Most North America Shale Plays Still Profitable at $65/Barrel
At $65/barrel, most North America shale plays are still profitable with the current rig and well economics on an individual or series basis, according to an industry expert with A.T. Kearney.
The firm doesn’t see any major pullback in activity at this price level, except for companies with stronger balance sheets possibly deferring or slowing programs to take advantage of consolidation opportunities with other players that may have higher debt levels and are looking for merger activity, said Vance Scott, partner and leader of the Americas energy practice at global management and strategy consulting firm A.T. Kearney.
Deeper, more expensive shale plays that have more exotic completion requirements are always going to be more sensitive to commodity pricing, said Scott. Bakken wells tend to be deeper than wells in the Eagle Ford in South Texas; wells in the liquids-portion of the Marcellus also tend to be shallower.
At $100/barrel, all of the North America liquids plays such as the Bakken, Eagle Ford, Niobrara, Marcellus, Utica and the Duvernay are very, very attractive. When the price falls to $80/barrel, some folks say that it starts to hurt economics.
“Fundamentally you have to think about where companies draw cost of capital and the risk they’re willing to take at certain price points,” said Scott.
According to A.T. Kearney’s bottoms-up analysis of well economics in shale basins, on average, the type of decision-making to scale back activity in shale plays doesn’t occur until $62/barrel; even then, hard pullbacks don’t occur to under $60/barrel. In the $50-$55 range, A.T. Kearney sees decisions made on marginal or fringe wells, said Scott. Once prices dip below $50, stronger operators will start to scale back activity.
Scott noted that there are some companies who have likely overleveraged themselves in shale plays, and players with stronger balance sheets currently are high-grading where merger and acquisition opportunities exist.
123456
View Full Article
WHAT DO YOU THINK?
Generated by readers, the comments included herein do not reflect the views and opinions of Rigzone. All comments are subject to editorial review. Off-topic, inappropriate or insulting comments will be removed.
- ExxonMobil Racks Up Discoveries in Guyana Block Eyed by Chevron
- Oil Market Sentiment Has Improved Significantly
- EU, US Eye Collaboration on Nuclear Materials
- USA Driving Activity to Increase to All-Time Highs
- TC Energy to Sell Prince Rupert Gas Pipeline Project to First Nation
- EU Electricity Export to Ukraine Up 94 Percent in Two Years
- China Coal Output Falls for First Time since Government Ordered More
- BP Pulse Buys One of Europe's Largest Truck Stops
- UK CCUS Plans Outdated: Think Tank
- North America Enters Rig Loss Streak
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- EIA Drops 2024 Henry Hub Gas Price Forecast
- EIA and Standard Chartered Offer Up Latest Oil Price Predictions
- Red Sea Region Sees Another Watershed Incident
- Chevron Oil Project in Kazakhstan to Cost $48.5B
- OPEC Voices Encouragement after IEA Affirms Support for Oil Security
- Biden Govt Bares Strategy for Freight Charging, Hydrogen Fueling Infra
- Ukraine Hits Third Russian Refinery In Escalating Drone Strikes
- Rystad Looks at the Buzz Around White Hydrogen
- VIDEO: Missile Attack Kills Crew Transiting Gulf of Aden
- Norway Regulator Blasts Proposal to Halt New Oil and Gas Permits
- Chinese Mega Company Makes Major Oilfield Discovery
- What Is the Biggest Risk to Offshore Oil and Gas Personnel in 2024?
- Is Peak Oil Demand Close?
- Vessel Sinks in Red Sea After Missile Strike
- JP Morgan, Standard Chartered Reveal Latest Oil Price Forecasts
- Exxon Rights in Stabroek Do Not Apply to Hess Merger with Chevron: Hess
- Rystad Forecasts Net Production of Top Permian Producers in 2024
- Analysts Reveal Latest Oil Price Outlook Following OPEC+ Cut Extension