#AceFinanceNews – October 19 – Oil profits are being tested. Crude prices have face-planted to their cheapest level since 2010, threatening the balance sheets of companies and the budgets of nations.
Source: Bloomberg New Energy Finance
Take Canada’s controversial oil sands.
With crude prices teasing $80 a barrel for the first time in years, about 25 percent of the synthetic crude produced from the sands is no longer profitable, according to the International Energy Agency.
Stocks of smaller oil companies, which tend to focus on supplies that are expensive to extract, aregetting crushed. Bond holders who have lent to oil prospectors are getting worried they won’t get paid back.
But maybe the biggest question remaining is whether the bounty of U.S. fracking, which made America the world’s biggest oil and gas producer, will wither in the field.
The answer so far: not so much. Here’s a list of break-even points for some of America’s biggest shale-oil regions. Note that most regions continue to be profitable below $80, including the Bakken and Eagle Ford formations, two of the most important sources.
Much of the Eagle Ford play would still be profitable with $50 oil.