May 18, 2016 – The Street
Oil May Hit $50 But There Are Still Good, Bad and Ugly Plays
By: Carleton English
Anyone looking to play the risky energy market should know that the break-even point for oil and gas companies keeps getting higher -- even as the price of oil increases. Without taking geography into account, investing in the sector could be a fool's bet.
There are "good basins," "bad basins" and "ugly basins," according to recent research by RBN Energy. The so-called good basins combine robust health of the well alongside lower costs. In a separate report, RBN Energy identified the top 20 counties for drilling activity, where 66% of rigs reside. The economics of drilling and completing wells are "viable" in these areas (pictured below), with most areas outside of these regions underwater with oil at $50 a barrel, RBN Energy said in an email to Real Money.
Read the full story here: http://realmoney.thestreet.com/articles/05/17/2016/oil-may-hit-50-there-are-still-good-bad-and-ugly-plays
The findings come at an interesting time. Oil has been nearing $50 a barrel, which was considered a break-even point for many players, where potential profits equal exploration and production costs. However, just as oil is nearing that point, several energy companies have filed for Chapter 11 bankruptcy protection. Within the last week alone, Breitburn Energy (BBEP), Linn Energy (LINE) and SandRidge Energy (SDOC) have all filed. SandRidge is the fourth of five so-called "zombie" companies Real Money called out earlier this to year to file.
