OPEC & Shale

-Khalid al Falih commented at recent OPEC meeting that global demand will outpace shale production so there’s plenty of room in the market for shale oil
-Combination of falling production from some formerly big players like Venezuela and growing demand in India and China and lack of investment in new large scale projects
-Will higher oil prices keep the money flowing to shale oil companies?

Prospects for profit for shale oil companies

-Will companies look to diversify into downstream? Yes, but government regulation is a factor in refining
-Could US energy companies look to establish downstream operations in Mexico as they liberalize their energy industry?
-Definite opportunity though NAFTA is an issue
-To what extent will service costs positively or negatively impact shale oil companies’ bottom lines? Service costs are up but companies are being pickier in how many people they hire
-Can they scale back up without as much as waste?
-Impact of hedging on shale oil companies. Could some miss the boat on the highest prices?
-Oversupply of light oil could push prices down for shale companies in particular

Russia-Saudi oil cooperation
-OPEC—non-OPEC production cut progress good though Iraq and Kazakhstan called out for overproduction
-Will the production cuts continue through 2018? Al Falih indicates they will but expectation is that exit will be discussed in June
-Al-Falih and Novak’s relationship as a sign of how well the production deal is working.
-Russian economy – how dependent is it on European natural gas market and/or Chinese market? Could European diversification to American or other sources of natural gas spell trouble for the Russian economy?


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