As the Mainstream media reports about the next phase of the glorious U.S. Shale Oil Revolution, the financial carnage continues to gut the industry deep down inside the entrails of its horizontal laterals. The stench of fracking fluid must be driving shale oil advocates utterly insane as they are no longer able to see financial wreckage taking place in these companies quarterly reports.
This weekend, one of my readers sent me the following Bloomberg 45 minute TV special titled, The Next Shale Revolution. If you are in need of a good laugh, I highly recommend watching part of the video.At the beginning of the video, it starts off with President Trump stating that the U.S. has become an energy exporter for the first time ever. Trump goes on to say, “that powered by new innovation and technology, we are now on the cusp of a new energy revolution.” While I have to applaud Trump’s efforts for putting out some positive and reassuring news, I wonder who is providing him with terribly inaccurate energy information.
I would kindly like to remind the reader; the United States is still a NET IMPORTER of oil. We still import nearly six million barrels of oil per day, but we export some finished products and a percentage of our shale oil production. Thus, we still import a net of approximately three million barrels per day of oil.
A few minutes into the Bloomberg video, both Pioneer Resources Chairman, Scott Sheffield, and Continental Resources CEO, Harold Hamm, explain how advanced technology will revolutionize the shale oil industry and bring down costs. I find that statement quite hilarious as Continental Resources and Pioneer continue to spend more money drilling for oil and gas then they make from their operations.As I stated in a previous article, Continental Resources long-term debt ballooned from $165 million in 2007 to $6.5 billion currently.So, how did advanced technology lower costs when Continental now has accumulated debt up to its eyeballs?
Of course… it didn’t. Debt increased on Continental Resources balance sheet because shale oil production wasn’t profitable… even at $100 a barrel.So, now the investor who purchased Continental bonds and debt are the Bag Holders.
Regardless, while U.S. oil production continues to increase at a moderate pace, there are some troubling signs in one of the country’s largest shale oil fields.
Shale Oil Production At the Mighty Eagle Ford Stagnates As Companies’ Financial Losses Mount
It was just a few short years ago that the energy industry was bragging about the tremendous growth of shale oil production at the mighty Eagle Ford Region in Texas.At the beginning of 2015, Eagle Ford oil production peaked at a record 1.7 million barrels per day (mbd). Currently, it is nearly 500,000 barrels per day lower.According to the EIA – U.S Energy Information Agency’s most recently released Drilling Productivity Report, oil production in the Eagle Ford is forecasted to grow by ZERO barrels in December: