RE:RE:RE:RE:RE:RE:Market Order scam....Good morning CountryBoy69! Both the Permian and Eagle Ford are still prolific producers with production expected to increase over the next decade or so and then level off with low decline rates for another few years.
Not to get too nerdy, they have converted geological, geophysical, well/production information into "mathematical objects" which they can then apply linear algebra to. With that, using AI, they can then develop geological models of the Permian and Eagle Ford to figure out how best to drill, frac, complete and produce the fields. It is estimated in the Eagle Ford that only 8% - 10% of the original oil in place (OOIP) has been produced. They reckon that they can increase extraction up to 30% of OOIP.
Exxon is paying premium price for Pioneer because the Permian is a "stacked play" in that there are individual, isolated oil bearing formations stacked on top of each other where, when drilled with a well design that can produce multiple stacked formations at the same time can really boost output per well and thus recover much more OOIP. Chevron is big on the application of this "new math" and now says that their return on capital of 30% in the Permian is the highest of all of their projects on the planet. Exxon sure aren't dummies when it comes to doing the math either.
All of this fancy application of AI and math is allowing them to optimize well design, spacing and location. It requires a huge data set of info from wells already drilled in those areas, which they have acquired. Marathon, for example, appears to be sharing info with bte in some arrangement that I still don't quite understand. Maybe they're working together to pool info to come up with a geological model that they'll both use. I don't know that to be true. I'm just speculating.
Anyway, bte is on a strong trajectory for growth in reserves, production and revenues. All of this volatility in sp, as you point out, is created on purpose because if you want quick bucks then you can't make much money on a stable sp trend. You need volatility so you can buy low and sell high in repeated cycles. You can make even more money if you can create and control the volatility.
It's so obvious. You want sp to go up then you get some analysts to predict $150 wti or some other bullish signal. You want sp to go down then start raising fears about demand destruction etc. Play people's fear and greed. It's all psychological noise. On a side note, M&A activity in the Permian and Eagle Ford is expected to really take off. There's a lot of small juniors with maybe only one or two rigs drilling sitting on great land. Also, I posted an analysis a couple of days ago that these days the difference between Tier 1 and Tier 2 is blurring when it comes to shale plays because they're finding that with the right application of the new math they can make pretty good money regardless the geological properties that a particular reservoir may have.