top of page

Cartoon Of the Week

Following CERA week in Houston I read 19 different, main stream media articles about what a game changer the shale oil phenomena has now become in America, again, how its revolutionized oil markets forever, that it will "dominate" the world oil order for decades to come with cheap, reliable exports, that it is now THE world's "swing producer," that OPEC should be scared to death, that US shale oil production has already surpassed Saudi Arabia's daily oil production and by 2020 will surpass that of Russia... blah, blah, blah. The one I liked the best was that increased "spending" in 2018 was a sure sign the shale oil sector was now profitable and a decade of 'growth before profit' was finally going to pay off.

Five of those 19 articles qualified their statements by suggesting that the US LTO industry's short to medium term future depended entirely on OPEC and Russia's production cuts and how willing those two producing entities were to sacrifice their revenue, and their market share, to benefit of Pioneer, EOG and other American shale oil corporations. So, that was something, at least.

NONE of those 'things are awesome' articles, however, mentioned the shale oil industry's debt, the percentage of net revenue from production now required to service that debt, approaching debt maturities, rising interest rates, where the money is going to come from to facilitate the IEA and EIA's massive LTO growth projections, and how the shale oil industry was going to grow AND implement stock buy backs and increase dividends to appease angry, fed-up investors.

Let me repeat that, please: not ONE article I read addressed the shale oil industry's massive...debt.

To most folks America's shale oil phenomena is simply a miracle of...existence.

bottom of page