Now, another story with more WOW! factor on the American landscape of shale oil. Should the Saudis and Russians give up? I really, really think they should consider something besides what is almost like a brute force DNS attack. Some of the American producers have break even costs of $22.52? $23.40? This is almost hard to imagine! And it's a LOT of oil.
Yes, American Capitalists can keep this game up for a LOT longer than anyone ever thought possible.
According to a report by the Bloomberg Intelligence analysts William Foiles and Andrew Cosgrove, Saudi Arabia may have its work cut out for it as it will be far harder to kill many U.S. E&Ps than analysts originally thought.It's not pretty out there at all, but this story is nothing short of astonishing.
The reason: a break-even model for the Permian Basin and Eagle Ford shows that oil production across five plays in Texas and New Mexico may remain profitable even when WTI prices fall below $30 a barrel, according to a 55-variable Bloomberg Intelligence model for horizontal oil wells.
The Eagle Ford's DeWitt County has the lowest break-even, at $22.52, followed by Reeves County wells targeting the Wolfcamp Formation, at $23.40. The diversity of breakevens highlights the hazard posed by looking for a single number, even within a play.
These counties together produced about 551,000 barrels of liquids a day in October. Taking into account drilled but uncompleted wells boosts the number of potential survivors to 19. The wide range of break-evens undermines efforts to come up with a single threshold for U.S. shale producers.
But I called it. I knew from past history, unless they tilt the board, whole countries with more money than anyone can imagine can not compete against Capitalists.