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.


Signup for our daily newsletter and get our best articles emailed right to you!

Results for rdsa
4-traders.com
31 Oct 14 10:05:05
Shell Midstream Partners : Raises $920 Million in New York I.P.O. http://t.co/WhpK9a5baf $SHLX $RDSA
Sleek Money
31 Oct 14 04:39:28
HSBC Reaffirms “Neutral” Rating for Royal Dutch Shell Plc $RDSA http://t.co/x5VM9RjPjQ
WKRB News
31 Oct 14 04:34:56
Jefferies Group Reiterates “Buy” Rating for Royal Dutch Shell Plc $RDSA http://t.co/JVPp0xBQcq
Sleek Money
31 Oct 14 04:24:19
Canaccord Genuity Reiterates “Buy” Rating for Royal Dutch Shell Plc $RDSA http://t.co/MBxlOJIFG3
US Consumer News
31 Oct 14 04:20:06
Royal Dutch Shell Plc's neutral rating reiterated at HSBC. GBX 2,415 PT. http://t.co/fRRlw394pf $RDSA #RDSA
Analyst Ratings
31 Oct 14 04:19:42
Royal Dutch Shell Plc's neutral rating reiterated at HSBC. GBX 2,415 PT. http://t.co/7lDODixSkA $RDSA #RDSA
US Banking News
31 Oct 14 03:05:38
Royal Dutch Shell Plc Stock Rating Reaffirmed by Credit Suisse $RDSA http://t.co/JAnYyu0Fca
US Banking News
31 Oct 14 03:05:32
Royal Dutch Shell Plc Earns Overweight Rating from Barclays $RDSA http://t.co/cNirqFJP3N
US Consumer News
31 Oct 14 02:56:59
Royal Dutch Shell Plc's overweight rating reiterated at Barclays. GBX 2,950 PT. http://t.co/fRrGDW9zm8 $RDSA #RDSA
US Consumer News
31 Oct 14 02:56:54
Royal Dutch Shell Plc's outperform rating reiterated at Credit Suisse. GBX 2,625 PT. http://t.co/M3Kn8AdD38 $RDSA #RDSA
GLOBAL NEWS DEPOT
31 Oct 14 02:53:51
RT @RatingsNetwork: Royal Dutch Shell Plc's overweight rating reiterated at Barclays. GBX 2,950 PT. http://t.co/yAGhQ7W5I9 $RDSA #RDSA
Analyst Ratings
31 Oct 14 02:52:06
Royal Dutch Shell Plc's overweight rating reiterated at Barclays. GBX 2,950 PT. http://t.co/yAGhQ7W5I9 $RDSA #RDSA
Analyst Ratings
31 Oct 14 02:52:00
Royal Dutch Shell Plc's outperform rating reiterated at Credit Suisse. GBX 2,625 PT. http://t.co/VoSDHeM5T7 $RDSA #RDSA
US Consumer News
31 Oct 14 01:20:38
Royal Dutch Shell Plc's buy rating reiterated at Jefferies Group. GBX 2,640 PT. http://t.co/eXxxDgPz8m $RDSA #RDSA
Analyst Ratings
31 Oct 14 01:15:20
Royal Dutch Shell Plc's buy rating reiterated at Jefferies Group. GBX 2,640 PT. http://t.co/C1ToPvnfA4 $RDSA #RDSA
Sentifi UK_Market
30 Oct 14 22:25:10
Shell outpaces peers with profit growth, keeps spending http://t.co/jUjfNRjOrv $RDSA +873% http://t.co/ZeVwR2dUv4 http://t.co/jCnshhsrOp
Sentifi UK_Market
30 Oct 14 22:22:50
Hottest $FTSE 100 Companies Today at http://t.co/XZQNh0x0r6 $RDSA #Shell $BARC $AV $STJ $STAN $BTA $SN http://t.co/splVrVb05d
US Banking News
30 Oct 14 20:57:18
Charles Stanley Upgrades Royal Dutch Shell Plc to “Buy” $RDSA http://t.co/e03hbUWQpG
Stocks for the Week
30 Oct 14 13:15:26
Will Falling Oil Affect Exxon, Chevron Earnings? http://t.co/Vj0lmkPupS @IBDinvestors $XOM $CVX $COP $BP $RDSA
Swiss Resource AG
30 Oct 14 11:23:07
Royal Dutch Shell Plc upgraded by Charles Stanley to buy. http://t.co/SXQPwm93hz $RDSA #RDSA via @RatingsNetwork #SwissResourceCapital
Sleek Money
30 Oct 14 06:23:52
Royal Dutch Shell Plc Lifted to “Buy” at Charles Stanley $RDSA http://t.co/j4TsfezV3F
InterCooler
30 Oct 14 05:29:19
Royal Dutch Shell Plc Earns “Buy” Rating from Canaccord Genuity $RDSA http://t.co/2ggsGCyw0s
Analyst Ratings
30 Oct 14 04:15:11
Royal Dutch Shell Plc upgraded by Charles Stanley to buy. http://t.co/MsS4ltxJ71 $RDSA #RDSA
US Consumer News
30 Oct 14 04:05:49
Royal Dutch Shell Plc upgraded by Charles Stanley to buy. http://t.co/yCqioz8zrK $RDSA #RDSA
Zonebourse News
30 Oct 14 03:00:02
Shell bat le consensus au T3, nomme un nouveau président http://t.co/QoJ03AV7Hn $RDSA $FP $NOK1V $ENI
WKRB News
30 Oct 14 02:28:06
Royal Dutch Shell Plc Receives “Buy” Rating from Canaccord Genuity $RDSA http://t.co/mNiwD3MT5o
US Consumer News
30 Oct 14 02:14:06
Royal Dutch Shell Plc's buy rating reiterated at Canaccord Genuity. GBX 2,800 PT. http://t.co/o1ksWtlFtI $RDSA #RDSA
Analyst Ratings
30 Oct 14 02:09:40
Royal Dutch Shell Plc's buy rating reiterated at Canaccord Genuity. GBX 2,800 PT. http://t.co/snp1zDV6lV $RDSA #RDSA
US Banking News
30 Oct 14 02:07:06
Royal Dutch Shell Plc Rating Reiterated by Canaccord Genuity $RDSA http://t.co/Q5q06uZnRn
Zonebourse News
30 Oct 14 01:25:04
Shell bat le consensus au T3 et nomme un nouveau président http://t.co/YqcpyPncfW $RDSA $NOK1V
Eagle Alpha
30 Oct 14 00:58:31
$BARC, $BT/A, $RDSA, $CCR, $SPRT. Top Headline: Barclays - Poor IB Performance Offset By Retail & Barclaycard http://t.co/mjgpyWuqys
JESUS REAL
30 Oct 14 00:49:40
RT @IGSquawk: $RDSA Royal Dutch Shell beats expectations: 3Q adj. profit $5.8bn vs est. $5.48bn. AB
Bjorn Distelmans
30 Oct 14 00:49:29
Best presterende olie aandeel dit jaar is er volledig klaar voor om na opening er nog een schepje bovenop te doen #shellQ3results $RDSA
IG Singapore
30 Oct 14 00:40:23
RT @IGSquawk: $RDSA Royal Dutch Shell beats expectations: 3Q adj. profit $5.8bn vs est. $5.48bn. AB
IGSquawk
30 Oct 14 00:37:13
$RDSA Royal Dutch Shell beats expectations: 3Q adj. profit $5.8bn vs est. $5.48bn. AB
4-traders.com
30 Oct 14 00:00:02
ONGC HIGHEST-RANKED INDIAN ENERGY FIRM http://t.co/1HaqUPrCMq $ONGC $RELIANCE $XOM $RDSA
JESUS REAL
29 Oct 14 12:41:59
En el resto de Europa mañana 30/10 presentan #resultados unas 100 cotizadas, entre ellas: Royal Dutch Shell $RDSA, Bayer $BAYN,...
Zonebourse News
29 Oct 14 09:35:18
Agenda economique du jeudi 30 octobre http://t.co/uvCoiXAN8H $SEV $AF $ALU $RAND $TEC $AC $ATE $COX $RDSA $VOW3 $0QJS $BARC $AV. $ENI
4-traders.com
29 Oct 14 09:15:16
LONDON MARKETS: Oil Stocks Lift FTSE 100 As Crude Rallies http://t.co/WGabuFLvjr $BP. $BG. $NXT $RRS $RDSA $AAL $GLEN $F100 $TRKG
4-traders.com
29 Oct 14 09:15:02
LONDON MARKETS: Oil Stocks Lift FTSE 100 As Crude Rallies http://t.co/IVkAgLUEOC $BP. $BG. $NXT $RRS $RDSA $AAL $GLEN $F100 $TRKG
4-traders.com
28 Oct 14 07:50:04
Toronto's historic Royal York Hotel to be acquired by Kingsett, Innvest http://t.co/m8Df34OeXR $RDSA $INN.U $HCH $GWGI $ARM
4-traders.com
28 Oct 14 02:15:02
LONDON MARKETS: BP Boosts FTSE 100 After Dividend Rise http://t.co/X1JkyiDE6j $BP. $LLOY $BG. $RDSA $F100 $S3258 $TBHS
US Banking News
27 Oct 14 23:10:54
Royal Dutch Shell Plc $RDSA – Investment Analysts’ Weekly Ratings Changes http://t.co/vt5F8d4wH3
WKRB News
27 Oct 14 22:59:26
Royal Dutch Shell Plc $RDSA – Investment Analysts’ Weekly Ratings Changes http://t.co/JUZrBvroRb
FOBManny
27 Oct 14 12:25:32
IPO Calendar: Western Retailer Boot Barn On List http://t.co/HEgueHoJTo $RDSA $BOOT $SHLX $SIEN $FSAM $ECIG @meetalmehta
env121
27 Oct 14 07:14:24
Drilling Deeper: New Report Casts Doubt on Fracking Production Numbers http://t.co/Q7wqrpEIzk #fracking #lies $CHK $RRC $AR $CNX $RICE $RDSA
colin
26 Oct 14 10:03:22
RT @Helioschariot: PTTEP picks up #Brazil stake from $RDSA Shell | OilOnline https://t.co/Yly8I39fmt
☀Helioschariot☀
26 Oct 14 09:37:39
PTTEP picks up #Brazil stake from $RDSA Shell | OilOnline https://t.co/Yly8I39fmt
Turkey World News
25 Oct 14 03:01:11
Cheaper Saudi Oil To Pressure Iran, Russia, Venezuela http://t.co/ehOuPkMPi9 #IBDNews @IBDinvestors $XOM $RDSA $CVX $BP aracılığıyla
4-traders.com
24 Oct 14 08:20:02
Royal Dutch Shell 3Q 2014 -- Forecast http://t.co/jCcp1GixBz $RDSA $GLE $MS $KN $CIGHL
				
				
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.