Oil: Shale Tight Oil Disrupting The Paradigm?

Summary
Discussion of oil futures pricing curve.
Discussion of breakeven, marginal, production and cash cost.
Examination of accounting methods for oil and gas concerns.
Examination of variations in shale and global major project breakeven costs.
In case you missed it, in our last missive, Oil: Price Impact? China's Shanghai Oil Exchange And RMB-Denominated Contracts we discussed:
  • Examination of China's cornering of the Dubai oil market and its record-setting August oil shopping spree's impact on oil prices.
  • Examination of the SHPGX - Shanghai Petroleum and Natural Gas Exchange - and its potential effect on oil prices.
  • Examination of China's dollar-denominated purchases and their impact on oil prices.
  • Examination of China's RMB-denominated purchases and their impact on oil prices.
In today's missive we discuss the oil futures pricing curve; definitions of breakeven, marginal, production and cash costs; examine accounting methods for oil and gas concerns; and variations in reported shale and global major project breakeven costs.

Oil Futures Pricing Curve
(click to enlarge)
Above note, as estimated in December 2012 by speculative futures markets, the WTI and Brent forward price curves.

Above note, as of August oil futures price curve eight years out 2015 - 2023, $41 to $64/bbl. Since August, we understand that this curve has slightly modified to $45 - $61/bbl.

Note the difference between the 2012 curve predicted price, Brent $108 - 94; today's market price $45, and today's predicted 2023 price of $61.

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