Study sees leap in prices needed for US drilling

04/11/2005
Rising finding and development (F&D) and operating costs have created sharp increases in the oil and gas prices producers need to support US drilling, said a report by Lehman Bros. Equity Research.“We estimate the industry needs $45/bbl oil and $6.25-6.50/MMbtu gas to earn a 15% pretax return on US drilling after fully allocating overheads and exploration costs,” analysts said in the Apr. 7 report. The price thresholds are $10-11/boe higher than those calculated in an earlier Lehman Bros. study of 2000 F&D and operating costs.The increases, according to the new report, result from higher service and operating costs, maturation of the asset base, and higher prices, whic...
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