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December 2, 2016 | US & Canada Post Promising GDP Numbers

The monthly publication for financial institutions was started in January 1982. This competently covers the stock market, the yield curve, credit spreads as well as metal and energy prices. Bob, as chief financial strategist, writes the weekly overview – Pivotal Events

  Crude oil production cut not as grand as it sounds

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Archives December 2nd, 2016

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One Comment

  • Alfred Winkler says:

    Here goes Bob making the mistake most people do ! Regarding the Bakken it true cost have come down and the tech has improved what is happening is that their is high grading going on too . They are drilling the sweet spots If it was a gold mine you be mining the highest grade vein and you cost pre ounce come down but you can not apply to the whole mine . This what Bob doing with Bakken field . It is a far more complex picture what he said is true cost and new tech. have improve economic but not to a point that they are self funding they are tapping the market for the money . Here the true their was nearly two hundred rigs working the field in boom time in N, Dakota last year this time 63 today 39 rigs. On the Canadian side the shallow end of the field we CPG tap the market to drill and they have drop their cost with new tech. .but are not self funding . It only Permian Basin that numbers work but again this is a very thick multiply horizon basin with sweet spots and formation but even here EnCana tap the market for a billion to expand drilling in Permian Basin for several hundred of millions. For the true companies are out spending interval cash flow to do this drilling in hopes of higher price in the future. It is to early to tell if OPEC increases will hold and the high prices increase drilling outside Permian Basin . Bakken need 50 to 55 dollar oil to break even these number are shifting and may drop but it only the sweet spot that are paying now. You do not know the full economic to several years after completion and type curve are known but early work does show much better type curves but the full cycle economy rather than half is an other story. It is much more complex than Wall and Bay Street think. When Bob talk about 15 dollar barrel this part number ( lifting cost ) not taking true cost in account. If true why is the rig count only 39 the rig count tells you the true of the economics not newspapers reports or media. Permian Basin full cycle look to be just below 30 dollars on the best plays and up on the rest . Their a huge different between oil in place and economical recoverable oil only a tiny fraction of this number ) so take with a grain of salt. When we look at total US rotary rig counts of less than 600 with 235 working the Permian Basin up 7 this not going to fill the gap in declining world production .I am sure the Saudis and Russian are shacking in their boots : NOT ! To put in context their are 200 rigs working in Canada .
    All I can say these are shale well while flush production is impressive 1000s od barrels and very good economics that in 5 years they are only producing 10 % of that volume. This stable production rates or the tails of the curve that add up and are going to replace Saudis and Russian any time soon.

    The EIA estimated that the Permian Basin’s crude oil production had amounted to ~1.9 MMbpd (million barrels per day) in September 2016, a marginal rise from August 2016’s production and 2% higher than production in September 2015. The Permian Basin’s crude oil production has risen on six occasions in the past 12 months. Permian Basin shale oil production rose from 854,000 bpd (barrels per day) in September 2008 to ~1.9 MMbpd in September 2016. That’s a rise of 130% in eight years.

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