This is where we are heading, but its still some way to go. That...

This is where we are heading, but its still some way to go.

That this is unsustainable is obvious. Eventually, investors will realize that there is no long-term value in tight oil. For now, the flood of oil from tight oil formations has conjured the illusion that the world needn't worry about oil supplies anymore because of the "miracle" of hydraulic fracturing, often referred to as fracking. (Why investors have been cautious about additional investment in the Canadian tar sands, but not American tight oil is a truly puzzling question.)

The recent rebound in oil prices should spur some investment elsewhere, especially where genuine financial returns await. But the punishing price decline in oil from 2014 to 2016 and the slow recovery that followed has resulted in deep cuts in exploration and development throughout the industry (if not so much in the U.S. tight oil fields).

In response, the International Energy Agency has been waving its arms for some time that this dearth of investment will mean constrained supplies after 2020. In addition, Rystad Energy, an independent energy research firm, reported at the end of last year that 2017 saw a record low in oil discoveries. It noted that exploration expenditures had dropped 60 percent from 2014 to 2017. Without a substantial reversal of this trend, the firm expects supply deficits. (Translation: There won't be enough oil to go around in the not-too-distant future.)

That not too distant future coincides with first production for FAR.

TPA