1. Permian getting gassier
- As drilling slows down, Permian wells are becoming gassier. “The oil ratio is no longer sufficient to offset gas in older wells, so we’re seeing some increase in basin-wide” gas-to-oil ratios,” said Artem Abramov, head of shale research at Rystad Energy.
- In the Permian, the average well produces 2,000 cubic feet of gas for every barrel of oil. Gas is much less lucrative than oil. Later on in the lifetime of that well, the gas-to-oil ratio can climb to 5,000 cubic feet.
- The ratio grows worse when wells are drilled too close together. But the ratio is also higher in the Delaware sub-basin of the Permian, where recent drilling has been concentrated.
- The higher-than-expected gas-to-oil ratio has undercut the finances of some drillers, while also contributing to the region’s worsening flaring problem.
2. Shale equity sales plunge
- The amount of equity issued in 2019 from the shale industry fell to its lowest level in 13 years.
- “It seems to be fairly unloved as a sector,” Andy Brogan, Global Oil & Gas Sector Leader for Ernst & Young LLP, told Bloomberg.
- The value of shares issued in 2019 fell to $1.3 billion, the lowest level since 2006. In 2016, the industry issued $34 billion in shares.
- Debt issuance was flat at $44.5 billion in 2019, still at elevated levels compared to earlier this decade.
- There is little sign…