This ICF International white paper examines key factors involved in identifying potential upstream investment opportunities based on analysis of well economics, including long-run subplay production analysis, decline curves and per-well recovery rates, resource consistency, regulatory factors, drilling and completion costs, and infrastructure constraints.
ICF has been analyzing these issues for decades and has years of well performance and economic data it continually calibrates to changing market trends. Identifying well costs and productivity, in the face of sustained low oil prices, allows potential upstream investors to identify favorable upstream business opportunities in an industry facing significant challenges over the medium term.
With global oil prices expected to remain low over the next couple of years, highly leveraged independent U.S. oil and gas producers are at significant risk—some potentially facing bankruptcy. The sustained low price environment creates new challenges for the U.S. upstream industry, but also investment opportunities for those with a medium- to long-term investment horizon and the ability to identify production sweet spots, driven by a number of key factors.