Fossil Oil Drilling Programs Break Evens on Oil Prices

HOUSTON - Dec. 2, 2014 - PRLog -- Houston, TX — 12/1/2014 —Fossil Oil Company (http://www.fossiloil.com/) explains that oil prices have fallen more than 30% in just the last six months.  Today’s investors want to know how low prices can go before oil projects such as the current Fossil Oil Joint Ventures will no longer be profitable.  Fossil Management and its Consulting Engineers have reviewed our year-end Joint Ventures to answer this important question.

First, one of the primary causes of this sudden price decline relates to substantial oil production from the unconventional shale plays such as the Bakken in North Dakota, the Eagle Ford in South Texas, Wolfcamp in the Permian Basin (Midland/Odesa, Texas), Niobrara in Colorado, Marcellus in Pennsylvania, and the Utica in Ohio and New York.  Most of these shale plays have a breakeven cost ranging from $80 down to $50 per barrel.  The major oil companies who dominate the drilling in these shale plays indicate a significant drop in drilling activity will take place during 2015 as their drilling rig leases expire.

“U.S. oil production would see a definite slow down by mid-2015”, according to Daniel Yergin, Pulitzer Prize-winning oil historian.

Right now, approximately 86% of the 1,659 oil rigs operating in the U.S. are drilling expensive horizontal wells in the major shale plays. It is only a matter of time and how low the price per barrel goes before the major oil companies will pullback in drilling and lower oil production in this country.

On November 27^th, 2014, OPEC announced that it would not curb its oil production to combat the decline in oil prices.  Industry pundits say that this position will be reversed once Saudi Arabia (OPEC) sees U.S. oil companies slash their drilling budgets especially in the shale plays.  Credit Suisse Research Analysts stated, “Oil prices would glide to near Long Run normal prices of $80/barrel for WTI (West Texas Intermediate) to $86/barrel for Brent by early 2017 but that WTI could average $85/barrel in 2015.”  Fossil’s Joint Ventures oil prices are based on the WTI price index.

Fossil Oil Management have run the calculations for both the Fossil-Friendship Church Oil Well JV – II and the final year-end Fossil-Antioch-Rush Creek Multi-Oil Well JV as to their Breakeven Cost.  Both of these Joint Ventures will still be profitable (over the life of these projects) even if the price falls to $35 - $40 per barrel.  The Operators for each of Fossil’s Year-end Programs, focus on maintaining tight cost controls and conservative approaches to well expenses.  Considering the excellent potential barrels of recoverable oil in each of these Joint Ventures, Fossil Oil is establishing a position for future higher oil prices.  Fossil Oil has made the decision to stay in the game of finding reserves of oil and gas with this longer range view in mind.

T. Boone Pickens, famed energy financier stated, “Despite the current ‘soft demand’, the U.S. energy boom is here to stay for decades to come.”

Fossil Oil Company, LLC (http://www.fossiloil.com/), is an independent Oil & Gas exploration, drilling, and production company generating lower risk, high quality 3-D seismic based investment opportunities for high income individuals, institutions and self-directed IRAs. Please contact Ms. Cheryl Proctor at Cheryl@fossiloil.com, call her at Toll Free (877) 822-5802, or CLICK HERE (http://www.fossiloil.com/oil-and-gas-investment/index-soc...) for more information.