US Shale Winners And Losers
This column starts my series on $80 oil and US shale winners and losers.
My working thesis is that although oil’s drop into the $80’s might be temporary, it won’t be short-lived. That puts marginal producers here in the US at risk, as much of their current production and certainly future planned production is predicated on higher oil price expectations.
I’m beginning this series by outlining the Bakken and Three Forks region first, as I believe that oil companies there are at the most risk to see slashed capex, production and therefore dropping share prices. But before I begin, I must thank Michael Falloon of shaletrader.com for his excellent help, almost certainly the most informed independent analyst of the Bakken and the companies invested there of anyone I have ever read. His service is a worthy addition for anyone deeply invested in that play, or indeed many of the other major US shale plays.
The reason I focus on the Bakken first is not because of the potential oil supply there or the quality of the play, quite the opposite. The diverse area involved and the relative maturity of fracking programs in the Bakken have led to a breakneck pace of production that have delivered tens of thousands of new jobs, dozens of new successful oil companies and a fresh housing boom. It has also led to an increasing lack of sufficient infrastructure in pipelines and…