American Oil and Gas Reporter - January 2015 - 72

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$55.96, Natural Gas Intelligence's Shale Daily quoted Wunderlich Securities analyst Irene Haas as predicting more than 500
rigs could be idled within 60 days. In the same article, Tudor, Pickering, Holt & Co. suggested "a sustained price of $60 a barrel"
could result in yet another 300-rig decline.
Credit Suisse predicts a 25 percent decrease in U.S. drilling
at $75 a barrel oil.
Others, however, are more positive. Citigroup calculates breakeven costs for U.S. shale oil projects "are almost all below $70
in Brent prices (about $60 WTI), sometimes much lower." Citigroup adds that its base case projection shows, "If Brent prices
stay in the $75-$85 range, with WTI about $10 lower, minimal
impacts to shale are expected."
A Wood Mackenzie analysis adds, "WTI needs to fall below
$70-$65 a barrel for several quarters before there will be a significant slowdown in U.S. tight oil production growth."
And in its BDO U.S. 2015 Energy Outlook Survey, which presents the perspectives of chief financial officers at oil and gas exploration and processing firms, BDO USA LLP reports that when
asked to identify their strategies for improving profitability in 2015,
56 percent of respondents pointed to cutting costs and seeking
efficiencies, compared with 27 percent that would look to new
technologies, and only 9 percent who said they would reduce exploration.
If accurate, that prediction may affirm the observation by numerous analysts that enough commitments and projects are "in
the pipeline" already to keep U.S. production growing for some
time. Or to borrow another phrase, "Locomotives don't stop on
a dime."
Survey Results

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72 THE AMERICAN OIL & GAS REPORTER

AOGR's Survey of Independent Operators asks respondents
what crude oil and/or natural gas price would cause them to both
reduce and increase the number of wells they plan to drill in the
coming year.
As seen in Figure 2A, 25.3 percent of respondents say they
would decrease their planned drilling this year at a WTI spot price
of $75 a barrel. That percentage grows to 49.4 at $70, to 69.9 at
$65, and to 86.7 at $60.
On the upside, 23.0 percent of respondents indicate they will
increase the number of wells they plan to drill this year if oil prices
return to $90 a barrel. That percentage increases to 44.6 at $95,
to 66.2 at $100, and 82.4 at $105.
Looking at natural gas (Figure 2B), 17.8 percent of respondents will drill more wells at $4.75 an Mcf, 51.1 percent will increase drilling at $5.25, and at $6.25 an Mcf, 75.6 percent of respondents will drill more wells.
Going the other way, 26.1 percent of survey respondents say
they will drill fewer wells if natural gas prices fall to $3.25. From
there, the percentage of respondents who would decrease
drilling balloons to 73.9 at a gas price of $3.00 an Mcf, and to
84.8 at $2.75 an Mcf.
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American Oil and Gas Reporter - January 2015

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