The rationale of the new administration is to try and get the drilling industry to drill more wells and produce more oil and gas . A higher rig utilization rate means higher drilling costs and higher oil and gas production means lower energy costs . Be careful what you wish for ! Hopefully part of the incentive to drill more is a lowering of the government royalties .
However oil and gas are finite resources that deplete very quickly especially the tight high cost non conventional basins that have been driving the USA to be the worlds biggest producer . There is good research that says those basins are at or in the case of the Permian close to their top production rates and production will start to go down soon . It is near impossible to predict future oil and gas prices but with more LNG export in the pipeline for the USA and Canada it is hard to see that the very low North American gas prices won't move a bit closer to world parity .
However all this may be just a little too far down the track for our little minnow .
OEL Price at posting:
1.2¢ Sentiment: Hold Disclosure: Held
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