Great analysis - I look forward to the next videos. I can confirm your analysis via an engineering look-back study I did in 2018 involving over 100 wells drilled by a large shale player in the Permian. Using horizontal well performance from 2012 to 2018 and actual wellhead pricing and costs (opex and drilling capital), matched with forecasted production and futures strip pricing at the time, it took 7 years to break even on the hundreds of millions of drilling capital spent. I noticed several things: Wall Street poured money into the industry based on way-optimistic shale typecurves, drilling costs increased dramatically during this time, and 2014 was the worst year for ROI due to peak drilling costs combined with the crash in oil price. I have gained many insights into the unconventionals, which I will save for future posts, but wanted to tell you that my ground-level engineering analysis confirms your macro analysis.
HI Arjun,
Happy New Year. Are there any links for this year's Arjun & Jeff show video or sound recording?
By the way, a very good interview with Smarter Market! (https://www.podbean.com/ew/pb-ef483-1357a31)
Thank you Tonyforever. There are numerous requests for Jeff and my remarks...I don't believe GS recorded, but if they did, will pass along.
Great analysis - I look forward to the next videos. I can confirm your analysis via an engineering look-back study I did in 2018 involving over 100 wells drilled by a large shale player in the Permian. Using horizontal well performance from 2012 to 2018 and actual wellhead pricing and costs (opex and drilling capital), matched with forecasted production and futures strip pricing at the time, it took 7 years to break even on the hundreds of millions of drilling capital spent. I noticed several things: Wall Street poured money into the industry based on way-optimistic shale typecurves, drilling costs increased dramatically during this time, and 2014 was the worst year for ROI due to peak drilling costs combined with the crash in oil price. I have gained many insights into the unconventionals, which I will save for future posts, but wanted to tell you that my ground-level engineering analysis confirms your macro analysis.
Thank you Dan and thanks in particular for sharing your experience and perspective.