TEA

Usually it takes several posts brefoe "Vange" contradicts himself. This has to be some kind of record. It seems that the smaller producers exist only to sell themselves off to those morons running the larger companies. Apparently the dufuses running the big companies are at once fooled by phony reserves and "unjustified assumptions", and "skeptical of all the hype". You don't read well or have not followed the argument over the various threads on the subject. It is very possible that a few small companies can make huge profits from shale oil or shale gas. If they are in the right spot of the formation they can drill wells that have great economics. But the problem is that the industry can't make a profit or generate positive cash flows. We have already seen the contradictions from Chesapeake as it began to hype shale gas but is now claiming to want to transition to shale liquids instead because it can't make money in gas. We have already seen AM admit that the claims that the shale formations were relatively uniform and productive are not true. And we have already seen the companies admit that they need $7.50 gas to have a hope of making a profit and that with sub $4.00 gas they are bleeding cash. That's right, and the reality is that companies with decades of profitable experience in the energy field are investing money hand over fist in shale oil and gas exploration and production. This is not exactly true. There is no profit in shale gas and oil for the industry. The profit comes from the ability of majors to hide their reserve declines thanks to SEC rules. This is why the big players who have plenty of production in conventional areas will continue to buy some of the shale developers and will quietly write down the losses over the next few quarters. If shale gas were profitable Chesapeake would not be telling investors on conference calls that it is trying to become a shale liquids play.

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