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Re: Drill Baby Drill!Completion deferrals mean two things: 1) Short-term prices are too low. Presumably if prices were below $50, they'd keep deferring completions. 2) It does shift the supply curve in the medium and long term. Here's a made-up example. Suppose shales do 4mmbd today, declining at 300kbd per month. And let's say there's 300kbd of new supply each month awaiting completions. If you complete those wells, supply looks like this: M0 4mmbd M1 4mmbd <-- immediate completions M2 4mmbd M3 4mmbd M4 4mmbd If everyone delays completions by 2 months, your supply looks like this: M0 4mmbd M1 3.7mmbd M2 3.4mmbd M3 3.4mmbd <-- restarting completions M4 3.4mmbd The depletion kicks in when you defer completions and it basically permanently shifts the supply curve down by 600kbd - enough to balance the 2015 market. You might be thinking, you can double-up on completions but I don't think that's realistic. |
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Msg # | Subject | Author | Recs | Date Posted |
329863 | Re: Drill Baby Drill! | doggydogworld | 2 | 2/2/2015 11:26:01 AM |