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The Oil God Dammed Stupid Money

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The Oil God
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The 'God' Of Oil Trading Warns America's Shale Boom Will Fizzle And That Oil Prices Will Hit $US150

Oil Trader Goes Long On Oil - Short On Shale (Tight) Oil

God Of Oil Trading Warns Of Boom Fizzle

Long Hall & Oil Fall

the sellers of these long-dated contracts
(many of which are those of shale companies that have financed the boom with mounds of debt)
 are offering them at a discount to existing prices.
Shorting The Future To Cover The Present

Who's to know if your soul will fade at all  The one you sold to fool the world  You lost your self-esteem along the way
Fake It

"The U.S. Energy Information Administration projects that nearly four of every five new barrels of oil produced in
North Dakota's Bakken Shale 
and South Texas' Eagle Ford Shale simply replace output lost to the high depletion rates."

Shale's Junk Debt

Andrew & Christine Hall

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Bakken Producers Are Dammed If They Do & Dammed If  They Dont

Oil Glut Silences Call For Exporting

The Shale Sugar Lick

EIA Corroborates

EIA - Debt - Cash Flow

“North American shale is currently the marginal source of supply in the world oil market, and most producers claim they can break even at $70 or even $60 per barrel.”
Virtually all of the growth—92%, on an energy-adjusted basis—has come from unconventionals, specifically, Canadian oil sands and US shale (tight) oil.
  Indeed, 70% of the net growth of the global oil supply from 2005 through 2013 came from US shales
alone.  Shales are not the icing on the cake; they are the cake itself.

Having Your Cake And Eating It To - Or It Eating You

Since 2005 when the clean water act was changed by Cheney - Bush & Fracking became the new rage
January 2005 - North Dakota had 3154 producing wells at 90,219 bbls oil a day = 29.0 bbls oil per day per well
  Oct. 2016 - North Dakota has 13148 wells at 1,043,207 bbls oil a day
13148 - 3154 = 9994 wells divided into (1,043,207 - 90219 = 952,988) = 95.3 bbls oil a day per well
  9994 wells at 8 million a well is $79,900,000,000.00 - 79 billion, 900 million dollars.

It seems that most oil companies are spending more than their revenues by increasing their debts.
 Countries can live for a long time with huge debt increase, not companies.
They count on the stock market by delivering optimistic reports and keep drilling to avoid the production to decline.
With shale oil or shale play, in contrary with conventional where wells are dry or producing, oil can be produced even for a while if not economical.
Such behavior explains why most peak forecasts are wrong. But the main question is about the slope of the decline after the peak.
EIA forecast a LTO (light tight oil = shale oil) peak in 2017 it is not too far after my forecast, the big difference is the slow EIA LTO decline.
Bakken Oil Peak

Top 10 Operators in Each North Dakota County June 2014

Bakken June 2014 -
Watcher’s question the other day of which operators dominate Mountrail County piqued my interest in asking the same question for other counties.
So I charted the results for the four big counties along with Divide and Stark, the two most important peripheral counties.
For space I have included only the top 10 operators of each county in the chart below. This is an exclusive to this blog, I hope you like it.

The county abbreviations are the same as what the NDIC uses (DUN=Dunn, MCK=McKenzie, MTL=Mountrail, WIL=Williams, DIV=Divide, STK=Stark).
The well count includes active wells, confidential wells that have been spud, and wells on ‘DRL’ status (drilled but not yet completed).
If desired I can chart other counties or show more than just the top 10 for any of these counties.

To Check Their Current Financials Use Yahoo Finance - Quote Lookup - Enter Stock Ticker Symbol - Click Key Statistics
Yahoo Finance

Stupid Money
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Saudi Arabia's Oil-Price War Is With Stupid Money
Some rationalize the negative free cash flow as an expansion of capital base that will result in future profits.
The following table shows that over the past 4 years, tight oil negative cash flow increased and has reached a cumulative of
more than -$21 billion for the representative companies. Almost half of that negative cash flow took place in 2014.

How many times do you hear it?  It goes on all day long  Everyone knows everything
And no one's ever wrong  Until later...
Show Me Dont Tell Me

Half of the 41 fracking companies operating in the U.S. will be dead or sold by year-end
Because of slashed spending by oil companies, an executive with Weatherford International Plc said.
Dead Or Sold

SLB - CEO Offers Panacea For Oil Industry Ills
Schlumberger Panacea

Schlumberger 20,000 Laid Off
Schlumberger Layoffs
Halliburton 9,000 Laid Off
Halliburton Layoffs
Baker Hughes 10,500 Laid Off
Baker Hughes Layoffs

Slide from Schlumberger CEO Paal Kibsgaard’s at the Scotia Howard Weil 2015 Energy Conference.
Schlumberger Presenation - March 2015

Arthur Berman: Why Today's Shale Era Is The Retirement Party For Oil Production
At 11:45 - "Recent Study For A Client In The Core - The Sweet Spot Of The Bakken - You Need About $83.00 BOE To Break Even"
Febuary 7th - 2015

The first step to price recovery is the severing of capital supply to companies that could not fund their operations
from cash flow when oil prices were more than $90 per barrel. If this does not happen, we could be in for a long period of low prices.

The Oil Price Collapse Is Because Of Expensive Tight Oil

These companies out-spent cash flow by 25%, spending $1.25 for every $1.00 earned from operations. Only 3 companies
–OXY, EOG and Marathon– had positive free cash flow. Total debt increased from $83.4 to $90.3 billion from 2013 to 2014.
Debt must be continually re-financed on increasingly  poorer terms because it can never be repaid from cash flow
 by many of these companies. The U.S. E&P business has, in effect, become financialized: investment in this class
 of company has become the sub-prime derivative of the post-Financial Crisis period. There is no performance requirement by
investors other than the implicit need to maintain net asset values above debt covenant trigger thresholds.

These terrible financial results reflect a year when average WTI oil prices were more than $93 per barrel.
First quarter 2015 earnings will make these results look good.

Table 1. Full-year 2014 earnings data for representative tight oil exploration and production companies.
Dollar amounts in millions of U.S. dollars. FCF=free cash flow; CF=cash flow; CE=capital expenditures.
Source: 2014 10-K filings, Google Finance and Labyrinth Consulting Services, Inc.
A Great thanks to Arthur Berman & His Experience & Insight Into The Hydrocarbon Industry

The Scheme To Export Americas Security

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A Great Thank You To Rune Likvern At  -  For The Amazing Data He Compiles

Question Is

Bakken Decline - Production Chart

We're setting sail To the place on the map from which no one has ever returned
Drawn by the promise of the joker and the fool By the light of the crosses that burn

Oh, save me. Save me from tomorrow I don't want to sail with this ship of fools

Ship Of Fools

The Photo Says It All

Bakken Maturity Map

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