"I think the Zerohedge article is skewed. There are areas that will be profitable below $70.
Thank you L2R. I think the Blomberg article was worse than skewed. I think it is agenda driven. Zerohedge leave out a big part of the picture.
What makes shale plays more expensive is the cast of drilling. Most shale plays have 4 horizontal legs 1.5 miles to 2 miles long. That's 6 to 8 miles of very expensive horizontal drilling for most wells. If the production zone is thick enough the driller might drill deeper, vertically and then drill another set of laterals.
But once the well is drilled, fracked & completed, production cost are marginally higher than traditional vertical wells.
The thousands of shale wells that are already in production will keep on producing. The way the article is written casual readers would probably think that shale oil isn't profitable at prices near $75/bbl/ Not true.
If the prices stay as low as they are now, it will certainly curtail new drilling. But it won't bring shale drilling to screeching halt. The price of crude has had way to may wild fluctuations to assume the price will remain at this level.
There is a very active shale play around where I live. It's is the Woodford Shale. Yesterday we drove to OKC for Thanksgiving. There is a new drilling rig in operation, 8 miles north of us, that wasn't there last week.
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