no chance shell is a buyer with all of our BG debt

nu awlins ag said:

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Let's just hope they push for higher prices instead of just producing thus decreasing prices. Read an article from CNBC where this one cat is predicting a fall back down to $42. Let's hope not for those still in the race..

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More New Supply
Prices Down Again

Per usual, I knew better than to get optimistic - but did anyway. Things looking grim once again.

Well, with shale break-even now at ~$35, there's much more opportunity for US wells to be profitable than just a few years ago....

BP largely missed the shale play and has long cycle investment projects. Not to mention extension overlap on the refining/downstream side.

Exxon may desire a trading organization but from a structural/organizational behavior standpoint they will never allow an individual or group to take that much risk. Could you imagine the pnl meetings.

Exxon likely wants to increase short cycle investment exposure to shale. they are beefing up their gulf coast downstream investments so a large independent makes the most sense.

I think ConocoPhillips has set itself up for purchase once the San Juan position is sold. Too many B team players running that place.

Where are these wells you are talking about? Is it $35 posted price? Sweet or sour? Does this include royalty interests or is this based on the gross price needed for working interest? Please answer these questions since I've seen you post the $35 number before. I honestly don't think you know. I don't think anyone knows. Besides that not all operators have the same costs.

http://www.worldoil.com/news/2017/2/28/rystad-examines-what-to-expect-from-us-shale-break-even-prices-in-2017

One of several articles that are out there. Your $35 is in the Permian.

I've asked you this before, are you going to short oil and make some money? Seems like you just enjoy the misery of a lot of good people who have been through a very rough time.

Really, you think service companies won't raise prices?

I'll admit I didn't read the article. But is that the price before or after paying royalties?

After.

So it's $35 after royalties so that takes it to $42. $42 posted is probably around $45.50 wti that you see on the news. Big difference between $35 and $45.50

So why waste time reading your article Colin?

By the way you seem a little bent out of shape. My earlier comment about people suffering was directed at 740a not you.

$35 includes royalties to clarify.

Colin, I read your article. The $35 is wellhead BEP. Throw in facilities costs at $10 - $15 across the different plays and now you're looking at $45 to $50 NOT $35.

I was more accurate without reading your article.

Not talking to you Colin with my response

We're seeing prices increase on the drilling and completion side. In the last 4 months, pipe, cement, drilling day rates, and frac sand are up significantly. Our AFEs have increased 10-15%.

I have heard similar tidings.

ColinAggie said:

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Latigo said:

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Really, you think service companies won't raise prices?

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Really? Do you think they have the leverage and market conditions to raise their prices?

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Well...

https://www.bloomberg.com/news/articles/2016-11-28/shale-fracking-rebound-starts-with-more-expensive-grains-of-sand

http://www.investors.com/news/shale-ep-spending-seen-rising-2017-but-services-will-cost-more/

http://www.houstonchronicle.com/business/article/As-crude-prices-rise-oil-field-service-costs-10841525.php

http://www.platts.com/latest-news/oil/houston/ihs-ceraweek-rising-oilfield-costs-a-test-for-21072918

http://www.epmag.com/blog/oil-industry-costs-will-rise-focus-shifts-growth-1484746

My point was more towards its nothing like the leverage or market conditions they had in 11-13 years. Should've been more specific in my first post.

My apologies for being a jackass.

I'm tired of headlines that don't indicate what the article actually says. The article clearly says $10 to $15 is added to the $35. So it is really $45 to $50. Please explain if I am missing something.

Here is the misleading part. Unless they are letting the oil just spill on the ground at the wellhead this is how the article describes the actual break even:

"Even though the wellhead BEP is often considered the "raw" or "initial" break-even, this is not the actual break-even realized by the companies. If we include the effect of facility costs and the price discounts, we can compare the average acreage BEP across main shale plays, expressed in WTI price. In this comparison, the different zones of Eagle Ford shale (EFS) namely the East Oil zone, Dry Gas zone and Wet Gas/Condensate zone, have lower WTI BEP compared to Permian Delaware's Bone Spring/Avalon or Wolfcamp formations. Note that the differences between the WTI BEP and the wellhead BEP are play-specific and can be within the range of $10-15."

I would define actual break even as:

Wellhead $35
Facilities $10
Total. $45

The well is not economical without facilities. You can't make money if the oil never gets to market. I would consider wellhead BEP to be similar to putting pipe on a dry hole. Lots of expense but no ROI.

Latigo said:

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Here is the misleading part. Unless they are letting the oil just spill on the ground at the wellhead this is how the article describes the actual break even:

"Even though the wellhead BEP is often considered the "raw" or "initial" break-even, this is not the actual break-even realized by the companies. If we include the effect of facility costs and the price discounts, we can compare the average acreage BEP across main shale plays, expressed in WTI price. In this comparison, the different zones of Eagle Ford shale (EFS) namely the East Oil zone, Dry Gas zone and Wet Gas/Condensate zone, have lower WTI BEP compared to Permian Delaware's Bone Spring/Avalon or Wolfcamp formations. Note that the differences between the WTI BEP and the wellhead BEP are play-specific and can be within the range of $10-15."

I would define actual break even as:

Wellhead $35
Facilities $10
Total. $45

The well is not economical without facilities. You can't make money if the oil never gets to market.

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I'm a little surprised that facilities are $10/bbl. I am somewhat familiar with the oil pipeline and terminal pricing in the eagleford and Corpus Christi and the cost to get from Gardendale to Corpus onto the water is only about $2-3 (and going down, not up) and buyers will pay LLS minus $1-2. Are you saying the cost to get it from the wellhead to gardendale is $5+?

Goose06 said:

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Latigo said:

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Here is the misleading part. Unless they are letting the oil just spill on the ground at the wellhead this is how the article describes the actual break even:

"Even though the wellhead BEP is often considered the "raw" or "initial" break-even, this is not the actual break-even realized by the companies. If we include the effect of facility costs and the price discounts, we can compare the average acreage BEP across main shale plays, expressed in WTI price. In this comparison, the different zones of Eagle Ford shale (EFS) namely the East Oil zone, Dry Gas zone and Wet Gas/Condensate zone, have lower WTI BEP compared to Permian Delaware's Bone Spring/Avalon or Wolfcamp formations. Note that the differences between the WTI BEP and the wellhead BEP are play-specific and can be within the range of $10-15."

I would define actual break even as:

Wellhead $35
Facilities $10
Total. $45

The well is not economical without facilities. You can't make money if the oil never gets to market.

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I'm a little surprised that facilities are $10/bbl. I am somewhat familiar with the oil pipeline and terminal pricing in the eagleford and Corpus Christi and the cost to get from Gardendale to Corpus onto the water is only about $2-3 (and going down, not up) and buyers will pay LLS minus $1-2. Are you saying the cost to get it from the wellhead to gardendale is $5+?

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Perhaps if there is a 1-off leasehold that doesn't adjoin any other acreage from the operator it could be $10. Nobody quotes breakeven prices this way. It would be based on other wells being drilled to split the costs at which point GM&T is no where close to $10/bbl.

nm

What are we calling facility cost? I've produced oil in many basins and we don't split out the facility costs like that. We roll up the field (which in the southern US includes facility costs) then back into a breakeven price. Even then, there are two BEP's: producing and AFE or project.
Unless you are producing tar or some Ecuadorian crude (11 API) what are we doing here? Refining it? Lol!

What discount rate is used for break even?