RE:RE:RE:RE:Rig counts continue to drop, Shale growth stallsPabloLafortune wrote: I have a somewhat different view than you do. Material shortages are over I believe. There is still a lot of productivity increases potential in shale. Chevron CEO said that. First it was longer laterals now there is a lot of talk, action and results on recompleting old wells with new techniques to recover more oil and gas. The other major factor is natural gas. A lot of associated gas coming out of the Permian (already exceeds Haynesville dry gas shale) and the US oil and gas industry is having tremendous success with LNG and that will only grow - hopefully the tip of the iceberg. Right now HH is low but JKM and other overseas LNG prices are not and eventually all producers will clamor /take action to get a better price mix than HH on their NG. Which means IMO that the contribution of associated gas to a shale producers' revenue mix will grow which will lower shale's oil break even cost. These turn of events advantages them over producers who strictly produce oil, IMO esp oil sands that uses natural gas as an input (though its not that significant of a cost). Also look at that little company called Crew. Not that much production but lots of potential (not enough $$ to develop all their landbase). Even though natgas prices are still very low, their stock price has been holding its own lately. Why? Because investors realize that's where the puck is going to be.
The flaw in Suncor's and Cenovus' business model is too much oil, not enough natural gas. Look at all the Global majors, they are all heavily involved in natural gas production (and trading...). YMMV.
the theoretical flaw of SU and CVE can be easily mitigated by signing long gas contract and even buying out gas producers to fill their need. WHen you say
" A lot of associated gas coming out of the Permian", that should keep the lid on north american NG price from going too high