Shell

I found this article this morning, and it gives some interesting insight as to why Shell is selling assets.

I found these quotes from the article most enlightening:

    "  We continue to restructure and focus our North America shale oil and gas portfolio to deliver the

       most value in the longer term."  "... the most value..." meaning where the company can maximize

       profit.

    "The company has focused on selling gas assets where development costs are high while

     revenues are relatively low compared with the oil sector,..."  Sounds as though more of their

     financial assets will be refocused to oil prospects around the world.

    " Shell, like many other global oil companies (think BP), is carrying out a broad cost-cutting drive

      aimed at boosting profits." The company is off loading $15 billion dollars of assets; not only in PA

      and OH, but also in Wyoming, and Louisiana.

You can read the entire article here:http://www.brecorder.com/fuel-a-energy/193/1214492/

My take away from this comes down to a conversation I had with a friend who has worked in the Eagle Ford and Barnett shale plays. He felt that the much of the Utica would not be developed by "the majors". Instead he felt that small to mid-size companies, or wholly owned subsidiaries of the majors such as XTO, would perform much of the development. A good example of this is Hilcorp.

My friend felt that the profit potential in much of the Utica did not fit the business model of the larger oil and gas companies. Whereas, Utica production fit nicely into the business model of smaller, more nimble companies, i.e. Hilcorp. So I expect as time passes we will see more small to medium size companies come in and develop the "Northern Utica".

Just my opinion which I offer up as food for thought. I have no phantom "big Texas oil men" or mythical legal advisors giving me information. These are just my observational opinions. Hopefully they will be taken that way.

   

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Replies to This Discussion

Permalink Reply by Sage59 on August 18, 2014 at 3:20am

Thank you Barry. Clear info, and a solid opinion based on reasonable thought. It is insight like this that keeps this site relevant to those of us trying to understand the play.

Permalink Reply by MJ on August 18, 2014 at 6:39am

A very reasonable way of thinking about things.  This could explain a lot.  Thank you Barry! 

Permalink Reply by Dexter Green on August 18, 2014 at 6:46am

The basic premise of what you said has been covered many, many, many, many times on here.  Most of us get it.  Some are still unconvinced.  Hopefully this succinct and erudite summation of yours will help others understand.  Thank you.

Permalink Reply by Trapper on August 18, 2014 at 9:45am
Thank you. Perfectly plausible. Remember when that BP well in the gulf was pouring crude into the gulf? That's the type of production the big boys are after!
Permalink Reply by Joseph-Ohio on August 18, 2014 at 9:59am
Only so much of that on this planet.

Also, the production could be great but forget the mega- spills - don't need or want any more of those !

Have to make sure that doesn't happen landside in populated areas.

Talk about risk and liability - wow !
Permalink Reply by Barry D on August 18, 2014 at 7:14pm

... and I think that's where they're headed.

They're just following the "benjamins".

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