• 5 minutes Drone attacks cause fire at two Saudi Aramco facilities, blaze now under control
  • 7 minutes China Faces Economic Collapse
  • 11 minutes Oil Production Growth In U.S. Grinds To A Halt
  • 13 minutes Iran in the world market
  • 15 minutes Ethanol, the Perfect Home Remedy for A Saudi Oil Fever
  • 17 minutes Experts review Saudi damage photos. Say Said is need to do a lot of explaining.
  • 4 mins Let's shut down dissent like The Conversation in Australia
  • 7 hours Saudis Confirm a Cruise Missile from Iranian Origin
  • 2 hours Who Benefits From The "Iran Attacked Saudi Arabia" Narrative?
  • 45 mins Pompeo: Aramco Attacks Are An "Act Of War" By Iran
  • 15 hours Is It Time To Invest In Offshore Drillers?
  • 12 hours Trump Will Win In 2020 And Beyond..?
  • 17 hours Trump new National Security Advisor. Trump easily manipulated.
  • 10 hours Democrats and Gun Views
  • 21 hours Aramco Production
  • 17 hours The Spy Money: U.S. Wants To Seize All Money Edward Snowden Makes From New Book
  • 15 hours Yawn... Parliament Poised to Force Brexit Delay Until Jan. 31
Alt Text

UK Offshore Oil & Gas Is About To Boom Again

The UK offshore scene is…

Alt Text

UAE: OPEC Can Fill Saudi Oil Supply Gap If Necessary

OPEC has sufficient spare capacity…

Oil & Gas 360

Oil & Gas 360

From our headquarters in Denver, Colorado, Oil & Gas 360® writes in-depth daily coverage of the North American and global oil and gas industry for…

More Info

Premium Content

The Lowest Shale Breakeven Costs Are Here

The Federal Reserve Bank of Dallas released its Energy Indicators report, outlining the continued recovery of the oil and gas industry.

No surprise

Texas is the heart of oil and gas activity, with both the Permian and Eagle Ford driving tremendous amounts of production and activity.

In total, the oil and gas industry employed about 211,700 people in Texas in March, up 3,500 from February. “Oil and gas extraction” jobs increased slightly to 92,500, while “support activities” rose to 119,200. Historically, employment in “oil and gas extraction” is much steadier than employment in “support activities,” as support activities saw employment drop by about half during the downturn.

(Click to enlarge)

Source: Federal Reserve Bank of Dallas

Texas accounts for about 54 percent of all oil and gas employment in the U.S. Nationwide, there are 181,200 people working in “oil and gas extraction” jobs and 208,200 people in “support activities.”

Fed finds lowest breakevens

The current oil price is approximately at breakeven for new wells in the most prominent shale plays, according to the Dallas Fed Energy Survey. The fed asked 62 E&P companies “What WTI oil price does your firm need to profitably drill a new well?” in mid-March this year. Related: Oil Prices Rise As Saudis Discuss OPEC Deal Extension With Iraq

While results varied widely, here is a breakdown:

- The Midland area of the Permian emerged as the best play, with an average reported breakeven from $46/bbl in Midland to $50/bbl in the central platform.

- Oklahoma is still a factor, as the SCOOP/STACK was close behind with $47/bbl.

- The Eagle Ford showed the most consensus, with all results near the average of $48/bbl.

- Non-shale plays in the U.S. varied widely, with responses ranging from $25/bbl to $100/bbl, but averaged $53/bbl, slightly above current prices.

(Click to enlarge)

Source: Federal Reserve Bank of Dallas Related: Iraq Agrees With Deal Extension, But Boosts Oil Exports To Record Levels

OPEX comfortably below oil price

While oil price seems to be hovering around breakevens for new wells, companies will likely not be forced to shut in production any time soon.

The fed also asked 60 companies, “What WTI oil price does your firm need to cover operating expenses for existing wells?”

- The Midland basin was again the cheapest play, averaging $24/bbl needed to keep wells online. This cost would be covered even at the lowest oil price seen during the downturn.

- Like the economics of new wells, the SCOOP/STACK was a close second for lowest operating expenses

- Next lowest were the Eagle Ford and other Permian regions.

Even non-shale plays have OPEX comfortably covered, averaging $38/bbl. Firms active in the Midland, SCOOP/STACK and non-shale each reported OPEX less than $10/bbl, indicating the best spots in the plays may never be forced to shut in.

(Click to enlarge)

Source: Federal Reserve Bank of Dallas

By Oil and Gas 360

More Top Reads From Oilprice.com:




Download The Free Oilprice App Today

Back to homepage



Leave a comment

Leave a comment




Oilprice - The No. 1 Source for Oil & Energy News
Download on the App Store Get it on Google Play