Haynesville Shale Revisited & Game Over for U.S. Oil SGS ... · 4/29/2020 · Labyrinth Consulting...
Transcript of Haynesville Shale Revisited & Game Over for U.S. Oil SGS ... · 4/29/2020 · Labyrinth Consulting...
Slide 1Labyrinth Consulting Services, Inc. artberman.com
Haynesville Shale Revisited& Game Over for U.S. Oil
SGS/ETGS Continuing Education WebinarApril 29, 2020
Slide 2Labyrinth Consulting Services, Inc. artberman.com
Observations
Ø Haynesville Shale average well EUR since 2015 is 20 bcf; earlier wells averaged 7 bcf.
Ø A good example of why investors don’t trust shale companies.
Ø Also a good example of how producers learn and get better over time.
Ø Much of the U.S. oil industry will probably be nationalized.
Ø 2020 world liquids demand will be approximately 20 mmb/d less than in 2019.
Ø U.S. oil production will probably fall to 5.5 mmb/d in 2020.
Ø U.S. GDP will decrease about 20%.
Ø WTI price is unlikely to reach $40/barrel for several years.
Ø The world economic re-start will be slow, partial and intermittent.
Ø Very little will be like it was before Coronavirus.
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Haynesville Shale methodology
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Haynesville Shale methodology
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Haynesville Shale methodology
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1,000
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MonthlyRate,bblsorMscf
MonthsfromFirstProduction
Semi-LogPlotofRatevs.Time
Points=ActualDataLine=Forecast
Oil=Green,Gas=Red1
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Timemonths
LogLogPlotRatevsTime
Points=ActualDataLine=ForecastOil=Green,Gas=Red
CHK 2015OIL GAS
Max NA 425,000b NA 0.40
Di NA 1.30EUR NA 11,990,646 CUM NA 5,685,029
Haynesville Shale representative decline-curve history match
Slide 7Labyrinth Consulting Services, Inc. artberman.com
17 bcf weighted-average EUR for top Haynesville producers
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Haynesville Shale Economics
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Haynesville Shale Economics
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Haynesville Shale Methodology
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Slide 12Labyrinth Consulting Services, Inc. artberman.comHaynesville Shale EUR map for wells drilled after 2014
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Frequency
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Histogram
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Average2015-2019EURinHaynesvilleShaleis19bcfBreak-evenpriceis~$1.70at$10.5mmwelldrill&completecost
Source:Drilling Info&Labyrinth Consulting Services,Inc ShalePlays/HaynesvilleShale/Haynesville 2020/HaynesvilleALLEURAPR2020
Slide 14Labyrinth Consulting Services, Inc. artberman.com
Haynesville Shale EUR map for wells drilled before 2015
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AverageEURinHaynesvilleShaleis8bcfBreak-evenpriceis~$3.15at$8mmwelldrill&completecost
Source:Drilling Info&Labyrinth Consulting Services,Inc ShalePlays/HaynesvilleShale/Haynesville 2020/HaynesvilleALLEURAPR2020
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Slide 17Labyrinth Consulting Services, Inc. artberman.com
$76.22
$42.68
$66.18
$51.08
$60.43
$52.31
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$52.31
$63.05$53.38
$31.50
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$12.34
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WTI12-monthSpreadsChartTitle
CLMEAN 1SD -1SD WTIPRICE -5SD
Source:Quandl&LabyrinthConsulting Services,Inc. Oil &GasGeneral/Futures &FutureSpreads/CL1&CL7 Futures
mean$54
Fiveoilralliesfailedfrommid-2018toearly2020BiggestpricecollapseinhistorybeganinearlyJanuary
WTIPrice
SaudiRefineryAttackSep2019
IranWaiversOct 2018
AttacksonGulfshippingApril2019
Dec2018
OPEC+Cut Extension,China TradeDeal&
AssassinationJan2020+1SD
$66
-1SD$42
2589 CL1 WKLYCLOSE vs.MEAN WKLYAVG2594 4/28/20 $12.34 -$41.82 $40.492599 4/17/20 $18.27 -$35.89 $44.492601 CHANGE -$5.93 -$5.93 -$4.00
SinceJan6 -$50.93 97% -$21.47
OPEC+cutextensionJuly2019
OPEC+failureMar6
Mean &standarddeviation fromCL1Sept152018- present
-4SD$4.87
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0.401.20
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ChartTitle
BALANCEPOS BALANCENEG SUPPLY DEMAND
NegativeSD Balance
PositiveS-DBalance
Supply
4.03 1.60 0.80 -2.01 -1.56 -0.60 -15.54 -16.31 -19.28 -12.93Q42018 Year-over-Year Q22019 Q32019 Q42019 Q12020 Q22020 Q32020 Q42020 2020AVG
SUPPLYGROWTH 0.80 -2.01 -1.56 -0.60 -15.54 -16.31 -19.28 -12.93DEMANDGROWTH 0.40 1.10 1.90 -14.97 -20.40 -22.90 -21.10 -19.84SUPPLYBALANCE 0.80 -1.91 -0.66 15.27 5.66 4.68 1.16 6.69
Source:OPEC,IEA,EIA,Vitol,Trafigura, Goldman Sachs &LabyrinthConsulting Services EIAInternational/EIA Supply&DemandMaster
Slide 20Labyrinth Consulting Services, Inc. artberman.com
-2.9-3.0-2.6
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WorldLiquidsDem
andGrowth(mmb/d)
ChartTitle
Series1 Series2 Series3Source:OPEC,IEA,EIA,Vitol,Trafigura, Rystad,IHSMarkit&LabyrinthConsulting Services EIAInternational/EIA Supply&DemandMaster
-20%contractioninglobalGDPislikelybasedonstrongcorrelationbetweenoilconsumptionandGDP
2008 FinancialCollapse
2020Covid-19&
OPEC+failure
AnnualGrowth PositiveDemandGrowth
-20
mmb/d Q1 Q2 Q3 Q4 Average2020 84.33 78.90 78.20 80.30 80.432019 99.30 99.30 101.10 101.40 100.28Change -14.97 -20.40 -22.90 -21.10 -19.84
PctChange -15% -21% -23% -21% -20%
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Frequency Cumulative%
U.S.GDPexpectedtocontract30-35%basedonestimatesby17investmentanalysts
Source: CharlesSchwab&LabyrinthConsulting Services,Inc. Oil&GasGeneral/GDP/2020 GDPEstimates
Frequency (LHS) CumulativePercent(RHS)
GDP%BloombergEconomics -9TSLombard -17.7WellsFargo 22.3ConrerstoneMacro -25JPMorgan -25UBS -25.5IHSEconomics -26.5BoAML -30OxfordEconomics -32DeutscheBank -33Strategas -33.3CreditSuisse -33.5
GoldmanSachs -34Barclays -35MorganStanley -37.9CapitalEconomics -40EvercoreISI -50
Slide 22Labyrinth Consulting Services, Inc. artberman.com
R²=0.93
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Source:EIA,WorldBank&LabyrinthConsulting Services,Inc. Oil&GasGeneral/GDP VSOILCONSUMPTION2017
GDPisproportionaltooilconsumption(Logarithmicscales)
Germany
Slide 23Labyrinth Consulting Services, Inc. artberman.com
Comparative Inventory (C.I.)
Supply Less Certain
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Mid-Cycle PriceMarginal barrel or mmBtuprice at the 5-year averageneeded to maintain supply
Yield Curve
Higher Price Needed toMaintain Supply
Lower Price Needed toMaintain Supply
Source: Aperio Energy Research & Labyrinth Consulting Services, Inc.
- +
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Comparative Inventory (C.I.)Millionsof Barrels
WTIPrice($/barrel)
Source:EIA&La
byrinthConsultingServices,Inc.-A
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EnergyResearch
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ChangeinW
orldDrivingSincemid-Ja
nuary2020(Percent)
NEG POS Series3Source:Apple &LabyrinthConsultingServices,Inc. Oil&GasGeneral/AppleMoblityTrends
Globaldrivinghasdecreased-58%comparedtomid-Januarybaseline
-28%
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+9%+6% Baseline
Slide 27Labyrinth Consulting Services, Inc. artberman.com
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ilHorizo
ntalRigCount
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onthLaggedTightO
ilProduction(m
mb/d)
ChartTitle
LAGGEDPROD SHUTINPROFILE RC
U.S.tightoilproductionwillprobablybe15-20%lowerinAprilvsMarchOutputwillfall~60%Junevs.Marchtolessthan3mmb/dbecauseofshut-inproduction
TotalU.S.outputwill fallto5.5mmb/d
Source: BakerHughes,EIADPR,Drilling Info&LabyrinthConsulting Services,Inc. RigCount/Rig CountCurrent/MONTHLY SHALEGAS-TIGHTOILRIG
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bo/d&% Production ChangefromMarch PCTMar 7,055,728 0 0%Apr 5,887,064 -1,168,664 -17%May 4,120,945 -2,934,784 -42%June 2,884,661 -4,171,067 -59%
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Low Risk High Risk
Tourism-Air Travel-CruisesBars, RestaurantsMovie Theaters
Sporting Events & Concert VenuesShopping Malls
Gyms & Recreation CentersSalons & SpasMuseums
Supermarkets & grocery storesHospitals, Medical Care
DaycareSchools
Food Supply & DistributionGoods Distribution
Work from HomeManufacturing & Construction
PharmaciesBig-box & Hardware Stores
Auto Repair ShopsLiquor stores
Banks
Home EntertainmentSocial Phone & Video Meetings
Convenience Stores & Gas Stations