With it’s Low Breakeven could things heat-up for the GOM Shallow-water in 2021 propelling it further than the GOM Deep-water and other Shale Basin areas?
Costs to drill and complete GOM shallow-water wells could drop in 2021 like what happened in 2016 to the Permian basin area. Eagle Ford and the Haynesville Shale areas deteriorated while the Permian’s drilling and completion costs dropped by up to 50% from two years prior. In 2016, the Permian basin excelled all other basin areas.
Schlumberger, Halliburton and Baker Hughes have had asset write-downs of $45 billion during this past year. Some analysts think this effectively marks the “bottom of the cycle” with an expansion to follow.
This could be the turning point for the GOM Shallow-water when compared to GOM Deep-water and the Shale basins. Deep-water was struggling at the end of 2019 at $60/bbl. Then there is the set backs of Shale, and their +300 billion dollars of asset “write-downs”. Yes you read it correctly, 300 billion dollar’s worth. Gulfslope’s Shallow-water Prospects breakeven is less than $20/bbl way better than deep-water, and most new Shale wells at $50/bbl.
There would still need to be a “recovery” for this to happen. It would not come overnight, in the next weeks, or a couple of months down the road. More like a long slow jog than a sprint.
For example, when you’re recuperating from a serious accident you don’t recover overnight. It takes planning, effort and time, and first and foremost is for your situation to become stable.
So when you see the price of Crude oil “holding” in the low $40’s it’s not always cause for concern, especially when some of the various factors that drive Crude oil pricing have become unfavorable. “Stable/Holding” is good.
The one thing we can count on is change, and how well you’re prepared for it dictates your success.
Gulfslope will need to already be strategically positioned during the upside of the recovery. The Lump Sum amount will be beneficial in achieving this.
I’m not saying this will happen for certain in the future, but Gulfslope Energy did survive 2016 so it’s something to ponder.
Smith
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