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Can tight oil costs fall enough?


Can tight oil costs fall enough?

Report summary

Tight oil producers' initial response to the 2014 price collapse was to cut costs. After the initial WTI price shock, producers worked aggressively to lower the cost of supply from onshore US tight oil plays. The more recent downward price movements are indeed cause for concern, but our models suggest that the additional cost savings required for wells to break even in a prolonged period of US$45/bbl WTI are not unprecedented, and some operators have plans and processes to achieve them.

What's included?

This report includes 1 file(s)

  • Can tight oil costs fall enough? PDF - 292.66 KB 6 Pages, 1 Tables, 3 Figures

Description

Globally, the industry is looking for the next big unconventional discovery after the success seen in the U.S. Lower 48. Argentina's Vaca Muerta has shown it can go head to head with US plays. But, as investors looks for the next big unconventional opportunity, will Argentina be able to attract enough investment to exploit the shale's full potential?

This Vaca Muerta development study report provides ground-breaking well-by-well analysis of production, well performance, and economics. The play is divided into three distinct sub-plays and this report provides insight into production, acreage positions, costs, and type-well economics. The sub-plays likely to drive value creation are identified, as well as the oil and gas prices and efficiency gains needed to produce positive returns.

The study enables potential investors, governments and companies to evaluate the relative attractiveness and value of acreage positions. Furthermore, the study helps benchmark the performance of each Vaca Muerta sub-play with that of North American analogues.

These findings are based on original well data from Argentina along with Wood Mackenzie's expert analysis.

Wood Mackenzie's 500 dedicated analysts are located in the markets they cover. They produce forward-looking analysis at both country and asset level across the globe, backed by our robust proprietary database of trusted research. Proprietary data means a superior level of analysis that is simply not available anywhere else. Wood Mackenzie is the recognised gold standard in commercial data and analysis.

  • Cost cuts to date
  • A late summer shift
  • A new downside scenario
  • Actually making the cut
  • Outlook

In this report there are 4 tables or charts, including:

  • Cost cuts to date
    • Changes in average US onshore well costs (2014 to 2015)
  • A late summer shift
  • A new downside scenario
    • Prior cost reductions and the additional cuts needed to break even at US$45/bbl
    • Absolute change in D&C needed to break even at US$45/bbl
  • Actually making the cut
    • Can tight oil costs fall enough?: Table 1
  • Outlook
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