Russia, Saudi Arabia Increased Output to Clamp Down Shale Oil Profitability

  • 6/1/2018
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At the time when Russia and other OPEC producers are in quest to study the increase of product during the second half of this year, this may lead to an imminent drop in oil prices and may clamp down the profitability of shale oil production regions in the US. Bloomberg New Energy Finance analyzed in a report, published on May 30, the cost of shale oil output and the par value required for the barrel in one of the biggest basins in the US. The report found out that the cost and par value vary from one region to another, but Permian Basin in Texas remains the lowest-cost basin on the level of the US, followed by Eagle Ford Basin in Texas. According to the report, more than half of the counties where shale oil is produced are profitable with the current oil prices of $75 – but this doesn’t mean that they are not facing financial pressures with an expected drop in oil prices in the coming period. This report shows the financial condition of the shale oil, in which companies that produce it have accomplished savings in costs and a high operating efficiency, since the drop in oil prices in 2014. Al Rajhi Capital Head of Research Mazen al-Sudairi said that it is remarkable that the barrel par value in regions such as Permian is rising - and this is because of the limited infrastructure and the rise of operational expenditures. Sudairi added that Permian that remained the most competitive region in regards of cost doesn’t contain sufficient pipes in the current time. For this, dependence on trucks to transport oil or materials used in Hydraulic breakdown of producing wells has risen the cost hugely.

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