Thursday, June 07, 2018

Oil Boom Bottlenecks Are Costing U.S. Investors $1 Billion a Day

More than $1 billion a day. That’s the price tag for a Permian Basin pipeline crunch that’s increasingly affecting investors as much as it is West Texas oil drillers. Eight of the top explorers focused on the booming U.S. shale region have lost $15.6 billion in combined market value in about two weeks, as shipping constraints devour the profit they can fetch for a barrel of crude. Parsley Energy Inc. shares have wilted 16 percent in that time; Diamondback Energy Inc. has been defanged, down 18 percent. Even as production soars, dwindling pipeline space and a rail and trucking shortage have raised shipping costs, boosting the discount Permian producers take to offload their oil. The bottleneck benefits refiners who can buy cheaper crude and pipeline owners with extra space, but it’s dragging down explorers. Relief may not come until 2020, when new pipelines are expected to be up and running...MORE

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