september 19th, 2017 · our approach and heritage: a bottom-up database of ~65.000 upstream oil and...
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September 19th, 2017
Havar Blakset – Partner Rystad Energy
• Independent energy database & advisory firm
established 2004
• Headquartered Oslo, Norway with offices in major
oil & finance hubs globally.
• Vendor of business intelligence databases for the
global oil & gas industry
• A leading energy advisor within E&P,
MIDSTREAM and OFS strategy, market analysis
and business development
• Publishing a number of industry reports on high
impact topics
Introduction to Rystad Energy – an energy database and advisory firm
Source: Rystad Energy
2
Online, global
E&P and oilfield
service databases
Strategy advisory,
market analysis,
business
development
Standardized and
tailor-made
research reports
Our approach and heritage: A bottom-up database of ~65.000 upstream oil and gas projects
4
Rystad Energy UCube
A microcosmos of the
upstream oil and gas industry
-4
-3
-2
-1
0
1
2
3
4
1980 1985 1990 1995 2000 2005 2010 2015
0
20
40
60
80
100
120
140
160
2017 OPEC cutting growth, Non-OPEC/shale oil is responding immediately to the cuts
Source: Rystad Energy UCube
5
Change in liquids production year on yearMillion bbl/d
OPEC
Non-OPEC
Historical oil price (Brent*), 1980-2017
Dollar per barrel, real December 2017
Brent oil price
(right axis)
2008
Financial crisis
OPEC cut supply
~1.8 mmbbl/d in
2009 to strengthen
oil price
D2000/2001
Dot-com & 911
OPEC cut supply
~365 kbbl/d in 2001 &
~1.6 mmbbl/d in 2002
C1998
Asian crisis
OPEC cut supply
~1.5 mmbbl/d in 1999
to rebalance the
market
1986
OPEC production increase
Saudi Arabia led the
production increase after
several years of reduction
and lost market share
A B
OPEC decided
against cutting
supply at Nov
27, 2014
meeting
1.
2.
…Non-opec is
stabilizing the
market, the
largest cut
since 1992
3.
…and instead
started a volume
war
4.
… shale oil
expanding,
no Y/Y cut
from OPEC
Despite no Y/Y cut from OPEC, the OPEC communication maters and moves the market
Source: Bloomberg, Rystad Energy research and analysis
ICE Brent crude front month contract price and OPEC policy announcements (2015-to-date)USD per bbl
6
0
10
20
30
40
50
60
70
80
Jan-15 Apr-15 Jul-15 Oct-15 Jan-16 Apr-16 Jul-16 Oct-16 Jan-17 Apr-17 Jul-17 Oct-17
OPEC meeting
No deal, but agree
to monitor market
closely
OPEC meeting
No policy
change
OPEC
reintroduce
target range
OPEC/non-
OPEC status
meeting in
Kuwait
JMCC
recommends 6-
month cut
extensionOPEC meeting
Cuts extended 9
months
OPEC boosts
production
Production freeze
agreement
announced (KSA,
RU, QA, VZ)
Doha
production
freeze talks
end without
agreement
KSA announces
producer talks
in Sep-16
Non-OPEC
meeting, no
commitment
made
OPEC meeting
Target cuts
introducedNon-OPEC
agreement
Nigeria
production cap
agreed
-3.0
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2.5
3.0
86
88
90
92
94
96
98
100
102
1Q-15 2Q-15 3Q-15 4Q-15 1Q-16 2Q-16 3Q-16 4Q-16 1Q-17 2Q-17 3Q-17 4Q-17 1Q-18 2Q-18 3Q-18 4Q-18
Implied stock chg, rhs
Implied stock chg (US shale at 40 USD), rhs
Supply (63 USD WTI 2018)
Demand
Supply (US shale at 40 USD)
March 2017 - OPEC needed to continue the cuts, if not 2014/15 all over again, 40 USD/bbl not
clearing the market
Note: The 1Q drop in global supply in 2017 and 2018 is partly driven by the ~400 kbbl/d seasonal drop q/q in biofuels production in Brazil.
Source: Rystad Energy research and analysis
World liquids supply and demand, quarterly
Million bbl/d Million bbl/d
7
ForecastHistorical
NormalNormal
But are the OPEC
cuts large enough?
Spending vise the cycle turned in 2016
Source: Rystad Energy UCube
9
- 250
- 200
- 150
- 100
- 50
0
50
100
150
200
1980 1985 1990 1995 2000 2005 2010 2015
Change in upstream capex budgets, year-over-year
Billion USD real terms
-25%
-24%
+2%
0
1000
2000
3000
4000
5000
6000
7000
0
200
400
600
800
1000
1200
1400
1600
1800
2000
Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17
DUCs (RHS)
Spudded Wells (LHS)
Completed Wells (LHS)
Driven by shale oil – already more then a doubling in spudded wells
Source: Rystad Energy NASWellCube
US shale oil activity (LHS) and associated DUC inventory (RHS)
Number of wells Number of wells
10
More completed than
spudded
More spudded than
completed. Delays due to
bottlenecks and price
expectations OFS
1.
Main driver for shale comeback – significant reduction in breakevens and oil price above 45
*Does not include test activity, where well was shut-down after completion
Source: Rystad Energy NASWellCube Premium
Average wellhead breakeven oil price, by play and spud year*USD/bb
11
0
10
20
30
40
50
60
70
80
90
100
2010 2011 2012 2013 2014 2015 2016
Bakken
Eagle Ford
Niobrara
Permian Delaware
Permian Midland
Average
1.
Source: Rystad Energy research and analysis, EIA
US crude oil and lease condensate production forecast, August 2017Million bbl/d
12
8.5
9.0
9.5
10.0
10.5
11.0
11.5
Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 Jun-18 Dec-18
Rystad Energy Aug 17 (50 USD/bbl 2017; 55 USD/bbl 2018)
Rystad Energy Sept 17 (50 USD/bbl 2017; 55 USD/bbl 2018)2
Rystad Energy Sept 17 (forward curve)
EIA (Aug17)
ForecastHistory
Impact from Harvey
Total US supply up by 1.0 mbbl/d Dec17 vs Dec16 – first time EIA is overestimating1.
-3.0
-2.0
-1.0
0.0
1.0
2.0
3.0
82
84
86
88
90
92
94
96
98
100
102
1Q2011 1Q2012 1Q2013 1Q2014 1Q2015 1Q2016 1Q2017 1Q2018
Implied stock change, rhsTotal SupplyTotal Demand
4Q 4Q 4Q 4Q
Opec
cuts
Stock draws through 1Q 18, OPEC will need to continue the cuts 2H 18 due to US shale surge
13
Source: Rystad Energy research and analysis, IEA OMR
World liquids supply and demand, quarterly
Million bbl/d
NormalNormal
14
Oslo, Stavanger, Singapore, Dubai, Moscow, London, New York, Houston, Rio
Consulting: strategy, market studies, DD, macro
Databases: E&P, Oil Service, Carbon Footprint
Havar BlaksetPartnerNew York
Main: +1 646 774 2943
Mobile: +1 917 254 5938
200 Park Avenue, 17th Floor New York, USA
www.rystadenergy.com
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