Hey Oilfield Guys!!

[oktx]

With the slowdown in new wells and frac crews with nothing to do, you may even see an overall effort to re-frac some wells. It has been done with good returns in production, according to my sources.

Been happening for awhile in the Barnett.

[miket]

That's just break even. If it were me, I wouldn't throw the money out there to make $5 a barrel anyway. The eagle ford has a much lower break even than many plays in west texas or the bakken.

The other thing is, those are current break evens. As prices for services go down, the break even goes down.

I do agree that what we'll see is mainly lease holding drilling though. People aren't going to spend the money to barely break even.

This is what I am hoping. Hopefully this will make the Saudi plan backfire on them.

[JMalin]

Been quoted as low as $40 in the eagle ford. This was from a company man for EOG.

[bphillips]

Been quoted as low as $40 in the eagle ford. This was from a company man for EOG.

Even the "company men" are guessing like everyone else. Even at $40 break even I doubt $45 is worth running rigs other than the amount needed to meet lease obligations.

[Skinny]

Hey Oilfield Guys!!

When y'all say break even...do you know how many bbls of oil these newly drilled wells are making per day or are you just guessing?

And what type of break even time frame are you putting on these wells???

[kyle1974]

When y'all say break even...do you know how many bbls of oil these newly drilled wells are making per day or are you just guessing?

And what type of break even time frame are you putting on these wells???

that's why there is a range in the break even values, as it's dependent on area and operator. IP's in the eagle ford range from 500 to 5,000 (or more) bbls a day, and days to drill range from 5 to 30... every well is different, so it's just an rolling average.

some wells have a 6500 ft TVD, other wells have an 11,000' TVD... some are two strings of casing, some are three... There is one company out here that has had their acreage long before the eagle ford ever kicked off, and their break even is probably around $35, but does that mean they want to sell it for that, when it will likely come back down the road?

lots of questions and lot of speculation right now...

[DXTroughneck]

Its getting real ugly and quick on the drilling end. Companies that claimed to be holding out till the spring to see what is going to happen are now laying rigs down. I sure wish i could find a job on the production side and wash my hands of this drilling end!

[bphillips]

Its getting real ugly and quick on the drilling end. Companies that claimed to be holding out till the spring to see what is going to happen are now laying rigs down. I sure wish i could find a job on the production side and wash my hands of this drilling end!

Yea I'm not believing a word any company tells me at this point.. Heard all the lies before

[willwork04]

Here is a chart for breakevens in different US shale plays.

A couple of things to note. 1) Not all parts of the same shale play are the same. 2) These are ESTIMATES.

I have the feeling this chart is fairly accurate.

[kyle1974]

this is the one I was going off, but I was wrong on what I posted... gives a range for the plays. When I first saw this back in November, I remember thinking... "there's still a long way it has to fall"... and now we're lower than that.

[willwork04]

this is the one I was going off, but I was wrong on what I posted... gives a range for the plays. When I first saw this back in November, I remember thinking... "there's still a long way it has to fall"... and now we're lower than that.

Yep, ours are both fairly similar. Bottomline -- the industry is going to slow down to a glacial pace if oil remains below $50/bbl for an extended period of time.

[bdog14]

Back of the napkin calculations:

COSTS: Leasing @ $1000/ac and spending $7.5mm per well = $7.6mm per well -based on 100 acre spacings.

REVENUE: If the estimated ultimate recovery of 300k bbl/well @ $48 oil = $14.4 mm revenue per well

LESS: 25% to royalty owners = $10.8mm per well

LESS: Original costs of $7.6mm = $3.2mm over the well's entire life

This leaves very little margin for error/dry holes/mechanical/title issues. Not to mention you have to factor in the time value of money after the flush production period slows down.

Basically, it doesn't work at this price.

Who knows how long this game of chicken goes on for...we need some good ol' fashioned collusion!!!

[coldgas]

Yep, ours are both fairly similar. Bottomline -- the industry is going to slow down to a glacial pace if oil remains below $50/bbl for an extended period of time.

Maybe?? Traditionally when oil prices drop then natural gas prices rise. Natural gas was at 2.88 this morning but if it starts climbing back to that $7 to $8 range then drilling will pick up for gas.

[willwork04]

Maybe?? Traditionally when oil prices drop then natural gas prices rise. Natural gas was at 2.88 this morning but if it starts climbing back to that $7 to $8 range then drilling will pick up for gas.

That could happen, but I personally don't see it. There is a huge glut of natural gas right now. But who knows! I definitely hope you are right....

[bowhuntertex]

With the slowdown in new wells and frac crews with nothing to do, you may even see an overall effort to re-frac some wells. It has been done with good returns in production, according to my sources.

This is exactly what we are seeing right now. The company I work for monitors fracing and we are slowing down on the monitoring of new wells and picking up contracts to monitor the refrac of wells. We will weather the storm for now but who knows if the price continues to drop.