https://oilprice.com/Energy/Energy-General/Heres-How-Oil-Could-Skyrocket-By-138.html
Wednesday, August 12, 2020
OilPrice.com - Here’s How Oil Could Skyrocket By 138%
The market is gradually beginning to give credence to something I've been discussing in past OilPrice articles for a long time now. In a June, 2020 article entitled, Underinvestment Could Send Oil Prices Soaring, I argued how the retrenchment and lack of capital investment the industry has seen the past five-years would lead to shortages of crude eventually. The huge volume of Saudi overproduction exacerbated the equal largess in American shale for the past couple of years, and led to a glut of crude globally.
Rystad Energy - Covid-19 pushes OFS headcount to lowest level in over a decade, revenue per employee set to decline
The oil market turmoil brought on by Covid-19 has led to lower-than-anticipated activity and delayed projects, forcing the industry to deploy cost-cutting measures. A Rystad Energy analysis of the top 50 oilfield service (OFS) firms shows that staffing is set to reach its lowest level in more than 10 years, with the anticipated revenue per employee also declining towards the previous downturn’s level.
Rystad Energy tracks the permanent employee count of the top service companies, including reported permanent employees at year-end. Our analysis shows that the reduced staff levels in the OFS industry seen in 2016, after the previous downturn, have mostly been maintained since then at just over 760,000 employees, keeping a major cost driver – investment in human capital – at steady low levels.
However, the downsizing expected this year is likely to result in the OFS industry experiencing the lowest total headcount in over a decade, which we estimate will amount to about 610,000 employees.
Rystad Energy tracks the permanent employee count of the top service companies, including reported permanent employees at year-end. Our analysis shows that the reduced staff levels in the OFS industry seen in 2016, after the previous downturn, have mostly been maintained since then at just over 760,000 employees, keeping a major cost driver – investment in human capital – at steady low levels.
However, the downsizing expected this year is likely to result in the OFS industry experiencing the lowest total headcount in over a decade, which we estimate will amount to about 610,000 employees.
Monday, August 10, 2020
World Oil - Funding for shale drillers dries up as lenders leave the sector
NEW YORK (Bloomberg) --One of the key sources of funding for American shale is evaporating, just as the the sector needs it more than ever.
Banks lending against the oil and natural gas reserves of hundreds of independent U.S. drilling companies have pulled back from the sector at an unprecedented rate this year after energy prices slumped. There’s every indication they’re not done: Many in the industry expect further reductions to credit facilities in the fall, with higher costs and more stringent protections for lenders.
All that comes at a time that could scarcely be more challenging for shale. Weakened by poor returns to shareholders, it was getting shut out of the bond and equity markets even before the Covid-19 pandemic decimated global demand. With crude prices staging a limited recovery in the last two months to around $40 a barrel, shale operators face an uncertain future, one where they must to drill to generate cash flow while facing a higher cost of capital.
“As long as oil prices stay at $40 or less and gas stays at $2 or less, I think banks are going to continue to be very cautious and continue to pull back,” said Spencer Cutter, an analyst at Bloomberg Intelligence. “It’ll be the end of shale if oil stays below $40.”
Banks lending against the oil and natural gas reserves of hundreds of independent U.S. drilling companies have pulled back from the sector at an unprecedented rate this year after energy prices slumped. There’s every indication they’re not done: Many in the industry expect further reductions to credit facilities in the fall, with higher costs and more stringent protections for lenders.
All that comes at a time that could scarcely be more challenging for shale. Weakened by poor returns to shareholders, it was getting shut out of the bond and equity markets even before the Covid-19 pandemic decimated global demand. With crude prices staging a limited recovery in the last two months to around $40 a barrel, shale operators face an uncertain future, one where they must to drill to generate cash flow while facing a higher cost of capital.
“As long as oil prices stay at $40 or less and gas stays at $2 or less, I think banks are going to continue to be very cautious and continue to pull back,” said Spencer Cutter, an analyst at Bloomberg Intelligence. “It’ll be the end of shale if oil stays below $40.”
World Oil - Shale drillers plan for maintenance, not growth, as oil prices stall
HOUSTON (Bloomberg) --America’s most prolific shale drillers are accepting a fate once anathema to an industry obsessed with growth: Drilling just to ward off production drops.
The pandemic and subsequent plunge in crude prices has forced U.S. crude explorers to scrap plans to expand supplies amid investor skepticism toward the shale business model. For some of the biggest names in the Permian, that’s meant vowing restraint as long as oil lingers at levels too poor to justify a new boom.
The pledges also come on the heels of the worst crude crash in the 161-year history of the petroleum industry. Explorers are disclosing just how deeply their balance sheets were wounded by a quarter that included the heretofore unheard-of phenomenon of negative prices.
“These guys have all just had a near-death experience,” said Raoul LeBlanc, an analyst at IHS Markit Ltd. “It will take some time to get themselves back in a a better position.”
The pandemic and subsequent plunge in crude prices has forced U.S. crude explorers to scrap plans to expand supplies amid investor skepticism toward the shale business model. For some of the biggest names in the Permian, that’s meant vowing restraint as long as oil lingers at levels too poor to justify a new boom.
The pledges also come on the heels of the worst crude crash in the 161-year history of the petroleum industry. Explorers are disclosing just how deeply their balance sheets were wounded by a quarter that included the heretofore unheard-of phenomenon of negative prices.
“These guys have all just had a near-death experience,” said Raoul LeBlanc, an analyst at IHS Markit Ltd. “It will take some time to get themselves back in a a better position.”
BTU Analytics - COVID-19 Puts Wave 2 LNG in Jeopardy
Just under a year ago, BTU Analytics released Getting to the Gulf, an in-depth analysis of Wave 2 LNG facilities and the potential infrastructure bottlenecks that could hinder growth. At the time, US LNG demand had been on a steady upward trend with feedgas deliveries growing over 90% in 2019. However, the COVID-19 pandemic has disproportionately hit US LNG exports and as a result significantly altered the trajectory of US LNG forecasts. In today’s Energy Market Insight, BTU Analytics revisits Wave 2 LNG facilities’ progress, or lack thereof, that could put Wave 2 LNG in jeopardy.
Friday, August 7, 2020
Baker Hughes US Land Weekly Rig Count - August 7 2020
After 1 week of stabilized rig count, the US Land rig count returned to a decline, losing 4 rigs week on week. The Baker Hughes Rig Count for US Land showed 235 active rigs. The Permian lost 2 rigs, the Eagle Ford lost 1 rig and Mississippi drop it's only rig.
We should expect the rig count to bump along the bottom for the next several weeks. As quarterly results continue to be released, we should have a much better idea about activity for the remainder of 2020. The one metric I will be watching closely is the amount of CapEx spent in the first half of 2020 and the amount remaining for the second half of 2020.
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| Figure 1: Baker Hughes US Land Weekly Rig Count - August 7 2020 (Source: Baker Hughes) |
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| Table 1: Baker Hughes Weekly Rig Count - August 7 2020 (Source: Baker Hughes) |
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| Table 2: Baker Hughes US Land Weekly Rig Count - August 7 2020 (Source: Baker Hughes) |
Thursday, August 6, 2020
Mike Shellman - The Responsibility of Influence
I do not pretest to be anybody other than a dumbass roughneck who has drilled and completed LOTS of wells with his own money. I don't have a college degree nor initials to put after my name, but after 45 years I do understand well economics and how to manage oil and gas production.
My counterpart's credentials are those of great influence across America, as a keynote speaker, a frequent podcast participant, a guest on cable net news networks and someone who when speaks, people listen...including the President of the United States, I'm sure. I respect this gentleman's contributions to my industry and the fact that he made an absolute killing when he sold his data sell company at the height of the shale oil phenomena.
So, how many HZ shale oil wells actually pay out in a year and get to 140% ROI at $40 WTI in America?
https://www.oilystuffblog.com/single-post/2020/08/01/The-Responsiblity-of-Influence
My counterpart's credentials are those of great influence across America, as a keynote speaker, a frequent podcast participant, a guest on cable net news networks and someone who when speaks, people listen...including the President of the United States, I'm sure. I respect this gentleman's contributions to my industry and the fact that he made an absolute killing when he sold his data sell company at the height of the shale oil phenomena.
So, how many HZ shale oil wells actually pay out in a year and get to 140% ROI at $40 WTI in America?
https://www.oilystuffblog.com/single-post/2020/08/01/The-Responsiblity-of-Influence
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