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$20 Oil?
“Rigzone” reports that almost a year ago, Ed Morse, the head of commodities research at Citigroup, said that oil could drop as low as $20. No one really listened, but my how things have changed. With oil recently dropping lower than it has been since 2003, everyone in the industry is familiar with the devastation… Read More
Goldman’s Forecast
“World Oil” reports that investment banker, Goldman Sachs predicts a bull market for oil before year-end. Previously, the bank had been exceptionally bearish, predicting prices as low as $20 per barrel as a possibility in 2016. Goldman says that the $20 scenario is still possible, but only if oil storage capacity runs out. Since this… Read More
DUCs to the Rescue
Approximately one-third of the cost of an oil well is land acquisition and drilling costs. Drilling contracts typically are long term and involve stiff cancellation penalties. Contracts for completion services are of shorter duration and penalties less severe. Consequently, when oil prices started collapsing, shale operators used scarce capital to keep drilling but left the… Read More
Dollar Bedevils Oil Price
The world-wide oil glut has been blamed for the collapse in oil prices and justifiably so. “World Oil” points out that Goldman Sachs has recently forecast $20 oil based on oversupply and the risk of running out of domestic storage capacity. According to the U. S. Energy Information Administration the major domestic terminal at Cushing,… Read More
Stripper Survival
Historically “stripper” wells have been defined as those which produce less than 10 barrels per day. The traditional wisdom is that the small operators who produce these wells are the most vulnerable to downturns in the oil market. However, a recent article in “Rigzone” points out that despite low production volumes, limited access to capital,… Read More
