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Monday, October 5, 2015

FracTracker Suggests That Utica Shale Bubble is About to Burst

FracTracker Alliance recently posted an article which looked at the claims regarding the makeup of the Utica shale play which were made by the Ohio Geological Survey and Department of Natural Resources back in 2012.  Comparing the projections with data that has become available since they were made, the author reached the conclusion that the estimates by the OGS have not held up.

A portion of the post:
Simply put, the OGS 2012 estimates:
  • Have not held up,
  • Are behind the times and unreliable with respect to citizens looking to guestimate potential royalties,
  • Were far too simplistic,
  • Mapped high-yield sections of the “play” as continuous when in fact productive zones are small and discrete,
  • Did not differentiate between per day and total productivity, and
  • Did not address brine waste.
These issues should be addressed by the OGS and ODNR on a more transparent and frequent basis. Combine this analysis with the disappointing returns Ohio’s 17 publicly traded drilling firms are delivering and one might conclude that the structural Utica Shale bubble is about to burst. However, we know that when all else fails these same firms can just “lever up,” like their Rocky Mountain brethren, to maintain or marginally increase production and shareholder happiness. Will these Red Queens of the O&G industry stay ahead of the Big Bank and Private Equity hounds on their trail?
Read the whole article by clicking here.

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