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Scott Sheffield, the outgoing chief of Pioneer Natural Resources, threw down the gauntlet last week - with some poetic licence - claiming that his pre-tax production costs in the Permian Basin of West Texas have fallen to $2.25 a barrel.
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Consultants Wood Mackenzie estimated in a recent report that full-cycle break-even costs have fallen to $37 at Wolfcamp and Bone Spring in the Permian, and to $35 in the South Central Oklahoma Oil Province. The majority of US shale fields are now viable at $60.
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If shale can produce profitable oil in this environment can't we pretty much call it a day for any hope of a recovery?
Or maybe everyone will realize that limiting production and driving prices up is now the best play for everyone since the Saudi's won't be able to drive Shale out like they intended? Wishful thinking??