Wednesday 8 February 2017

In the past year, the Midland and Delaware have become exclusive neighborhoods—the oil and gas industry’s Midtown Manhattan and Beverly Hills, without the view.

Acquisitions in the Permian averaged $30,000 per acre in January. Companies talked up low breakeven prices and rich internal rate of returns as they entered huge deals.

Now, on the cusp of a recovery, E&Ps in the Permian and other cost-effective shale plays are boosting capex by 50% or more compared to 2016, analysts said.

Enter the oilfield services sector, which may play spoiler to the E&Ps.

Many operators, having survived in part because of lower service costs, are preparing for a wave of inflation that could bump up prices by 10% to 15%. The cost for rigs, pressure pumping, proppant and transportation all stand to see price adjustments.

more [source: EP Mag]