Imagine, please, investing $8MM ($8,000,000) of your own money to drill a stinking shale oil well and, in spite of the mass manufacturing model, that investment does have risk. You could lose the hole, stick tools and have to sidetrack, the casing could part, or burst; the price of oil might be good and then again, it might not be so good. If everything goes just right, your $8MM investment might earn you a 35-40% return over the next 15 years. That is the BEST you can hope for, unless the price of oil goes to $200 a barrel and hope is not a good plan.
You can justify that investment all you want, use EBITDA and all that crap, but the reality is, you have risked a lot of money to earn a little over 2% nominal rate of return per year, the next 15 years.
You could make a safer investment by burying that $8MM in the back yard with the dog bones.
The American shale oil sector celebrates these kinds of oil "investments" with golf tournaments, crawfish boils, blasting away at clay pigeons, shale oil magazines, more MSM attention than the immigration crisis and one podcast after another, all day long. Everybody that has never owned working interest is his or her life loves the US shale oil phenomena. Folks are mesmerized by it. Its NOT their money.
I am, on the other hand, a lowly stripper well operator in America. I don't borrow money to be, or stay in business and I pay folks that work for me within 30 days. I drill wells that make a 500% rate of return, or more sometimes and I can make money, good money, operating 3-4 BOPD wells. Been doing that for a half century.
We can do that, in part, by starting Monday morning off with coffee and by cutting up old underwear to use as rags. That's how we roll.
Gotta. Its our money.
