Bad for America...Good for US exploration companies not in California's Montery shale
Next month, the US Energy Information Administration (EIA) will publish a new estimate of US shale deposits set to deal a death-blow to industry hype about a new golden era of US energy independence by fracking unconventional oil and gas.
EIA officials told the Los Angeles Times that previous estimates of recoverable oil in the Monterey shale reserves in California of about 15.4 billion barrels were vastly overstated. The revised estimate, they said, will slash this amount by 96% to a puny 600 million barrels of oil.
Not wanting to get to heavily into semantics, but EIA estimates of future recoverable oil and E&P companies proven, probable, and possible reserves, are very different. The later having to meet very strict SEC guidelines on how the estimates are quantified and qualified. Any professional (or amateur) Petroleum Geoscientist will tell you that the Monterey shale contains vast quantities of oil, the challenge is getting it out of the ground. Not so many years ago the EIA estimates of recoverable oil from the Bakkan were minuscule, but now with advances in drilling and completion technology, these numbers are huge.
The EIA likely made assumptions that the same technology could be applied in the Monterey shale, as has been applied in the Bakkan, Eagleford, Niobrara, etc., this has proven to not be the case, and so the EIA has to adjust the estimates. When reading the EIA estimates you should always insert the words "with current technology" after the statement. The Monterey shale still holds huge quantities of oil and E&P companies will still work to figure out a way to get it out of the ground. The EIA statement on the Monterey shale has no impact on other shale plays where current technology IS WORKING (as evidenced by the growing domestic oil production in the US.
What your inferring is oil shale reverses in the US are nowhere near what the present projections are? Which means XCO has nowhere near what everyone thinks they have too? Which means what $2 per share here in the near future?