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Bakken Monitor – September 2019 Access to Capital, Not Drilling Locations, Will Determine When US LTO Peaks

North Dakota's June 2019 output hit 1.425 million b/d (+30,000 b/d m-o-m), in line with our 1.428 million b/d (+33,000 b/d) forecast. This marks a return to growth after flat production this year through to May. We see production higher in July at 1.449 million b/d. The unloved Eagle Ford basin is showing signs of having passed peak productivity, in line with our assessments of May and June last year. This is problematic for optimistic visions of US LTO’s future, such as Rystad’s, which sees production growing from 8.3 million b/d currently to 15.2 million b/d by 2023 (or 80% growth) if Brent averages $65/bbl. We consider forecasts over such a time frame to be inherently unreliable due to the short cycle nature of LTO. Nevertheless, the Eagle Ford will need to at least plateau over the forecast period to achieve this growth, which will prove difficult without further productivity gains or significant capital investment. Analysis based on how many Tier 1 locations remain misses the major question of cost of extraction and the availability of alternatives....

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