The Table's Turned | Russell T. Rudy Energy LLC
Reading a recent article in “World Oil” I could not help being reminded of the song by the Rolling Stones, “It’s All over Now”. The article recounts the harsh words Saudi Energy Minister, Ali Naimi, had for the U. S. shale industry just a year ago, “Lower costs, borrow cash or liquidate.”
Admittedly, since the beginning of 2015 more than 100 domestic shale operators have gone bankrupt. However, the survivors are fitter, leaner and more resilient than ever and have proven they can thrive in a world of $50 oil.
While OPEC and its partners are cutting back on production to restore prices, U. S. shale operators have increased rig counts 91% since April of last year to 602. While production cutbacks have created a void in world markets, domestic producers are rushing to fill it, and profitably. I can’t help but remember the line from the Rolling Stones “The table’s turned and now it’s your turn to cry.”
Domestic shale production has become so attractive that it is no longer the sole province of the independents. ExxonMobil and other international majors are rushing to cash in. While offshore and international plays can take 15 years to bear results, domestic shale projects can deliver cash flow within 3. Donald Trump’s pro-energy policies have only served to accelerate the trend.
While the Delaware Basin of the Permian (West Texas and Southeast New Mexico) is the epicenter of the domestic oil production revival, it is not the only area offering profitable opportunities in the $50 world. The SCOOP and STACK plays in Oklahoma are also seeing a sharp upturn in drilling activity. As Regina Mayor with KPMG in Houston observes, “Today, almost every single shale basin is economic in the $35-$50/bbl range.”
Meanwhile, Ali Naimi was replaced as Saudi Oil Minister in May. Truly, “The table’s turned and now it’s your turn to cry”.
To read the article in its entirety, please go to http://www.worldoil.com/news/2017/3/3/leaner-fitter-faster-us-shale-challenges-opec-again .
Russell T. Rudy Energy, LLC buys oil, gas and mineral interests nationwide. Please call (800-880-0940), or write (info@rudyenergy.com ) to let us know if you agree, disagree or would just like to comment on this, or any of our posts.
