Tight oil needs new metrics

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18 March 2020

Tight oil needs new metrics

Report summary

As tight oil operators focus on navigating the next few months, holding decades of well inventory simply isn't as important. The higher priority is cash flow. Any new wells must pay back incredibly fast. Screening by these metrics reshuffles the cost stack, and the Permian loses some of its luster. On a straight payback metric at today's prices, core zip codes in the Eagle Ford and Bakken represent some of the most competitive acreage in the Lower 48. More mature tight oil basins won't provide years and years of growth potential but can offer portfolio optionality and a safer retreat while prices remain depressed.

Table of contents

  • Executive summary
  • Investment doesn't go to zero
  • Arguing for payback and P/I ratios
  • Benchmarking the best tight oil assets
  • Lower price decks
  • Any upside?
  • Conclusion

Tables and charts

This report includes 3 images and tables including:

  • The pros and cons of payback period vs profitability index
  • Sub-play benchmarking under flat US$55/bbl and US$2/mcf prices
  • Sub-play benchmarking under flat US$40/bbl and US$2/mcf prices

What's included

This report contains:

  • Document

    Tight oil needs new metrics

    PDF 840.91 KB