US shale oil drillers move rigs to more productive areas

32 Comments on "US shale oil drillers move rigs to more productive areas"

rockman on Mon, 4th May 2015 6:33 am 



“High grading, with producers eliminating the least efficient rigs first and moving rigs to more productive areas, could help stabilize production.” Let me explain what I hope is obvious to everyone here: if I have 30 prospects to drill I’ll move a rig to drill my best prospect first. After that I’ll move it to my second best prospect. Eventually I’ll move it to the 30th prospect…the one with the lowest potential. If I plan to only drill 15 prospects do I drill the same better wells I would have drilled or do I drill some of the less attractive prospects? Do I need to answer that? LOL.

So I still drill the better prospects I would have drilled in the first case. Thus my AVERAGE well might have a better rate. But guess what buckaroos: I’m drilling 15 fewer wells so my new production rate will be LESS THEN IF I DRILLED ALL 30 WELLS.

Production WILL NOT BECOME STABLE. It will NOT INCREASE as much as it would had I drilled all 30 wells. And the 15 wells I do drill will have the same high decline rate typical of the shale plays.

One need not understand anything about the tech aspects of drilling and producing. Just some basic logic and a touch of common sense would be sufficient to know production will not be anywhere close to what it would have been without the rig count collapsing.

shortonoil on Mon, 4th May 2015 7:22 am 



“Just some basic logic and a touch of common sense would be sufficient to know production will not be anywhere close to what it would have been without the rig count collapsing.”

Sure — those drillers left all those really good sweat spots so that when times got really hard, and prices got really low they could go back, and then drill them. Rock you are commenting on commentary from the financial industry, where the world runs on pixie dust, and everyone wears extra large size rose colored glasses. Rig counts go down, production will go down. Of course GS doesn’t want anyone to know that until they have unloaded all their exposure to shale! Then they will short it, and telling everyone all these outfits are going broke.

Northwest Resident on Mon, 4th May 2015 9:40 am 



Clearly, the shale producers have been saving all their best and “sweetest” drilling prospects for last — the ones where they’ll really make some money — just waiting for the price of oil to crash so they can do a quick shift over to the “more productive areas of the Permian and Eagle Ford basins”. These oil guys have been at it for a long time, they’re smart and they’re always planning ahead. And that’s exactly why they wait until oil prices are at all time lows to drill their most productive spots. Surely everyone can see the brilliant logic in that?

buddavis on Mon, 4th May 2015 10:11 am 



This article gives E&P companies way too much credit for their ability to time the market. Just not how it works

JuanP on Mon, 4th May 2015 10:47 am 



Rock, Short, and NWR took the words out of my mouth. This article is extremely moronic. Of course the wells with better prospects will always get drilled first. It saddens me to think that there are people out there that fall for this kind of crap. Oh, well!

Northwest Resident on Mon, 4th May 2015 10:57 am 



This is the TOP “news” story on Yahoo main page right now, by the way. “They” (TPTB and their propaganda machine) must really need to get the word out that the best is yet to come for shale oil production. It is all part of the misinformation and big fat lies propagated to the masses in order to keep “the fish” fully invested. Because, when those frightened, nervous fish begin to swim away, BAU falls apart like a demolished building.

ht tp://finance.yahoo.com/news/u-shale-oil-drillers-move-061732051.html

rockman on Mon, 4th May 2015 11:57 am 



NR – Their big problem remains the same: no amount of spin will change the numbers that will eventually show up in the next 6 to 12 months. Of course, they’ll come up with some replacement spin then.

Northwest Resident on Mon, 4th May 2015 12:25 pm 



Rockman — So true. And like I’ve said before, I suspect the stock market will be soaring and the propaganda will still be pumping full throttle as the vehicles run out of gas stranded on the side of the road, as JIT delivery stops working and as the starving terrified masses take to the streets.

shortonoil on Mon, 4th May 2015 1:51 pm 



The market is beginning to see that low oil prices aren’t what every economist, and his pet monkey thought was going to be a bonanza for the economy:

http://www.zerohedge.com/news/2015-05-04/us-shale-sector-crashes-after-david-einhorn-repeats-what-everyone-knows-already

What they still don’t seem to grasp is that there is an affordability cap now in control of the price. Until they begin to take that aspect into consideration, we’ll be getting rosy estimates of just how bad things are going to get. Oil will be capped at $77 in 2015, and $66 in 2016. Factoring in those two data points, we have a HY catastrophe in the making!

http://www.thehillsgroup.org

Nony on Mon, 4th May 2015 4:59 pm 



Agreed with Rock. They will just cross off the projects that are now not earning needed rate of return. The average production per well will improve, but the total will drop with less wells.

There is some “shifting” going on wrt Marcellus/Haynesville but that is a different phenomenon (market access). PA is running out of take-away and gas prices in region are a dollar cheaper than HH.

steve on Mon, 4th May 2015 5:39 pm 



Uh Oh! Mainstream is starting to get it! Here is Einhorn’s talk on how fracking is not working!!

http://www.cnbc.com/id/102646105

steve on Mon, 4th May 2015 5:46 pm 



It is interesting to note the comments below the story…deny, deny, deny..

SilentRunning on Mon, 4th May 2015 11:43 pm 



The shale oil/gas companies showed enormous restraint by starting out their operations in the less productive areas, and saving the more productive regions for themselves and their competitors!

Anybody who believes that story – I have the deed to the Brooklyn Bridge, and will sell it to you for an amazingly low price!

Northwest Resident on Tue, 5th May 2015 12:35 pm 



Shale Stock Shambles — The truth about shale profitability (or lack thereof) may finally be setting in, cutting through all the many layers of hype and lies and spin that so many investors have been Teflon-coated in.

http://www.zerohedge.com/news/2015-05-05/shale-stock-shambles

nony on Tue, 5th May 2015 2:23 pm 



Noooooo.

Don’t mess up my clr/eog wet dream.

shortonoil on Tue, 5th May 2015 2:29 pm 



The truth about shale profitability (or lack thereof) may finally be setting in,

As we have been saying for a long time, liquid hydrocarbon production that is not energy positive can not be economically positive. Production that is not energy positive is limited to use as feedstock material, and feedstock material has a limited market that is dependent on the health of the overall economy. To demonstrate that shale production is not energy positive requires no more than a few simple equations that are well known to any junior engineering student. This type of analysis is not rocket science, and does not require an Albert Einstein to implement it.

Regardless of its obvious deficiencies, shale has been sold as the American Energy Independence Wonder, the New Saudi-America, and the Shale Revolution Miracle. It has been sold to the tune of over $1 trillion in investor financing. Zero Hedge recently had an article that stated that the average investor in China has no more than a secondary school education. America’s financial machine appears to be doing no better. These are the people that the public is entrusting to manage the world’s financial health. If we find the world on the brink of an economic apocalypse, it should certainly be no surprise as to why!

http://www.thehillsgroup.org

Apneaman on Tue, 5th May 2015 2:49 pm 



Chicago and London school’s of economics. Modernity’s seminary schools. Churning out highly educated priests mumbling the new Latin-econ 101 speak.

marmico on Tue, 5th May 2015 3:57 pm 



To demonstrate that shale production is not energy positive requires no more than a few simple equations that are well known to any junior engineering student

Please tell all.

Start your EROI buffoonery here. The latest data point in 2013 is that the oil industry used 3% of distillate fuel oil.

shortonoil on Tue, 5th May 2015 4:21 pm 



Start your EROI buffoonery here.

All that proves is that you are as qualified as the average Chinese investor.

marmico on Tue, 5th May 2015 4:32 pm 



You are an effing buffoon as amply demonstrated by your responses in The Tverberg Nutter World.

Is it 2.47% or 54%?

Any junior engineer wouldn’t make an order of magnitude error.

Apneaman on Tue, 5th May 2015 4:47 pm 



marmico-nony, I have worked with many engineers who don’t know shit and like you think they know it all. Happens when all you know is on paper or CAD these days or magic graphs in yours. Your just another one of the doe eyed faithful – they got you when you were young and you will die a true believer of econ 101 and it’s no limits doctrine. Even when it’s over. Like the Jews returning home after Babylon the solution to failure is to double down on the faith.

marmico on Tue, 5th May 2015 5:14 pm 



The quart shy of oil is a buffoon. He fits exactly into your categorizations of “don’t know shit” and “doe eyed faithful”.

While you and Davy “computerized word salad prattle” Doomer are in your caves smoking some goat meat on charcoal, you won’t have to worry about communications.

Just pick up all the crayons lying around that were produced by the oil age and you can draw the hieroglyphic of a pig on the cave wall and Davy can color the zero dead head lipstick on it.

Nutters. 🙂

Davy on Tue, 5th May 2015 5:41 pm 



Marmi, exciting minds eye picture you projected in my mind. You really are good with words and pictures.

Marmi, better a nutter than a numb nut. This world is now in a “right is wrong wrong is right” paradox of a pole shift of the reality of descent from the failed dogma of fruit cakes like you who preach growth without question or concern.

You truly are a low life and part of an evil group of mad men seeking advancement at the expense of so many. You are a devil with a clean shaven face and manicured finger nails. You will hate yourself someday.

marmico on Tue, 5th May 2015 6:04 pm 



better a nutter than a numb nut

True for population growth. Nutters prattle, numb nuts prefer Christmas cakes all night long. Ooopsie.

For the umpteenth time, since 1980 the U.S. has grown even though oil consumption has been flat.

You will hate yourself someday

Highly unlikely based on reading and participating in nutter blogs.

So when are you going to bring the crayons to the quart shy of oil buffoon cave to share the nutter goat meat!

Lip sticking the Ape’s communication pig, I’d say Ruby Red for 2.47%, Bruiser Blue for 54%.

Davy on Tue, 5th May 2015 6:44 pm 



Prattle is in Marmi, it is doom speak that sounds prattle but actually follows closely reality.

Numb nuts will be remembering fondly Christmas cakes back in the days of BAU. Numb nuts will be looking in disbelief as the crowds gather at their gated communities chanting bloody slogans. Numb nuts will shoot their guns off to try to scare the crowds away but instead just piss them off. Numb nuts get lynched and tugged around town by cables behind pick-em-up trucks. How’s that mind eye Marmi?

Apneaman on Tue, 5th May 2015 7:00 pm 



“U.S. has grown” Sure as long as you count the US as maybe 10 percent of the population and 40% finalization as real. Food stamps, pathetic retirement savings, Hardly any young families buying homes, 6-8 year mortgage just to but a fucking car, student loan debt over a trillion, reverse mortgages, retarded household debt and all of it getting worse. Take a fucking look outside your privileged tunnel vision world at your country-it’s staggering and leaning on the ropes.

Apneaman on Tue, 5th May 2015 7:03 pm 



When the mob can’t get a hold of the masters they go for their servants and cheerleaders.

apneaman on Wed, 6th May 2015 2:00 am 



In ‘Misbehaving,’ an Economics Professor Isn’t Afraid to Attack His Own

“Professor Thaler’s narrative ultimately demonstrates that by trying to set itself as somehow above other social sciences, the “rationalist” school of economics actually ended up contributing far less than it could have. The group’s intellectual denial led to not just sloppy social science, but sloppy philosophy.

After all, the father of modern economics, Adam Smith, was actually a professor of moral philosophy. Smith’s masterwork, “The Wealth of Nations,” is not fully intelligible without having first reading his earlier “The Theory of Moral Sentiments.” Economists would do well to embrace both their philosophical and social science roots. No amount of number-crunching can replace the need to confront the complexity of human existence.”

http://www.nytimes.com/2015/05/06/business/dealbook/book-review-misbehaving-by-richard-thaler.html

apneaman on Wed, 6th May 2015 2:01 am 



“No amount of number-crunching can replace the need to confront the complexity of human existence.”

shortonoil on Wed, 6th May 2015 7:23 am 



The petroleum industry, on average, is now losing money on every barrel they produce. Oil is the bases of our modern industrial civilization, and yet its cheerleaders, and proponents want us to believe that everything is fine. They are trying to convince us that Santa is going to show up at any moment to pull our fat out of the fire. Whoever it is that orchestrates this mass deception should be aware that they are as vulnerable to what is transpiring as those who are aware of its outcome. If they think that deceiving the world will somehow protect their privileged positions; all that they are accomplishing is completing the definition of fool!

Davy on Wed, 6th May 2015 8:16 am 



Short, I am wondering if the BAUtopian spell of money for nothin in finance combined with technology and resource substitution beliefs in economics has TPTB bamboozled.

This spell is so deep and profound I am wonder aside from a very few they are all solidly in its grip. Those like the military and CIA probably don’t accept how bad it can get systematically. They probably feel a certain segment of society will suffer but their privilege maintained through technology and maintained complexity.

IOW it is only the true blue Doomers who got it. Even the greenies and AltE wonkers are still in the BAUtopian spell. This is as profound a deception that has ever gripped humans.

Northwest Resident on Wed, 6th May 2015 9:36 am 



I don’t know, Davy. The military seems to be making very detailed plans for social breakdown/collapse. The US Government also seems to be fully engaged — NSA electronic surveillance, beefing up police forces with military equipment and training them in urban combat, homeland security department fully ramped up, etc…

I think all the official propaganda and lies are intended to keep the masses bamboozled up until the moment that they either pull the plug and bring on the collapse, or the whole BAU spectacle just crashes on its own, which it would do right now and at any moment if TPTB simply stopped doing those things they do to keep propping it up.

I am certain that we will reach a point in the not too distant future where the grid nodes across the USA will start flickering and going dark, gas lines at service stations will stretch for miles, vehicles of all sorts will be stuck on the side of the road, terrified people will rampage the grocery stores for scraps of whatever is left and there will be nothing more after that. Just total breakdown.

And when that happens, as the grids flicker and go dark, across the land in homes and pubs and thousands of public places, there will be a television set tuned into Fox News, and the last thing that people will see before the television flickers off for good will be a bleach-blond bimbo (“Triple-B” in guy talk lingo) happily talking about how great the economy is, spouting off about job numbers and investment opportunities, and on the ticker tape display at the bottom of the screen the stock prices will be stupendous, the Dow and Nasdaq will be soaring. And then, fade to black.