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Will Shale Keep Booming At Low Oil Prices?

Friday June 23, 2016

In the latest edition of the Numbers Report, we’ll take a look at some of the most interesting figures put out this week in the energy sector. Each week we’ll dig into some data and provide a bit of explanation on what drives the numbers.

Let’s take a look.

1. U.S. shale breakevens could be tested

(Click to enlarge)

- Oil prices plunged this week to their lowest levels since the third quarter of 2016.
- Oil prices are deep into bear market territory, approaching $40 per barrel. That will put the shale industry to the test.
- Many shale companies have dramatically reduced their breakeven prices, but some weaker, smaller companies operating in less-than-optimal areas could face pressure.
- A survey from the Dallas Fed says the average breakeven prices for the major shale basins range from the mid-$20s to the upper-$30s.
- However, that is just an average. Outside of the sweet spots, companies could fall below water.

2. Bakken activity up sharply

(Click to enlarge)

- The rebound in drilling over the past year has provided a jolt in economic activity to North Dakota, as seen by the Federal Reserve data above.
- The rig count in the Bakken has more than doubled from a year ago, and production has climbed over 1 million barrels per day.
- Some Bakken companies are even struggling to find enough workers as they step up drilling plans.
- However,…

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