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TROUBLE AT MIGHTY EXXONMOBIL: Record Number Of Shale Wells While Permian Oil Production Remains Flat
TROUBLE AT MIGHTY EXXONMOBIL: Record Number Of Shale Wells While Permian Oil Production Remains Flat
There’s trouble brewing in the U.S. largest oil company while most investors remain in the dark. ExxonMobil added a record number of wells in the Permian during the first three quarters of 2019, only to see the company’s oil production plateau. What a difference in a year when Exxon bragged that its Q4 2018 Permian oil production had surged 93% from the same period in 2017.
However, an investor reading ExxonMobil’s latest presentation would believe the company’s Permian oil production continues to increase significantly by the announcement that output is up 72% since Q3 2018.
Let me explain how these oil companies “BUFFALO” investors with the numbers.
First, the nice chart above is stated in Koebd, or 1,000 barrels of oil equivalent per day. Exxon’s Permian production shown in that chart includes natural gas. So, unless you do a bit of digging and research, the typical investor will believe that Exxon’s Permian oil output continues to surge higher in 2019.
Second, while Exxon’s Permian production continues to increase in 2019, the majority of the gain is from natural gas. According to Shaleprofile.com, Exxon’s Permian oil production rose slightly since January, but natural gas was the clear winner.
(charts from Shaleprofile.com)
Third, ExxonMobil added 133 wells from Jan-Aug 2018 to increase overall Permian oil production by 84%. However, when ExxonMobil added 149 wells from Jan-Aug 2019, oil production only increased by a mere pittance of 3% during the same period. The reason for the plateauing of Exxon’s Permian shale oil production has to do with the massive decline rate taking place in its 2018 production.
We can see this occur in glorious 3D Technicolor in the chart below:
…click on the above link to read the rest of the article…
Why The Shale Oil “Miracle” Is Becoming A “Debacle”
klublu/Shutterstock
Why The Shale Oil “Miracle” Is Becoming A “Debacle”
Energy is everything.
This is an amazingly important concept. Yet it’s almost universally overlooked.
Sometimes it’s hard to appreciate the magical role energy plays in our daily lives because most of what we experience is a derivative of it. The connection is hidden from direct view. Because of this, most people utterly fail to detect or appreciate the priceless and irreplaceable role of high net-energy fuel sources (such as oil and gas) to our modern lifestyle.
With high net-energy, society enjoys increasing complexity and technological advances. It’s what enables us to pursue massive goals like desalinating billions of gallons of seawater, or going to Mars. But without high net-energy fuel sources, our capabilities quickly regress to those of decades — or even centuries — past.
Which is why understanding where we truly are in the ‘net-energy story’ is so incredibly important. Is the US on the cusp of being “energy independent” from here on out? Is the “shale miracle” ushering in a glorious new ‘boom’ era that will vault America to unprecedented prosperity?
No. The central point of this report is that the US is deluding itself when it comes to energy abundance (generally) and oil (specifically).
Yet that’s not what we hear from the cheerleaders in the industry or in our media. From them, we hear a silver-tongued narrative of coming riches — a narrative that contains some truth, some myth, and a lot of fantasy.
It’s those last two parts — the myths and fantasies — that are going to seriously hurt many investors, as well cause a lot of extremely poor policy and investment decisions.
The bottom line is this: The US shale industry resembles a fraudulent Ponzi scheme much more so than it does any kind of “miracle”.
…click on the above link to read the rest of the article…
