If the round of second-quarter upstream conference calls showed anything, it was that operators have been humdingers in recent months: incredibly competitive, ruggedly hard-working and totally determined to match their operating costs to slipping oil prices, with a bit left over for profit. And they have succeeded beyond their most extravagant forecasts. The cost of producing the once-perceived “high-priced” unconventional oil patch has now fallen, in some cases, to per-barrel breakeven prices pretty much on par with an extra-large delivered pizza with all the works, including tip. According to the North Dakota Oil and Gas Division, some parts of the Bakken Shale in that state have breakeven prices as low as $24/b. And a recent analysis by Moody’s showed that North American independent producers, most of whom have shale operations, can survive at about $42/b — about what oil is right now. Imagine that. All the labor, ingenuity, science and pricey sophisticated hardware that goes into identifying prospects, exploring, drilling, completing wells, and hauling up a barrel of oil originally sited at 8,000 or 10,000 feet below the surface of the earth, is valued at about the same as a much yummier but less vital product made by a guy who throws a little dough on a table, … continue reading
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Source: CTRM Center