logo
Sign in or Register

Already a member?

Sign in

Or sign in with your account on:

Not a member yet?

Register
    

 


US Shale Boom To Hit A Snag On Lower Prices, Oversupply

By  +Follow August 19, 2013 5:46AM
Share:
Tickers Mentioned:

Despite all the hype this year about the US’s future as the world’s largest producer and exporter of oil and natural gas, there are growing indications that oil firms are pulling back on their investment in shale drilling and exploration.

On Aug. 7, Australia’s BHP Billiton (BHP) , the world’s largest publicly-traded mining company, announced that it would be upping its involvement in state-side shale drilling beyond the $20 billion it has already spent on projects in the US. But on Monday, Bloomberg reported that oil and gas deals in North America that include shale drilling dropped by over half to $26 billion during the first six months of 2013, from the prior-year period’s total of $54 billion. Energy companies spent a total of $461 billion on the continent’s shale assets between 2009 and 2012.

Just a few short years into the new millennium, improved drilling and exploration technology led to discoveries of potentially massive reserves of oil and natural gas in shale formations far below the earth’s surface in states such as North Dakota, New York, Pennsylvania, and Ohio, among others. Subsequently, analysts have speculated the ensuing boom in production would propel the US to the top spot in terms of output and exports, which would entail a seismic shift in the global energy economy.

By 2012, however, prices dropped to a 10-year low as a massive influx of investment led to oversupply.

A significant number of wells ended up producing far less oil and gas than had originally been expected. Royal Dutch Shell ($RDS-A), one of the world’s top integrated oil and gas firms, was forced to write down its North American projects by over $2 billion during the recently-ended quarter. Shell released a disappointing quarterly earnings report earlier in the month that showed the company’s bottom line suffering a great deal from lower gas prices throughout the period, though other factors such as continued and increasing violence affecting Nigerian operations contributed significantly to the losses as well.

Other companies such as Chesapeake Energy ($CHK) have had to liquidate assets purchased during the frenzied buy-up of previous years at a significant loss. Oil firms took on significant debt in the rush to get their hands on what was being hyped as the holy grail of energy discoveries, and are now stuck holding the bag as many of the assets have turned out to be worth far less than was originally expected.

For the time being, this should put a clamp on acquisitions as well as downward pressure on output. In the long term, however, companies that have overshot the mark are still likely to find themselves well positioned after shedding underperforming assets, though it could take a number of years for this situation to play out fully.

[Image: Aerial view of the Burgess Shale in Yoho National Park, British Columbia, Canada. Courtesy of Wikimedia Commons]

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer


Liked What You Read? Join Equities.com as a contributor and get eyeballs on your content FOR FREE!

Results for rdsa
Zonebourse News
2 Jun 15 09:44:05
#A Paris, le secteur pétrolier dénonce l'usage du charbon, prônant celui du gaz http://t.co/VKMnJ688eg $RDSA
FinSentS Euro 600
2 Jun 15 07:24:46
$RDSA:NA Shell and Total believe future is in natural gas and not in coal #ROYAL DUTCH SHELL PLC http://t.co/O1zYXVP58G #STOXX600
FinSentS UK100
2 Jun 15 07:17:00
$RDSA:NA Shell and Total believe future is in natural gas and not in coal #ROYAL DUTCH SHELL PLC http://t.co/osujPEuQTp #LDN100
US Banking News
2 Jun 15 03:38:23
Royal Dutch Shell Plc’s “Outperform” Rating Reiterated at Credit Suisse $RDSA http://t.co/TmgS6g3YCR
Dakota Financial
2 Jun 15 01:39:12
Royal Dutch Shell Plc Receives “Outperform” Rating from Credit Suisse $RDSA http://t.co/vDbDG03hhF
MarketBeatCom
2 Jun 15 01:35:35
Royal Dutch Shell Plc's outperform rating reiterated at Credit Suisse. GBX 2,325 PT. http://t.co/3otSfvOxgw $RDSA #RDSA
Ticker Report
2 Jun 15 01:26:55
Royal Dutch Shell Plc’s “Outperform” Rating Reiterated at Credit Suisse $RDSA http://t.co/6fw18Hcxsf
Sleek Money
2 Jun 15 01:20:46
Royal Dutch Shell Plc’s “Outperform” Rating Reiterated at Credit Suisse $RDSA http://t.co/ZJFEbb4ZEy
Sentifi UK Market
1 Jun 15 23:01:10
Hottest #FTSE100 Stocks Today Featured on @thisismoney at http://t.co/UDLXIvgzn6 $BATS $PRU $AZN $RDSA $BG $RR $EXPN http://t.co/QiQlOCkpHt
FinSentS Euro 600
1 Jun 15 15:25:54
$RDSA:NA Shell and BP call for international carbon pricing deal #ROYAL DUTCH SHELL PLC http://t.co/tZ3syZCugk #STOXX600
FinSentS UK100
1 Jun 15 15:16:51
$RDSA:NA Shell and BP call for international carbon pricing deal #ROYAL DUTCH SHELL PLC http://t.co/Ia4fbTrPQV #LDN100
AlgoAnalyst
1 Jun 15 04:18:04
$RDSA #rdsa / Royal Dutch Shell PLC (NL). Positive score +2. Signal (+1), Correlation (+1). https://t.co/Z3pSCvL7BY #stocks #stockacti...
Sentifi UK Market
1 Jun 15 03:36:29
Most Discussed #FTSE100 Stocks #SentifiAlerts Available for Subcription at http://t.co/Vd1YV68b5j $STAN $RDSA $PTEC http://t.co/WpFzJojt22
US Banking News
1 Jun 15 00:06:22
Analysts’ Recent Ratings Updates for Royal Dutch Shell Plc $RDSA http://t.co/DPfJT2I8Rn
Ticker Report
31 May 15 23:41:44
Analysts’ Recent Ratings Updates for Royal Dutch Shell Plc $RDSA http://t.co/G3eLMuNlxU
Sleek Money
31 May 15 23:36:15
Analysts’ Recent Ratings Updates for Royal Dutch Shell Plc $RDSA http://t.co/SSUkpkxBgH
Sentifi UK Market
31 May 15 23:01:06
Hottest #FTSE100 Stocks Today http://t.co/P76TExK8VL $STAN $EZJ $RDSA $AZN $NG $AZN $BRBY $FTSE http://t.co/k0DlChW7PH
Sentifi UK Market
31 May 15 20:12:35
#Shell to market premium gasoline Monday http://t.co/eq8QuonqWm More about @Shell: http://t.co/uAhuANdn9w $RDSA http://t.co/3rOAEsGhF9
FinSentS Euro 600
31 May 15 15:23:33
$RDSA:NA Shell sought to influence direction of Science Museum climate programme #ROYAL DUTCH SHELL PLC http://t.co/CiAy4mSnoU #STOXX600
FinSentS UK100
31 May 15 15:16:19
$RDSA:NA Shell sought to influence direction of Science Museum climate programme #ROYAL DUTCH SHELL PLC http://t.co/g79qqHBEub #LDN100
The Legacy News
31 May 15 06:27:32
Royal Dutch Shell Plc Receives GBX 2,318.33 Average Target Price from Analysts $RDSA http://t.co/FilcCtzE0X
FinSentS Euro 600
30 May 15 15:26:13
$RDSA:NA Royal Dutch Shell A : Local activist campaigns from on high, again #ROYAL DUTCH SHELL PLC http://t.co/IWWD9lvj4n #STOXX600
FinSentS UK100
30 May 15 15:18:24
$RDSA:NA Royal Dutch Shell A : Local activist campaigns from on high, again #ROYAL DUTCH SHELL PLC http://t.co/swgMviIz6o #LDN100
Rachal Petro
30 May 15 04:09:59
RT @Sentifi_UK: Today's Hottest #FTSE100 Stocks http://t.co/P76TExK8VL $ABF $NG $RMG $EZJ $PRU $KGF $TSCO $RDSA $FTSE http://t.co/9JrhyChglJ
nj46nick
30 May 15 04:09:36
RT @Sentifi_UK: Today's Hottest #FTSE100 Stocks http://t.co/P76TExK8VL $ABF $NG $RMG $EZJ $PRU $KGF $TSCO $RDSA $FTSE http://t.co/9JrhyChglJ
Rectitude Market
30 May 15 04:06:31
RT @Sentifi_UK: Today's Hottest #FTSE100 Stocks http://t.co/P76TExK8VL $ABF $NG $RMG $EZJ $PRU $KGF $TSCO $RDSA $FTSE http://t.co/9JrhyChglJ
Sentifi UK Market
29 May 15 23:06:15
Today's Hottest #FTSE100 Stocks http://t.co/P76TExK8VL $ABF $NG $RMG $EZJ $PRU $KGF $TSCO $RDSA $FTSE http://t.co/9JrhyChglJ
FinSentS Euro 600
29 May 15 15:25:04
$RDSA:NA Federal Investigators Blame Shell for Alaska Drill-Ship Accident #ROYAL DUTCH SHELL PLC http://t.co/zNeIb2S4tM #STOXX600
FinSentS UK100
29 May 15 15:17:03
$RDSA:NA Federal Investigators Blame Shell for Alaska Drill-Ship Accident #ROYAL DUTCH SHELL PLC http://t.co/fNfYCYQ0Ar #LDN100
FinSentS Euro 600
29 May 15 07:24:15
$RDSA:NA Federal Investigators Blame Shell for Alaska Drill-Ship Accident #ROYAL DUTCH SHELL PLC http://t.co/CSlCGBDstf #STOXX600
FinSentS UK100
29 May 15 07:17:26
$RDSA:NA Federal Investigators Blame Shell for Alaska Drill-Ship Accident #ROYAL DUTCH SHELL PLC http://t.co/9d1OmluDQU #LDN100
Sentifi UK Market
29 May 15 00:45:06
#Shell names top executive to lead BG integration http://t.co/yb7SFATU40 More about @Shell: http://t.co/uAhuANdn9w $RDSA
FinSentS Euro 600
28 May 15 23:20:36
$RDSA:NA Federal Investigators Blame Shell for Alaska Drill-Ship Accident #ROYAL DUTCH SHELL PLC http://t.co/XpOOlkKoim #STOXX600
FinSentS UK100
28 May 15 23:15:21
$RDSA:NA Federal Investigators Blame Shell for Alaska Drill-Ship Accident #ROYAL DUTCH SHELL PLC http://t.co/Z8XHaIkHvC #LDN100
The Legacy News
28 May 15 22:42:53
Deutsche Bank Reiterates Hold Rating for Royal Dutch Shell Plc $RDSA http://t.co/HKxRRMSxvK
FinSentS UK100
28 May 15 15:18:13
$RDSA:NA Alaska governor tours Shell oil rig in Seattle #ROYAL DUTCH SHELL PLC http://t.co/Ceo8OVuuLy #LDN100
Mário Dos Santos
28 May 15 15:13:41
$RDSa at 27.41 via @uk_investing - http://t.co/ljmlLaOChp
US Banking News
28 May 15 08:32:50
Deutsche Bank Reiterates “Hold” Rating for Royal Dutch Shell Plc $RDSA http://t.co/iDMOB99yl7
Sleek Money
28 May 15 07:37:19
Royal Dutch Shell Plc Receives Consensus Recommendation of “Buy” from Analysts $RDSA http://t.co/IZNCqsim6e
US Banking News
28 May 15 07:28:59
Royal Dutch Shell Plc Receives Consensus Recommendation of “Buy” from Analysts $RDSA http://t.co/XegVLpbx7b
FinSentS UK100
28 May 15 07:17:58
$RDSA:NA Alaska governor tours Shell oil rig in Seattle #ROYAL DUTCH SHELL PLC http://t.co/tX3s59vQFG #LDN100
AlgoAnalyst
28 May 15 02:54:04
$RDSA #rdsa / Royal Dutch Shell PLC (NL). Positive score +2. Signal (+1), Correlation (+1). http://t.co/JuK1MyPPXN #stocks #stockactio...
WKRB News
28 May 15 00:42:30
Deutsche Bank Reiterates Hold Rating for Royal Dutch Shell Plc $RDSA http://t.co/82O8ED19cN
Ticker Report
28 May 15 00:27:13
Deutsche Bank Reiterates Hold Rating for Royal Dutch Shell Plc $RDSA http://t.co/qkLPQQhspQ
Dakota Financial
28 May 15 00:25:47
Royal Dutch Shell Plc Receives “Hold” Rating from Deutsche Bank $RDSA http://t.co/kEr6PqlndS
US Consumer News
28 May 15 00:05:08
Royal Dutch Shell Plc's hold rating reiterated at Deutsche Bank. GBX 2,425 PT. http://t.co/4xm4xVh86H $RDSA #RDSA
MarketBeatCom
28 May 15 00:02:38
Royal Dutch Shell Plc's hold rating reiterated at Deutsche Bank. GBX 2,425 PT. http://t.co/rxFAmv67os $RDSA #RDSA
FinSentS Euro 600
27 May 15 23:21:43
$RDSA:NA Alaska governor tours Shell oil rig in Seattle #ROYAL DUTCH SHELL PLC http://t.co/HLNCQ2u3fK #STOXX600
FinSentS UK100
27 May 15 23:16:11
$RDSA:NA Alaska governor tours Shell oil rig in Seattle #ROYAL DUTCH SHELL PLC http://t.co/5UpqFfq0Jp #LDN100
FinSentS Euro 600
27 May 15 15:30:59
$RDSA:NA Shell burns priceless works of art in Greenpeace Arctic video #ROYAL DUTCH SHELL PLC http://t.co/C4M72Gvyxs #STOXX600
				
				
By  +Follow August 19, 2013 5:46AM
Share:

Comments

 

blog comments powered by Disqus

About us

Equities.com is the most advanced interactive online social ecosystem for the financial industry, serving as a resource center and next-generation communication platform that connects self-directed investors with public issuers, market experts, and professional service providers and vendors. Registered members can leverage our exclusive proprietary research tools such as the Small-Cap Stars, which outperformed 90% of all small-cap mutual funds, and robust do-it-yourself E.V.A. research reports. The Equities.com Issuer Dashboard is the ideal tool to communicate and manage investor awareness campaigns to the investment community, as well as to access valuable resources to help your company grow.

Market Data powered by QuoteMedia.
Copyright © QuoteMedia. Data delayed 15 minutes unless otherwise indicated. Terms of Use.

Login or Register

LOG IN