Great answer. Always happy to engage in discussions with you. Like yourself, I prefer to deal in facts and I know that you also do a lot of research into your numbers which is why I respect your posts.
I'm sure you've heard of "confirmation bias". It's clearly evident in all posts. Were one to simply take operational advisory production facts and point out the decline in production to levels of 3 months ago that would be true and factual. It would serve as a "confirmation bias" for the camp that is concerned with the decline curve and also the operating effectiveness. Were one to take this set of data and measurement annual increase then of course the is massive YoY production increase and the trendline points up to the right and the extrapolation that can be inferred from it. Again "confirmation bias" fact to support that point of view.
I interpreted "throttling" quite differently to what you wrote. What I understood as the implication is that a well's production could be "throttled" like say the pilot flying a plane. That is not the case (that sort of "throttling" could cause well damage) and my overall experience is companies manage the "throttle" on a well to maximise the EUR.
Aware that the wells are being produced below maximum capacity due to "pipeline constraints" - but that's not a SSN controlled variable though is it (unless we are simply talking the gas gathering pipes - and if so then why wasn't that addressed as part of the infield drilling development plan). The commentary on oil price - that in IMO is one of convenience. Fracking and cleaning out a well and then deciding not to tie it into production. Maybe they got a great deal on the F&C cost. Otherwise why not leave it as DUC.
Great observation on the decline curve. Many companies are showing slides of how their recent wells are overproducing the decline curve - showing both cumulative production of many wells overlaying the Type Curves of various well designs and also charts showing the historical improvements of these designs. So that danger does indeed go both ways and is visible. I would add that the backward looking historical view understates the production of "old designs" and the forward looking decline curves have yet to prove themselves. Also worth noting the IRRs applied to old/new designs at various strip pricing to gauge how the cash comes in (or out).
I really don't think the negative is that bad here. What there is a Zero-Tolerance policy for the posting of any opinion or interpretation of macro/micro O&G fundamentals by one line wonders. I mean its hard to cheer lead any E&P stock at the moment (and as a holder of quite a few its painful to hold - but at least some pay good dividends). I continue to watch but certainly not committing new money to any (with the exception of buying some Lotto tickets like LEAPs on CHK).
Hope your 31K BOE for July is on the money.
Regards & GLTM
SSN Price at posting:
0.7¢ Sentiment: None Disclosure: Not Held
