumes....so they have trucking water east to new areas. Look at the densitiy map of injection points and volumes in the Winkler, Ward and Loving confluence where the earthquake occured...this is an an area of most likely shallower injection zones than those found in the far west near the basement. What is the reason for this dense area of SWD wells and high injection volumes? Because New Mexico sends its water to these wells, in Texas, for disposal. It doesn't like earthquakes...Texas doesn't seem to mind them. THIS is all an example of how the Texas Railroad Commissioners are failing Texas and soon to be responsible for failing the entire nation. Its incessant desire to drain Texas first will ultimately leave the entire country with nothing someday way sooner than people think. WOR in the Delaware is bad and getting worse. I've seen some OPEX lately that was $13-14 per incremental BO just for water disposal. We should focus on the big picture. None of the problems are going away. They are going to get worse, all for US crude oil exports to foreign countries. John, you should duct tape your dishes in the cupboard and decide, now, which side of I-20 you want to be on, north or south, when the Permian Basin breaks in half.

Yes, I was incorrect to say there are no costs associated with associated gas. That was a dumb statement of mine. In essence associated gas is subject to ALL the same OPEX, etc. of its oil counterpart. Then, as you say, once its on the bank there are the costs you mentioned. I might have guesed a dollar, $1.50 is astounding. Thanks for that! It confirms my belief that associated gas, etc. is essentially killing Permian well economics. So when Van't Hof says FANG can run gas to zero, which is has, FANG can still make a lot of money on the 50% of the stream that is oil, who believes that? FANG just drove its new drilling costs to $13-14MM each with its Endeavor buy. I always enjoyed the sector's attempt at stating OPEX in BOE terms. Sheffield years ago liked to say his OPEX was $2.30 per incremental BOE. It was clear nobody bought that stuff and he stopped.

Yes, sir. Natural gas prices are killing economics in the Permian Basin. Imagine risking, and I must repeat that term, risking, $14 MM just to make $21 MM over the next 12 years. Then, at the end of 12 years, there is nothing to sell, you can't bail out of your investment for what you put INTO your investment. In fact, you must spend another $150K or so to plug the well and restore the land to its original state. New Permian wells make 3 BCF of gas or more, with little to no expensenses. Its a bi-production, a waste, gas. So if you are leaving two dollars an MCF of gas on the table, you are essentially leaving $5MM of revenue behind, on a $14 MM investment. Nobody, I repeat nobody, would be in the tight oil industry with their own money for very long, no sir. Debt is the sole reason for shale's entire existence. But growth, using debt, is artificial, it is fake, and it does not work in the long run. I suggest the US shale oil phenomena has been one of the greatest propaganda efforts in modern time. The internet, and social media, Twitter, the sector itself and its pundits created the illusion of abundance, and profit, and it was, actually, pretty much all a big lie. US shale oil has been the biggest foreign policy tool in modern history as well...everybody had a very good reason for it to appear to be working.

There was a time when the Texas Railroad Commission had a hand in this sort of thing. It is, in fact, mandated by Texas Constitutional Law to regulate the oil and gas industry with a heavy hand in matters of waste, preservation of bottom hole pressure, the correlative rights of ALL Texans, and conservation of our natural resources for future generations. It is the law, set forth in the Texas Natural Resource Code, but just three Railroad Commissioners have taken it upon themselves to ignore that law. Spacing between wells, lease/unit lines, and well densities per acre would fix all this; it would slow the rush to drain Texas to nothing way down and preserve bottom hole pressure. It would reduce flaring and most importantly, increase recovery rates of oil in place. It would lower costs. It could be done, easily, under existing, applicable statute and Statewide Rules than were created based on those statutes. Are we overdrilling this stuff? Sure, its been proven a thousand times, a thousand ways. The TRRC could stop it and get us back on the right track. Those three Commissioners act as fiduciaries to the entire nation, not just Texas. They are in it, however, for money, and for power. We should not forget who was in charge the past 8 years, including R. Sitton. I apologize, by the way, for the post about Israel and America. That is not the way I look at things. I took it down. I should have read it first.

I agree with this statement 5 x 5. The headline of the actual article is designed to be misleading and is an effort to effect the trade of crude oil. It is a lie. Like the DOJ who lies about the job numbers, the EIA also works for this administration and has orders from headquarters.

Whoa Nellie !!!!!!

I am glad to hear from you, John; I was thinking you got sick of my shit. I hope you and the family are well. I appreciate this a lot. I did not know that West Odessa was the badlands. I had sorta heard that before, like best not go over their looking for a beer joint, but not the extent you described. And once again, I am disappointed in the hype from what we'd hope would be a neutral, data based only company. The memes are getting very dumb. I sense from many a sense of worry about the future and the more of that, the more dung heap. My first passion is geology, as you know, and I read everything I could about the Barnett after the Alpine High Mississipian fiasco. It was my take then, and is now that because of burial depth it was going to be very gassy and because of its depositional environement, extra tight and hard to produce. For example, try frac'ing THIS... I see Continental has a good Barnett well in Ector but can no longer follow it. Those operating in the Permian clearly find associated gas a necessary evil to deal with, a sort of waste. But as wells become gassier that gas and NGL appears to represent a much higher portion of the production stream, like 50/50 in a lot of cores and though they still appear to be sastisfied with getting nothing for the gas and drilling for rapidly declining LTO, I don't see how that can keep going on much longer. The breakeven to net back barrel benchmark is still bad, even at $80. Novi just released another...analysis that suggests at $60 breakeven, $11 MM wells pay back in 2 years. I could destroy that but am beginning to feel bad. The outlook for natgas prices, because of overproduction, is bleak; I will be dead, I fear, before I will see all the shut in gas wells I've drilled reach an economic price level. I would think that any deeper bench in the Permian that is going to be gassy is sort of a bad idea. But, what do I know? Blackmon, everybody, is talking it up like the next best thing to peanut butter and jelly samiches. Where o where will all the money come from and....the water ?

Thanks, George, this is a good stuff. A nice compliment to the recent post on OSC, The Hamster Wheel. Good thoughts and again, thank you.

Anne, there was a big jobs number come out today from the DOL. Ends up most of those new jobs were part time jobs and jobs that were abscounded from lazy Americans by illegal immigrants. That jobs number release came from the Dept.of Labor, also a department under Biden's administration and the press release might have been designed specifically to make Bidens economy look better than it is. That from the numerous sources, including Bloomberg. If the Dept. of Labor is told to do that, why isn't the Energy Inaccuracy Agency told to do that for the exact same reasons? To keep the appearance that there is so called "oil" everywhere, and to keep the price of oil low before November. I suggest, respectfully, there is no difference and that is exactly what is being done.

Thanks Anne. I find myself disagreeing more and more with Novi's analysis; I suspect they are trying to sell as much good news as possible. Associated gas from tight, depletion driven shale does in fact decline less than its oil counterpart. And they all of a sudden bubble point occurs, it doesn't and its gone too. Gas from tight oil wells does in fact NOT behave like conventional wells. Its called gas depletion for a reason. We've seen text book examaples of bubble point in the Bakken already and gas depleted to nothing. This stuff in the Permian will behave the same way; it already is in 2014-2017 vintage HZ tight oil wells. In a number of overdrilled cores gas and gas liquids already represents 50% of the production stream and I am very unclear how the sector can keep drilling oil wells when they get nothing for their gas. Personally, I think that is why rig counts are down; economics are terrible. So I agree with you 100%. I don't see a long term future in associated gas from Permian tight oil wells; they can build all the takeway they want and someday soon it will be empty. I would NOT invest in Permian associated gas, midstream or down, particularly LNG. https://www.msn.com/en-us/money/markets/the-global-gas-glut-could-reach-multi-decade-highs-in-the-coming-years-morgan-stanley-says/ar-BB1kUQHL The rig count went no where this week, again, in spite of 85 dollar oil and clear indications of increasing Middle Eastern problems. There is a reason for that and it has nothing to do with politics.

Thank you, Mr. Kopel. I am really NOT an expert, just someone with lots of experience who tends to question what most people say or write about my industry. You are kind, however, and I appreciate it.