Shale Drilling Slowdown: A Mineral Owner's Perspective

After 10 years of seemingly successful shale drilling, why is the oil and gas industry slowing down? Why are stocks performing poorly? Why has capital dried up? The answer is complex. There are multiple factors at play. We will look at overproduction, parent-child well spacing issues, forecast errors, reporting reserves vs "drilling locations", and a pump-and-dump mentality that has left investors burned. 1. Overproduction Hundreds of thousands of long fracked horizontal wells have resulted in an overproduction of oil and gas, causing prices to decline. 2. Parent-Child Well Spacing Problems Drilling wells too close to each other reduces the amount of oil and gas produced by the parent and all child wells. Production forecasts were based on tight well spacing. 3. Reserves vs Drilling Locations Oil and gas company valuations used to be based on proven and producing reserves. Now they are based on potential drilling locations, which include "probable" and "possible" reserves. 4. Growth vs Profits Companies focused on growth rather than profits, which lead to drilling uneconomic wells and taking on large amounts of debt. 5. Pump-and-Dump (or Find-and-Flip) Rather than playing long-game, companies have a defined exit strategy, leading to a pump-and-dump mentality. 6. Lack of Due Diligence Petroleum and reservoir engineers used to make drilling decisions, and lenders only financed what their experts deemed as economic projects. 7. Capital Drying Up Lenders, particularly those in the North East, have been burned by investing in oil and gas without conducting proper due diligence and because of forecast errors. 8. What Now? The oil and gas industry is having a "Come to Jesus" moment and learning that they need to play the long game, only drill in economically viable areas, secure funding from investors who know the industry, and put money back into the ground. The parent-child well spacing image in the video is from an excellent WSJ article, "Shale Companies, Adding Ever More Wells, Threaten Future of U.S. Oil Boom" at https://www.wsj.com/articles/shale-companies-adding-ever-more-wells-threaten-future-of-u-s-oil-boom-11551655588. Learn more about the oil and gas industry slowdown at https://bluemesaminerals.com/oil-gas-slowdown/ Some mineral owners are interested in selling their minerals, while revenue is still high. If you are interested in selling your minerals, request an offer at: Https://bluemesaminerals.com/

Видео Shale Drilling Slowdown: A Mineral Owner's Perspective автора Грибная Фантазия