CANADIAN SHALE IN 2015 – NEW REALITY 
RYSTAD ENERGY PRODUCT HIGHLIGHTS
Rystad Energy offers a wide product range of North American shale products (NASAnalysis).


NASReport: Up-to-date play coverage incorporating prospectivity maps, company-specific data, acreage and reserves, production forecasts of plays up to 2025 as well as well data analysis and economics of plays.

NASCube: Database that provides US and Canada shale gas and tight oil plays data for more than 400 companies and 80 plays. Data derives from Rystad Energy’s global and complete upstream database UCube, in addition to well data.

NASMaps: Geological, company acreage and well location maps. Maps are available as pdf-layers and GIS files with embedded information for import to GIS software.

NASWellData: Listing of official well data for key plays in addition to estimates for average well curves for selected acreages, NOW AVAILABLE in CUBE BROWSER.


RYSTAD ENERGY INDUSTRY OUTLOOK
As of March 2015, there are 18 proposed LNG projects in NA; 15 located in the US with a combined capacity of 16.69 bcf/d and 3 in Canada with a capacity of 4.74 bcf/d. As of March 2015, the combined capacity of all potential Canadian LNG sites reached ~30 bcf/d. Rystad Energy does not believe that all of the potential LNG export projects will come online in the mid- to long term, due to insufficient gas export capacity towards 2025. [Source: FERC, NASReport]

On February 27, 2015, the provincial regulators in Alberta announced that the requirements for hydraulic fracturing are expected to change. The announcement came in response to a series of earthquakes that occurred in the area of central Duvernay in the town of Fox Creek. [Source: Government of Alberta]

The LNG landed prices have followed the declining trend of the oil prices and have fallen to 7.45-7.85 $/MMBtu at the Asian east coast. This is only ~3 times higher than the LNG price in North America. Rystad Energy expects that this could further postpone the FID for LNG export projects in British Columbia. [Source: FERC]



CONTACT
NAS@rystadenergy.com



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The WTI oil price being around 55 $/bbl and AECO gas price around 2.5 $/GJ have significantly affected the upstream activities in Canada. Rystad Energy forecasts ~30% decrease in the total 2015 upstream activity in the Canadian tight oil and shale gas plays, compared to 2014. Regarding production levels, the industry will further see the impact in 2016 as a result of the cost cuts during 2015. Rystad Energy expects the 2015 shale production to be 16% higher compared to 2014.
 
There are only a handful of companies active in Canadian Shale that are expected to realize a positive free cash flow from their shale operations in 2015 (Figure 1). Crescent Point Energy has the highest FCF from its shale operations among Canadian operators. The company has maintained a 2015 budget at nearly $1 billion to be invested in its shale operations, primarily in the Bakken Shale Play in Saskatchewan, Viking and Shaunavon. The peer group, which includes shale-focused companies in Canada, has decreased its 2015 capital spending by 35% on average, compared to 2014 spending levels. The spending cuts range from ~10% to almost 80%; and we can observe cuts across the board.

 
On average, the upstream companies in Canada are more disciplined when it comes to their debt. The average debt to total assets ratio for the largest shale companies in Canada is 22% (Figure 2). This is 4% lower than for the peer group in US, including the largest shale players. For instance, companies like Painted Pony Petroleum reported not to have any debt.

 
Figure 3 shows the historical and forecasted well count for Canadian shale plays split by the breakeven prices. In 2015, 75% of the wells are expected to be drilled with a wellhead breakeven price lower than 60 $/bbl. These wells will be drilled in the core positions of Bakken Shale, Viking and liquid-rich Montney. Non-core and exploration activities are expected to be lower in 2015 and 2016 compared to the historical developments. The shale activity is expected to recover in 2017 and 2018 as a result of higher oil prices. Most of the growth will come from wells with breakeven prices above 60 $/bbl.

 
Rystad Energy is an independent oil and gas consulting services and business intelligence data firm offering global databases, strategy advisory and research products for E&P and oil service companies, investors and governments. We are headquartered in Oslo, Norway, with additional research teams in India. Further presence has been established in the UK (London), USA (New York & Houston), Russia (Moscow), for Africa as well as South East Asia.