the rig count has somewhat stabilized
and remained relatively flat over the
past couple of months, we have observed a growing trend in the Eagle
Ford Shale over the last weeks of 2016.
For both plays, however, the total current number of rigs stands close to 1/5
of the peak that occurred in 2014. At
the same time, we observe a significantly different development for the
Permian plays. Here, both plays are
currently at a similar level in terms of
number of running Hz rigs as they were
in March 2015, or about 65-70% of the
peak activity from 2014.
The shale operators are also entering
2017 with a more balanced cash flow
from shale operations, our analysis indicates (see Figure 4). In Q3 2016 the
cash flow from operations was $10 billion, with an average WTI of 44. 8 $/bbl.
This means that for the first time the
investments did not exceed the cash
from operations for the shale companies. The shale companies have been
able to reduce the imbalance between
cash from operations and investment
from $16 billion in Q1 2015 to zero in
Q3 2016 with a considerable reduction
in investments. For 2017, Rystad Energy
forecasts an average WTI oil price of
$60/bbl, which implies a 40% improvement in the cash from operations. This
improvement in the cash flow will result in higher investments by shale
ABOUT THE AUTHOR
Sona Mlada is a senior analyst at Rystad Energy. Her
main responsibility is the
analysis of upstream E&P
activities in North America, with a specific focus on
shale asset modeling. She is the project
manager for the monthly North American Shale Report, and is also responsible for analyzing global discoveries
and estimating recoverable resources.
She holds a degree from the University
of Economics in Bratislava, Slovakia,
including a graduate exchange program
at Universidad de Granada, Spain.
For additional information, please contact
for Oil & Gas Financial Journal.
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