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Tuesday, April 28, 2015

Costs for Fracking Are Dropping, Helping Producers Ride Out Low Oil Price Storm

From Reuters:
Oil is trading around $55 a barrel, and most U.S. shale fields are seen as having break-even costs of $40-$70 a barrel. 
In fourth-quarter earnings calls, operators initially were looking for prices cuts for services like fracking of around 20 percent. Now those savings appear to be steeper. 
"We're seeing costs fall more for fracking than drilling," Mike Bahorich, chief technology officer at Apache Corp told a CERAWeek breakfast meeting. 
He estimates Apache's fracking costs have fallen about 30 percent, while drilling costs have tumbled 20 percent. 
Gary Gould, senior vice president of operations at Continental Resources Inc said his company, which has its largest operations in North Dakota's Bakken Shale, had seen service costs "falling most steeply in recent weeks and months." 
Analysts at IHS CERA expect fracking costs to fall 32 percent this year, down from a prior forecast for a decline of 24 percent.

Lower fracking costs, along with steep cuts to capital spending and a focus on drilling in only the most profitable areas in shale basins are helping producers weather the downturn.
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