The Wall Street Journal’s Greg Ip reported on June 3rd (2015) that unconventional shale recovery is still generally profitable at $60 per barrel pricing of oil, whereas “the conventional onshore and offshore industry has seen complexity and break-even prices rise,” quoting Lars Eirik Nicolaisen of Rystad. With this still immature sector of the E&P industry learning further upstream efficiencies, Nicolaisen adds that “the break-even price at which (operators) can profitably produce keeps dropping.”
But because of the capital intensity required throughout the industry, large operators with excess debt are increasingly seeking to de-leverage and growing opportunities are emerging throughout the oil patch for typically smaller, more nimble companies with little debt to favorably acquire some of these interests.
As various shale operators fine tune their operations and adapt their techniques to the unique, local geophysics of each formation, these efficiencies will certainly continue, but peak momentum in these production innovations may not be that far away.
Meanwhile, a growing recognition is also beginning to sharpen across various secondary plays, where original oil and gas remaining in place within these formations with deep histories of successful wells, is now economically recoverable through technological advances that are economically quite efficient.
Cumulatively, all these contributions to E&P in the US (and increasingly beyond) mightily enhance the upstream industry, so that indeed despite “the current slump in prices, OPEC’s world will never be the same.” (ibid)