Via Oilprice.com

Shale

Friday December 13, 2019

1. OPEC+ cuts deeper

– OPEC+ agreed to cut output by an additional 500,000 bpd last week. Overall, the group has agreed to hold 2.1 mb/d off of the market for the first quarter.

– OPEC production is now 2.69 mb/d lower than it was a year ago. Iran and Venezuela have lost a combined 1.4 mb/d compared to last year.

– Those disruptions were entirely offset by a 1.5 mb/d increase in supply from the U.S. this year.

– But the task for OPEC+ is not over. The IEA still sees a supply surplus of 0.7 mb/d in the first quarter.

2. Tullow’s 70% stock meltdown

– Tullow Oil (LON: TLW) saw its share price fall off a cliff this week, falling by 70 percent in a single day. It was one of the worst performances from a London-listed company in a decade, as the FT put it.

– The meltdown was the result of a revelation by the company of its dismal performance in Ghana. The company’s flagship operation has a list of technical issues – in particular, more water than expected has entered its oil field.

– Tullow slashed its production guidance to just 70,000 bpd in 2020, down from 100,000 previously.

– Cash flow is expected to fall to just $150 million as a result, down from a previous forecast of $500 million.

3. Shale base declines increase

– The IEA sees U.S. shale growing by 1.1 mb/d in 2020, down from 1.6 mb/d in 2019, but still a substantial growth rate.

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