June 1, 2025 Trending New York News

Oil: American shale oil producers are already in crisis

If prices stayed around $ 30, production could drop by 2 million barrels a day from the end of this year to the end of 2021. The effects of the oil war between Saudi Arabia and Russia

There is a relationship that gives reason to Russia: to put American shale producers out of play, the price of oil had to drop to these levels, $ 30 a barrel. In Vienna, Russian Energy Minister Alexander Novak tried to explain it to former OPEC partners last week without great results. Saudi Arabia did not take well the refusal to sign the agreement by Moscow and decided to increase production. The rest is known history with crude oil prices plummeting yesterday in what may be called black oil Monday.

Well, according to data collected by the Norwegian consultancy Rystad Energy, American shale oil producers already have liquidity problems . Things get worse every day, hand in hand with crude oil prices. In one fell swoop, Saudi Arabia and Russia and their battle for market share made almost all US shale companies unprofitable. Only five companies in two areas of the country have a breakeven at lower prices than the current one, the report reveals.

Wells drilled by Exxon Mobil, Occidental Petroleum, Chevron and Crownquest Operating LLC in the Permian basin, which spans western Texas and southeastern New Mexico, can generate profits of $ 31 a barrel, as shown by Rystad’s data. Occidental’s wells in Colorado’s DJ Basin are also up for that price, the same as Monday’s close. But this is not the case for the rest of the shale industry, more than 100 operators in a dozen fields. For them, drilling new wells will almost certainly mean going red .

Shale projects have the characteristic of being able to be activated or closed quickly. But as the production of these wells decreases much faster than that of traditional wells, companies need to drill more of them just to keep production flat. This means modest investment returns , one of the main reasons why oil & gas represents less than 4% of the S&P 500 index.

At this point, “companies shouldn’t burn capital to keep their production base at an unsustainable level,” said Tom Loughrey, a former hedge fund manager who founded his shale-data company, Friezo Loughrey Oil Well Partners. LLC in Bloomberg. There are already manufacturers like Diamondback Energy and Parsley Energy who have announced that they are cutting their budget for drilling and wells. Others, such as Apache Corp. and Occidental, have announced that they will reduce the business . According to many analysts, a well requires a price of $ 68 for investors to get an adequate return within 24 months.

The boom in shale production has made the USA the largest oil producers in the world as well as exporters of crude oil. But if prices stayed around $ 30 they would be forced to cut many businesses and production could drop by 2 million barrels a day from the end of this year to the end of 2021, a drop of about 20%. “Even the best traders will have to cut back on their business,” explained Artem Abramov, Rystad’s head of shale research at Bloomberg, adding that “it is almost impossible to have total cash neutrality this year with prices going down.”

On the other hand, the oil ‘war’ provoked them, the American shale producers who, while Opec and Russia cut production, not only compensated for it with their increases but exceeded it. Since November 2016, Goldman Sachs has highlighted, production of OPEC and Russia has been reduced by 4.4 million barrels per day while the rest of the world has increased it by 5.7 million barrels. And a large chunk of these barrels are all American Shale companies.

Banner
Related Posts

The United States already has more than 1,000 cases that have tested positive for the coronavirus

March 11, 2020

March 11, 2020

31 deaths in the United States have now been linked to the coronavirus, and at least 36 states have confirmed...

3 Tips by Jermany Coney to Navigate the Vast World of Social Media Marketing

June 20, 2022

June 20, 2022

Social media has become a massive platform for content creators and influencers in the last few years. While it was...

Navigating the Jungle Of Finance: What Is APE Stock And Why Does It Matter?

December 2, 2023

December 2, 2023

Dive into the financial jungle and discover the buzz around APE Stock. In this guide, we break down the essentials,...

Julie and Zach Ruhl Share How They Met and Built their Multimedia Content Brand – Ruhls of the Road

January 31, 2023

January 31, 2023

If one were to ask, “What are the most beautiful things in the world?” We would answer not with a...

Online Marketing to Survive the Covid-19: How Harley Cannard Leads Companies to Boost Their Brand on the Web

March 26, 2021

March 26, 2021

Although society is constantly changing, forcing companies to reinvent themselves to satisfy demands, events such as Covid-19 have represented a...

The Truth About Bonni3

March 26, 2021

March 26, 2021

Who is Gabriel Comfort? Gabriel Comfort, better known by her stage name “Bonni3” is not your typical music artist. Her...

Meet Cloudie McDoom – The Gaming Industry’s Newest Comedian

February 2, 2023

February 2, 2023

Cloudie McDoom is a gaming comedian who has made a name for himself by creating parodies of popular games on...

The Iconic Dr. Darnyelle J. Harmon Reorients Entrepreneurial Thought Processes by Shifting the Focus to Creating a Lofty Legacy

June 19, 2022

June 19, 2022

Revenue charts, gross income and expenditure, profit and loss, and whatnot! As an entrepreneur, it’s a never-ending drill, doing this...

Vivek Ramaswamy: GOP’s Lightning Rod Sparks Debate Storm

December 12, 2023

December 12, 2023

In the wild world of political showdowns, big names clash like ideas in an epic debate. Lately, one word’s been...

Mixcloud DJ Michael Ramos Gives Advice on How to Lead a Successful Life

April 10, 2022

April 10, 2022

How does one define success?  For one, it has a high-paying salary job; for another, it is achieving an Oscar....

Get To Know David Tracy, A Fantastic Culinary Artist, and YouTube Food Show Host

November 16, 2022

November 16, 2022

It’s hard to find people who are actually multi-talented and are genuinely focused on creating tremendous opportunities for all those...

Top 3 Things to Keep In Mind When Creating and Designing Fashion Wear, According to the famous influencer Nikita Karizma

May 29, 2022

May 29, 2022

Nikita Karizma is a British-Indian fashion designer who runs her namesake designer brand. Nikita designs fashion wear, contemporary clothing, fashion...

DLE Event Group: Revolutionizing Weddings with Their Signature Hybrid DJ and Live Band Fusion

July 4, 2023

July 4, 2023

Envision your perfect wedding day: a room filled with friends, family, and loved ones, all gathered to celebrate your love....

In olive oil there is a substance that rejuvenates the brain

February 24, 2020

February 24, 2020

The discovery of a Cnr study: hydroxytyrosol reverses the aging trend of neurons A component of extra virgin olive oil,...

Inventor Curren Krasnoff Contributes to Safety on the Road by Introducing New Technologies for Vehicles

May 10, 2022

May 10, 2022

The rate of technological advancement in the vehicle sector has been phenomenal since its inception. Safety has consistently been prioritized,...

Comments
Leave a Reply

Your email address will not be published. Required fields are marked *