US Shale Oil: The road to recovery? T R I S H A C U R T I S P R E - - PowerPoint PPT Presentation

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US Shale Oil: The road to recovery? T R I S H A C U R T I S P R E - - PowerPoint PPT Presentation

Nov 20, 2023 375 likes •578 views

US Shale Oil: The road to recovery? T R I S H A C U R T I S P R E S I D E N T / C E O A N D C O - F O U N D E R E P R I N C A L U M A N D D I S T I N G U I S H E D F E L L O W T R I S H A @ P E T R O N E R D S . C O M J U L Y 7 ,

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SLIDE 1

US Shale Oil: The road to recovery?

T R I S H A C U R T I S – P R E S I D E N T / C E O A N D C O - F O U N D E R E P R I N C – A L U M A N D D I S T I N G U I S H E D F E L L O W T R I S H A @ P E T R O N E R D S . C O M J U L Y 7 , 2 0 2 0

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PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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SLIDE 2

Changing Dynamics in the Oil Market

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PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645 $- $20 $40 $60 $80 $100 $120 $140 $160 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10 Jul-11 Feb-12 Sep-12 Apr-13 Nov-13 Jun-14 Jan-15 Aug-15 Mar-16 Oct-16 May-17 Dec-17 Jul-18 Feb-19 Sep-19 Apr-20

$ Per Barrel

Europe Brent Spot Price FOB $/bbl Cushing OK WTI Spot Price FOB $/bbl

Jan 2011 to Dec 2014 WTI - $95 Brent - $108 Jan 2015 to Feb 2020 WTI - $53 Brent - $57 March 2020 to June 2020 WTI - $28 Brent $30

Source: EIA

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SLIDE 3

US Production Declines 700,000 b/d

PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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$- $20 $40 $60 $80 $100 $120 $140 $160

  • 2,000

4,000 6,000 8,000 10,000 12,000 14,000 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 Jul-09 Oct-09 Jan-10 Apr-10 Jul-10 Oct-10 Jan-11 Apr-11 Jul-11 Oct-11 Jan-12 Apr-12 Jul-12 Oct-12 Jan-13 Apr-13 Jul-13 Oct-13 Jan-14 Apr-14 Jul-14 Oct-14 Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17 Jan-18 Apr-18 Jul-18 Oct-18 Jan-19 Apr-19 Jul-19 Oct-19 Jan-20 Apr-20

$ Per Barrel Thousand Barrels Per Day

Federal Offshore - Gulf of Mexico New Mexico Texas Colorado California Oklahoma Wyoming North Dakota Alaska U.S. Field Production Cushing OK WTI Spot Price FOB $/bbl

700,000 b/d decline from March to April

Source: EIA

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SLIDE 4

From Covid to Climate

Investors have a critical role to play. All investments made today must factor in long-term climate and societal implications. Indeed, the shift to a zero-carbon, inclusive business model is already well under way…. We need to invest in them with the same sense of urgency that people have demanded in mitigating the pandemic. There is an obvious, if uncomfortable, parallel between our still inadequate responses to the tragic suffering of Covid-19 and to the fast- growing consequences of the climate crisis. We ignored the warnings of respected epidemiologists and virologists about the likelihood of a deadly pandemic such as the one we are now struggling to vanquish. Similarly, climate scientists have warned us with ever greater urgency about the consequences of the climate crisis.

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PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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SLIDE 5

Combined Free Cash Flow, Production, and CAPEX

PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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SLIDE 6

Operators Shift Gears in Response to Crisis

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PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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SLIDE 7

Permian Basin Production

PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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  • 1,000,000

2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 1/1/2008 5/1/2008 9/1/2008 1/1/2009 5/1/2009 9/1/2009 1/1/2010 5/1/2010 9/1/2010 1/1/2011 5/1/2011 9/1/2011 1/1/2012 5/1/2012 9/1/2012 1/1/2013 5/1/2013 9/1/2013 1/1/2014 5/1/2014 9/1/2014 1/1/2015 5/1/2015 9/1/2015 1/1/2016 5/1/2016 9/1/2016 1/1/2017 5/1/2017 9/1/2017 1/1/2018 5/1/2018 9/1/2018 1/1/2019 5/1/2019 9/1/2019 1/1/2020 BARRELS PER DAY Total Liquid Vertical Liquid Horizontal Liquid

Source: PetroNerds, Enervus/DrillingInfo

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SLIDE 8

Shale Production by Play

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PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

  • 1,000,000

2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 1/1/2000 5/1/2001 9/1/2002 1/1/2004 5/1/2005 9/1/2006 1/1/2008 5/1/2009 9/1/2010 1/1/2012 5/1/2013 9/1/2014 1/1/2016 5/1/2017 9/1/2018 1/1/2020 BARRELS PER DAY Permian Liquid Williston Liquid Eagle Ford Liquid DJ Liquid Anadarko Liquid Powder Liquid

  • 1,000,000

2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 9,000,000 10,000,000 1/1/2000 6/1/2001 11/1/2002 4/1/2004 9/1/2005 2/1/2007 7/1/2008 12/1/2009 5/1/2011 10/1/2012 3/1/2014 8/1/2015 1/1/2017 6/1/2018 11/1/2019

Barrels Per Day

Permian Liquid Williston Liquid Eagle Ford Liquid DJ Liquid Anadarko Liquid Powder Liquid

Source: PetroNerds, Enervus/DrillingInfo

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SLIDE 9

US Oil Rig Count

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PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645 $- $20 $40 $60 $80 $100 $120

  • 200

400 600 800 1,000 1,200 1,400 1,600 1,800

$ Per Barrel # of Rigs

2011 Onward

DJ Oil Eagle Ford Oil Permian Oil Williston Oil Total Oil Cushing OK WTI Spot Price FOB $/bbl $- $10 $20 $30 $40 $50 $60 $70

  • 100

200 300 400 500 600 700 800 900 1,000 1/4/2019 2/4/2019 3/4/2019 4/4/2019 5/4/2019 6/4/2019 7/4/2019 8/4/2019 9/4/2019 10/4/2019 11/4/2019 12/4/2019 1/4/2020 2/4/2020 3/4/2020 4/4/2020 5/4/2020 6/4/2020

$ Per Barrel # of Rigs

2019 Onward

DJ Oil Eagle Ford Oil Permian Oil Williston Oil Total Oil Cushing OK WTI Spot Price FOB $/bbl

Source: Baker Hughes, EIA

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SLIDE 10

Historical Rig Count by Basin

PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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200 400 600 800 1000 1200 1400 Jun 2014 Aug 2014 Oct 2014 Dec 2014 Feb 2015 Apr 2015 Jun 2015 Aug 2015 Oct 2015 Dec 2015 Feb 2016 Apr 2016 Jun 2016 Aug 2016 Oct 2016 Dec 2016 Feb 2017 Apr 2017 Jun 2017 Aug 2017 Oct 2017 Dec 2017 Feb 2018 Apr 2018 Jun 2018 Aug 2018 Oct 2018 Dec 2018 Feb 2019 Apr 2019 Jun 2019 Aug 2019 Oct 2019 Dec 2019 Feb 2020 Apr 2020 Jun 2020 ANADARKO CENTRAL BASIN PLATFORM DELAWARE MIDLAND DENVER-JULESBURG GULF COAST WEST POWDER RIVER WILLISTON

Source: PetroNerds, Enervus/DrillingInfo

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SLIDE 11

Monthly Well Additions

PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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400 400

Source: PetroNerds, Enervus/DrillingInfo

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SLIDE 12

Where Could Production Go?

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PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

  • 1,000,000

2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 Nov-09 May-10 Nov-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 Nov-18 May-19 Nov-19 May-20 Nov-20 May-21 Nov-21 May-22

Barrels Per Day

Stacked Play – Well Count to Zero

Permian Historical Production Permian 0 Wells/Month Eagle Ford Historical Production Eagle Ford 0 Wells/Month Bakken Historical Production Bakken 0 Wells/Month

  • 1,000,000

2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 Nov-09 May-10 Nov-10 May-11 Nov-11 May-12 Nov-12 May-13 Nov-13 May-14 Nov-14 May-15 Nov-15 May-16 Nov-16 May-17 Nov-17 May-18 Nov-18 May-19 Nov-19 May-20 Nov-20 May-21 Nov-21 May-22

Barrels Per Day

Stacked Play - Decline

Bakken Decline Forecast - 40 Wells/Month and 9,800 FT Lateral Length Bakken Historical Production Eagle Ford Decline Forecast - 50 Wells/Month and 7,000 FT Lateral Length Eagle Ford Historical Production Permian Decline Forecast - 200 Wells/Month at 8,000 FT Lateral Length Permian Historical Production

Source: PetroNerds, DrillingInfo/Enervus, EIA

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SLIDE 13

Productivity

PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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Source: PetroNerds, Enervus/DrillingInfo

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SLIDE 14

Permian Basin Drilled but Uncompleted Wells (DUCs)

PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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  • 200
  • 150
  • 100
  • 50

50 100 150 200 250 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 DRILLIED/COMPLETED DUCS TOTAL DUCS

Permian DUCs

DRILLED BUT UNCOMPLETED COMPLETED TOTAL DUCs

Source: PetroNerds, Enervus/DrillingInfo

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SLIDE 15

US Weekly Product Supplied/Demand

PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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$- $10 $20 $30 $40 $50 $60 $70 $80

  • 5,000

10,000 15,000 20,000 25,000 1/5/2018 2/5/2018 3/5/2018 4/5/2018 5/5/2018 6/5/2018 7/5/2018 8/5/2018 9/5/2018 10/5/2018 11/5/2018 12/5/2018 1/5/2019 2/5/2019 3/5/2019 4/5/2019 5/5/2019 6/5/2019 7/5/2019 8/5/2019 9/5/2019 10/5/2019 11/5/2019 12/5/2019 1/5/2020 2/5/2020 3/5/2020 4/5/2020 5/5/2020 6/5/2020 $ Per Barrel Thousand Barrels Per Day U.S. Product Supplied of Petroleum Products Distillate Fuel Oil Residual Fuel Oil Propane and Propylene Finished Motor Gasoline Kerosene-Type Jet Fuel Other Oils Cushing OK WTI Spot Price FOB $/bbl

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SLIDE 16

Global Oil Demand, GDP Growth, and Unemployment

PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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  • 20,000

40,000 60,000 80,000 100,000 120,000

  • 6
  • 4
  • 2

2 4 6 8 10 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Thousand Barrels Per Day % - GDP, Oil Demand % Change, Unemployment

World Oil Consumption, World GDP Per Capita Growth, and World Unemployment

World - GDP per capita growth (annual %) (World Bank) World - Unemployment, total (% of total labor force) (modeled ILO estimate) (World Bank) World Oil Demand - YoY % Change Total World Oil Concumption Thousand b/d (BP)

6 mbd demand decline after two major price shocks East Asian crisis - little to no fall in demand 1.4 mbd demand drop in

  • 2008. Recession did not

end until 2010 when employment began recovering

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SLIDE 17

US Oil Consumption, GDP, and Unemployment

PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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  • 5,000

10,000 15,000 20,000 25,000

  • 10
  • 8
  • 6
  • 4
  • 2

2 4 6 8 10 12 1965 1966 1967 1968 1969 1970 1971 1972 1973 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019

Thousand Barrels Per Day % - GDP, Oil Demand % Change, Unemployment

US Oil Consumption, US GDP Growth, and US Unemployment

US GDP per capita growth (annual %) (World Bank) US - Unemployment, total (% of total labor force) (modeled ILO estimate) (World Bank) US Oil Demand - YoY % Change US Oil Consumption (BP)

US - 2 mbd demand growth since 2012 and oil prices (2015 to 2020) have averaged just $53/barrel

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SLIDE 18

US and European Oil Consumption and Price

PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645

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20 40 60 80 100 120

  • 5,000

10,000 15,000 20,000 25,000 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019

$ Per Barrel Thousand Barrels Per Day

US

US Oil Consumption (BP) Cushing OK WTI Spot Price FOB $/bbl (BP/EIA) 20 40 60 80 100 120

  • 2,000

4,000 6,000 8,000 10,000 12,000 14,000 16,000 18,000 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019

$ Per Barrel Thousand Barrels Per Day

Europe

Total Europen Oil Consumption Europe Brent Spot Price FOB $/bbl (BP/EIA)

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SLIDE 19

Chinese and Indian Oil Consumption and Price

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PETRONERDS LLC | WWW.PETRONERDS.COM | 970-329-1645 20 40 60 80 100 120

  • 2,000

4,000 6,000 8,000 10,000 12,000 14,000 16,000 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016

$ Per Barrel Thousand Barrels Per Day

China

China Oil Consumption Thousand b/d (BP) Europe Brent Spot Price FOB $/bbl (EIA) 20 40 60 80 100 120

  • 1,000

2,000 3,000 4,000 5,000 6,000 1965 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010 2013 2016 2019

$ Per Barrel Thousand Barrel Per Day

India

India Oil Consumption (Thousand Barrels Per Day) (BP) Europe Brent Spot Price FOB $/bbl (EIA)