"U.S. companies in shale fields from North Dakota to Texas are talking tough in the face of Saudi Arabia's price war, believing they have more staying power than many of the OPEC partners.
“Saudi Arabia is really taking a big gamble. If they take the price down to $60-$70, you will see a slowdown in the U.S. but you’re not going to see it stop. The consequences for other OPEC countries are far more dire," says Chesapeake Energy (NYSE:CHK) chairman Archie Dunham.
Execs at several large U.S. shale producers, including CHK, EOG Resources (NYSE:EOG) and Whiting Petroleum (NYSE:WLL) said as they reported earnings that they plan to maintain and even raise production.
Shale producers cite success in reducing costs as proof they can still be profitable at prices below $70/bbl; CHK says well costs at its two largest production areas - Pennsylvania’s Marcellus Shale and Texas' Eagle Ford - fell 11% and 13% respectively Y/Y during the first seven months of this year.
But not all shale is alike: Bakken and Permian producers need prices at ~$67 and $65, respectively, to make drilling worthwhile, according to ITG Investment Research, while producers at the Cana Woodford shale in Oklahoma need $100 to make a profit, and $79 is the threshold at the Anadarko formation on the Texas-Oklahoma border."
Halcón’s latest (through September) well performance data in the Eagle Ford is analyzed.
El Halcón production has remained approximately flat June through September; Q3 volumes may show ~10% decline from Q2.
Based on completion activity in September, I expect October volumes to increase ~6%-10% month-on-month, even if no new wells are turned to sales in October.
Given Halcón's acreage retention objectives and strong oil hedge portfolio in 2015, I do not expect significant slow-down of the company's drilling activity in El Halcón."
It was an excerpt of a Zeits piece on SA.
I didn't post the entire piece cause I felt Yahoo would allow me to.
Trust me, no one here knows. And if anyone posts a reasoning for today's action, it'll be nothing but speculation.
"Floyd C. Wilson, Chairman and Chief Executive Officer, commented, "We had another solid quarter in both of our core plays and announced our preliminary outlook for 2015 today. That outlook is driven by our view that the service cost side of our business is out-of-sync with crude oil prices. As a result, we are electing to reduce spending next year while still preserving our ability to grow production year-over-year. While we are substantially hedged through 2015 and into 2016, we believe that the precipitous drop in crude prices calls for conservatism. We will remain flexible and are prepared to adjust our 2015 capital program as future events dictate."
"Preliminary 2015 Outlook
In response to lower oil prices, the Company expects to operate six rigs in 2015, five rigs less than originally planned. Halcon's preliminary drilling and completion budget for 2015 is $750 to $800 million. Despite the reduced capital budget, the Williston Basin and El Halcon assets are expected to drive year-over-year pro forma production growth of 15% to 20% in 2015."
I'll scratch my head for the remainder of my life, wondering why I ever invested in this stock.
I deserve this punishment. My condolences to anyone else out there who's been hurt.
You need to put this in quotes, since you were not the author.
This piece came from 'finanzen'.......
Yes, well, today it tanked from the opening bell to the close.
No different than most of the other oil stocks though. It doesn't comfort me to say that.
"OPEC is already clamoring for production cuts."
Do you use weed while reading the news? lol
Thanks for your thoughts, lucky 7. Personally, I hope you're on the mark re. your feelings that OPEC will cut two to three billon barrels daily. I don't know if it will work. However, I believe a cut in production would certainly be a more positive move for us than for OPEC to leave things as is.
Take a peek at this piece dated November 14:
"The price of Brent crude oil has fallen to below $80 a barrel, marking a fresh four-year low.
ICE December Brent, the global oil benchmark, is now $77.52 a barrel, 30 per cent below its June price. West Texas Intermediate, the US benchmark, is also at a four-year low after closing at $74.28.
Analysts say that crude oil is facing downward price pressures from oversupply, yet Saudi Arabia – the biggest oil exporting nation in the world – has signalled that it is not interested in taking action to cut back on production.
Members of Opec (Organisation of the Petroleum Exporting Countries), which controls 40 per cent of world oil exports and includes Saudi Arabia, are due to meet later this month to discuss the global oil market.
Most of these nations need higher oil prices to fund rising government spending, so tend to limit their output and supply when prices are low in order to boost prices and income, says the BBC.
But despite the fall in oil prices, traders believe member nations will not cut production. Saudi Arabia's oil minister, Ali al-Naimi, has said that talk of "price wars" has been "misinterpreted", but kept quiet on whether the kingdom has any intention of limiting its supply."
From your mouth:
"PVA hit a bottom today! I am calling it a bottom for several reasons: The news about the OPEC meeting result is already discounted for no cut. FINALLY, I AM LOOKING FORWARD TO PRICE RECOVERY BEFORE THE CLOSE TODAY OR FRIDAY!"
How do you feel today about your well thought out prognostication?
Well thought out? NOT!!!!!