More Peak Shale: World’s Largest Miner Is Selling Its Shale Assets
Over the past several months, we have wondered if despite new all time high shale production, whether the US shale sector in the has peaked. Some of our recent thoughts can be found in the following articles:
- Why Some Hedge Funds Believe The Shale Boom Is Coming To An End (Again)
- Shale Efficiency Has Peaked For Now As Rig Count Surges For 22nd Straight Week
- Is The Second Shale Boom Grinding To A Halt?
- Has Permian Productivity Peaked?
- Peak Shale: Anadarko Just Became The First US Oil Producer To Slash CapEx
The “peak shale” narrative got a boost in late July when one of the world’s most bearish hedge funds, Horseman Global, announced it was aggressively shorting shale companies on the thesis that funding is about to “run dry”, resulting in a sharp drop in production and with the lack of capex, would lead to another round of industry defaults (while sending the price of oil higher).
More evidence was revealed in the latest Baker Hughes data, which showed that both active Horizontal and Permian oil rigs had finally peaked and were now declining, while the number of oil rigs funded by Public junk bond deals had plateaued, suggesting little interest in future funding:
Fast forward to today when overnight, we got the clearest indication yet that the US shale sector may have indeed have peaked, when BHP Billiton – the world’s largest miner – said it was in talks with potential buyers of its U.S. shale assets, purchased during a frenzied $20 billion buying spree in 2011, just as the price of oil peaked.
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