There is a bigger picture in shale that companies like SEA and Lonestar don't get to participate in as they just don't have the scale and leverage.
I think COP is the best operator in EFS. A close second is EOG. I own COP and therefore follow them closely. Their Lifting Cost in EFS is <$2/Bbl. Their ALL-IN cost of supply of <$40/Boe for 2.3BBoe Resource in the EFS. Their current plan has them at 25% CAGR from 130,000 boepd in 2017 growing to 245,000 in 2020.
That advantage crushes companies like SEA and Lonestar because it is immensely profitable and a very short capital cycle to boot (compared with LNG, Oil sands, Alaska projects) to a company with a pretty strong balance sheet (now) to begin with.
So I do expect considerable growth from shale E&P - with some being much more profitable than others. What SEA & Lonestar have to be able to do is scale up (profitably). They have got to be able to defend and also grow at 25% CAGR (less the sharks eat their dinner or worse they become the dinner). Not all companies will make it through 2018 just like with 2017, 16, 15 before.
Testament that it is still tough out there - Lonestar $250M 2022 note offering priced at 11.25%. Using the proceeds to retire $150M of 2019 maturing 8.75% notes. I'd say that's fairly expensive pavement they purchased for a clear runway to 2022.
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