Exxon writes a big check in North Dakota
Exxon’s latest move into the Bakken could be validation of the tight oil play or it could be the realization there is nothing else left. It should prove instructive whichever the case.
“Exxon Mobil Corp will buy Denbury Resources Inc’s properties in the Bakken shale for $1.6 billion and the exchange of some assets as the world’s largest publicly traded energy company seeks to boost its crude oil output.”
Other news from North Dakota: As of Wednesday, September 19th there were 141 wells awaiting completion which falls in line with the lower rig count and the drop in new wells coming into production over recent weeks. According to the North Dakota Dept. of Mineral Resources the “utilization rate for rigs capable of +20,000 feet has fallen to 90%, but for shallow well rigs that drill to 7,000 feet or less utilization has increased to about 60%.” So the issue doesn’t appear to be availability of rigs. Could it be money?
The problem in a nutshell
It is hard to reduce the problem the global economy faces to simpler terms than how Jeff Rubin put it this week.
“We can’t grow our economies without burning more oil, but the growth we seek will eventually push the price of the fuel out of our economy’s reach. That, in a nutshell, is the quandary central banks are now facing. Unfortunately for the Fed, it’s about to learn once again that no amount of monetary stimulus is going to change that basic constraint on economic growth.”