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  • U.S. Shale Oil: What Doesn't Kill Me Makes Me Stronger [View article]
    Carl,

    I agree with you on proved reserves - the undeveloped portion may shrink with lower prices. I should have mentioned of course that when I was talking about depletion, I was talking about it in relation to the specific well that is declining. In that case, reserves vary little with price.
    Jan 16, 2015. 03:10 PM | Likes Like |Link to Comment
  • Richard Zeits Positions For 2015: A Bull Case For North American Natural Gas [View article]
    LNG is by ship, mostly to Europe and Asia.
    Jan 16, 2015. 08:37 AM | Likes Like |Link to Comment
  • U.S. Shale Oil: What Doesn't Kill Me Makes Me Stronger [View article]
    Carl,

    To me personally, unless defined in a specific way for a specific context, the meaning of "deplete" should probably default to the definition used in the accounting for proved reserves. In that sense the term is fairly unambiguous. But I agree, all these terms may be fairly confusing.
    Jan 15, 2015. 01:50 PM | Likes Like |Link to Comment
  • Richard Zeits Positions For 2015: A Bull Case For North American Natural Gas [View article]
    Robert,

    Here is a consideration that may help reconcile your expectation from the title to the content.

    In order to develop an actionable idea, one needs to be two steps ahead. In this case, one needs to look all the way through to 2019-2020 to understand how the market's perception and willingness to take risk will evolve. So if 2015 presents, let's say, an entry point, how would the exit look like and is the ride worth the risk?
    Jan 15, 2015. 02:27 AM | 4 Likes Like |Link to Comment
  • Richard Zeits Positions For 2015: A Bull Case For North American Natural Gas [View article]
    Hi Robert,

    I don't think in the title (or anywhere else in this note) did I say "a bull case for 2015." Moreover, this is really food for thought: readers can derive their own "case," based on their view of various factors at work. But I hope this may help them challenge their own assumptions.
    Jan 15, 2015. 01:52 AM | 3 Likes Like |Link to Comment
  • U.S. Shale Oil: What Doesn't Kill Me Makes Me Stronger [View article]
    The presumption is that the team will score at least once. What if the game ends with a "0" in the score? But I agree, the goal line is still a valid destination

    :)
    Jan 14, 2015. 07:48 PM | 1 Like Like |Link to Comment
  • U.S. Shale Oil: What Doesn't Kill Me Makes Me Stronger [View article]
    Surplusmarketing,

    Please do not tell anyone -- that would be a crime equal to revealing what 2015 Super Bowl score is. We just got the popcorn here! :)

    Thanks for reading.
    Jan 14, 2015. 06:05 PM | 2 Likes Like |Link to Comment
  • U.S. Shale Oil: What Doesn't Kill Me Makes Me Stronger [View article]
    Calculation,

    "the physical facts make shale oil more expensive to extract compare to conventional oil no matter how you low the cost."

    If I understood your statement correctly, I don't think I agree with it.
    Jan 14, 2015. 01:57 PM | 4 Likes Like |Link to Comment
  • Richard Zeits Positions For 2015: A Bull Case For North American Natural Gas [View article]
    Fracguy,

    I would not be surprised to see this effect in new LNG contracts. The Russia crisis is just nine months old, but the consequences for Europe's gas strategy are obvious. "Energy security" is a big thing in EU officials' statements. Until recently, U.S. LNG had an advantage over Russia's imports in terms of price. Low oil prices may change that somewhat, but utilities will likely think long-term. Besides, this is obviously not just a price issue.

    It typically takes at least six months to negotiate a new LNG purchase and sale contract. There is still some unsubscribed capacity on high-probability projects. So we may some announcements this year.
    Jan 14, 2015. 01:52 PM | Likes Like |Link to Comment
  • Richard Zeits Positions For 2015: A Bull Case For North American Natural Gas [View article]
    Metal27,

    Oil substitution appears to be a secular trend that should continue even if oil prices are lower - there is still a major cost advantage for gas. There are many applications (compressors, drilling rigs and frac fleets, transportation, etc.)
    Jan 14, 2015. 01:38 PM | 1 Like Like |Link to Comment
  • Richard Zeits Positions For 2015: A Bull Case For North American Natural Gas [View article]
    Bh012888,

    The figures in that forecast appear to be well supported by multi-year customer commitments that have already been signed.

    As I wrote, only four projects are beyond the FID point, but at least two more have very strong probability to break ground as well.

    There are many proposed projects that are less certain and do not appear to be included in the estimates that I quoted. So in fact, LNG exports may be a bigger number in 2020, at least theoretically.
    Jan 14, 2015. 01:33 PM | 1 Like Like |Link to Comment
  • U.S. Shale Oil: What Doesn't Kill Me Makes Me Stronger [View article]
    Index60/40,

    I personally believe it's the former (already reflected in the estimates).
    Jan 14, 2015. 01:12 PM | Likes Like |Link to Comment
  • U.S. Shale Oil: What Doesn't Kill Me Makes Me Stronger [View article]
    Kamil Kolacek,

    I would not be surprised if among tens of thousands of shale wells one would find some that deplete 72% in the first year. That would not be typical though.

    In big plays like the Eagle Ford and Bakken, first year depletion is perhaps in the 20%-25% range. For some highly naturally fractured reservoirs - such as Miss Lime carbonate - that number may be higher. But thinking that 72% is the average would be very far from reality.

    2-3% conventional well depletion per year is equally a misconception.

    High initial production decline is not necessarily a bad thing, as long as overall return is high. High depletion means that cash flow comes back fast (in a high commodity price environment wells in shale sweet spots often fully pay out in less than two years). This also reduces risk to the investor, as there is less value associated with the uncertain tail production (which is thin).
    Jan 14, 2015. 12:36 PM | 3 Likes Like |Link to Comment
  • U.S. Shale Oil: What Doesn't Kill Me Makes Me Stronger [View article]
    rv3lynn,

    Oil/condensate represents a relatively small % of the EUR for those wells - natural gas and NLGs are the largest components in the mix.
    Jan 14, 2015. 02:15 AM | Likes Like |Link to Comment
  • U.S. Shale Oil: What Doesn't Kill Me Makes Me Stronger [View article]
    Qniform,

    I cannot make any representation for CLR, but for myself, I interpret CLR's Bakken return estimates as based on $8-$10 local differentials. I do not believe these are wellhead numbers.

    As I wrote, current differentials are obviously wider than $8-$10 per barrel "normal", but I have no grounds to believe they will stay that wide forever.
    Jan 14, 2015. 12:31 AM | 1 Like Like |Link to Comment
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