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As kancevica will react to $ 70 per barrel? Three scenarios

Как сланцевики среагируют на 70 долларов за баррель? Три сценария

The price of WTI, which reached $ 70 per barrel, put American kancevica challenging. On the one hand, they can maintain financial discipline and begin feverishly to increase production. On the other hand, kancevica can pull the plug on the side of caution and pump up as much oil to extract maximum benefit from high prices.

In the analytical material on the World Oil resource, presented three scenarios in which the situation may develop in the near future. Moreover, experts believe that kancevica, most likely, will use a third option.

On course

For several months investors have urged companies involved in exploration and production, to curb unsustainable costs. This pressure is likely to continue, according to analysts at Houston investment Bank Tudor Pickering Holt & Co. “Change in plans for 2018 to be minor, as operators continue to view the rise in oil prices as a way to increase cash flow, not the ability to accelerate growth,” the Bank said.

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In favor of maintaining the status quo is the fact that the main problems of the Permian basin remains a shortage of labor, equipment and pipeline throughput. It is worth considering the expansion of hydraulic fracturing, which lengthened the timing of release oil to the market. “I would not conclude that we will see a sharp rise of oil production,” says Antoine Half, the former chief oil analyst at the International energy Agency.

Price wars

After a service enterprise within a few years the price of the crisis were forced to settle for pennies for their services, they can now demand a bigger piece of the pie. And they will have many chances to achieve it, because without them chemicals, a huge amount of sand and service work on wells producers will not be able to develop their own production.

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“Seventy dollars a barrel – a very strong signal, says Ashley Petersen, chief oil analyst Stratas Advisors. – For service companies, now is the time to start aggressively renegotiating contracts that were concluded when prices were much lower.” The high cost of the service will limit the ability of operators of fields to increase production.

Total drilling

Historically, kancevica increase production whenever this is a good opportunity, and no reason to believe that this time things will be different. “There are very clear signals that kancevica squeeze from rising prices all that is possible”, – said Ashley Petersen. So, shale companies have begun increasingly to hedge risks to support the growth of production, if prices fall again.

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