Shale Series Part 1 - Art Berman discusses recent WSJ article on shale production

The Wall Street Journal recently wrote an article stating that shale production was coming in at around 10% less than forecasted. Art Berman recently discussed this on Peak Prosperity. Art Berman is a geologist who is an oil expert. He's been saying for awhile that shale production was coming in lower than anticipated. Here some of his thoughts on the article:

1. He believes the gap is really greater than 10%.

2. This is based on what the definition of "average" means. He suspects that the data given to the Wall Street Journal was cherry picked. That is, they were coming up with the 10% based on the best locations. He's looked at total wells drilled and therefore is coming up with a much lower figure.



3. Not only does he believe that oil forecasts for shale is too high, but that revenues are coming in much lower than expected (I'm assuming based on even the lower actuals). Why? Forecasts aren't taking into account the proper mix of gas and oil that is coming out of the wells. Gas sells at a lower rate so too much of a gas ratio means that revenues end up coming in lower than anticipated.

I've been following what Berman has to say for the last year or so. I love the fact the Wall Street Journal is at least somewhat validating Berman's conclusions. It helps me feel more comfortable that Berman knows what he is talking about.