Shell just sold large chunk of their UK North Sea portfolio.
UK as a country will focus more on on-shore oil & gas for the next 2-3 decades.
Maybe it is interesting to see the valuations;
Shell received $8.50 for proven barrels reserve
The peak was $13-15, and at its lowest the value was $3.50 per proven barrel reserve
Clearly it does not compare to onshore. Once the train is running (with the legal issues ironed out, that seems to be the phase we are entering + a lack of opposition on political level as well as on the ground) shale will prove to be a lot cheaper. For one, the acreage comes for free (compared to US $10k per acre for good properties). Secondly, all infrastructure --well, say 85%)-- is already in place. And thirdly, conducting any type of exploration is far cheaper then off shore.
So, probably the value per proven barrel will be higher than the once given in the latest Shell transaction.
And be assured, it will be those companies out for hunting shale assets. Shale will become the fundament for any large oil & gas producer. It is easy to develop, and to switch on and off. The capital outlay is infinitely smaller compared to the large projects where $10-20 billion investments (and more!) have become the new normal!
Without a doubt the cost per barrel can be higher. But the Capex risk is so much smaller. So a smaller margin is justified! In addition to this the scalability is another aspect that will be important in future energy investments.
So, key will be to have enough acreage. To develop it. And to unlock it, depending on the market conditions. Sometimes at a high pace, sometimes at a slow pace. It is a game changer compared to the High Capex, Lineair production facilities which were in favor with Big Oil over the past decade. It completes their portfolio, as their own in house swing producer.
---meantime we see the protests collapsing in the UK. I have followed this closely, as it is important for us, but also for the industry developing shale in the UK. Currently there are pockets of genuine local concerned people that have formed small groups. They are getting nowhere, and they are 'tired'. Early days they could mobilize their children, neighbors and families, now it is getting less so. Then there are the professional anarchists. They show up everywhere. Always the same guys. Rif Raf, unwashed, militant (pretending to be the opposite). You can expect them to set up a camp (digging a shitpit), do a lock-in, antagonise the workers and police, video everything etc. To top it of, there is also some lunatics that seem to be relentless in their efforts to fight shale. To be fair, they are stuck in tunnel vision, and heading for a brick wall. They have become isolated from any type of movement.
In the end there is a lot of disunity between all groups & individuals. The paradox of anarchists uniting themselves is not working out... In Lancashire the numbers are; 25 active locals, mostly housewives some backed by their husband. Then anarchist nationally maybe 50. And the loony tunes in Lancashire 2-4. That's it.
They will not be holding up shale development in the UK. That much is certain.
Sorry for this long post, it has been some time, but I am still convinced this is a winning play! Especially the dilution is killing us, but then again, if you don't sell and continue to buy on share issues, no man overboard!
