Comments by Khalid Al-Falih, chief executive of Saudi Aramco, to WorldEconomic Forum on 21 January 2015 about the fall in oil prices:Only real surprise is that people were surprised by decline in oil price. Oil is ultimate cyclicalcommodity.Al-Falih identified four factors behind sharp fall in oil prices:•High price environment for a number of years fuelled growth in supply•Efficiency and high oil prices crimped demand growth to levels not matching supply growth•Market propped up to a significant degree by geopolitical fears encouraging investors to driveprices up and keep them upUltimately reality of fundamentals burst that bubble of geopolitical risk propping price up•Financialisation of commodities (Falih not sure how significant this is). Strong dollar,winding down of QE and investment flows contributed to acceleration of collapse of bubbleFull interview is available on Saudi Aramco website here:http://www.saudiaramco.com/en/home/news-media/live-streaming.htmlWith Falih’s comments at minutes 24-26 of the video clip

Estimated breakeven prices by North Dakota’s DMR

Projected output from North Dakota for various levels ofwellhead prices and number of drilling rigs (DMR)

Latest daily active rig count in North Dakota from DMR

Factors affecting U.S. oil production in 2015 – not just theraw rig count(1) Rig count(2) Drilling efficiencya) Time spent moving in and rigging upb) Time to reach target depth(3) Horsepower and capability of the rigs(4) Average vertical depth(5) Average horizontal section length(6) Time taken for pressure pumping and other completion services(7) Complexity of geology(8) Quality of source rock(9) Average number of stages fractured per well(10) Initial production in first 30/60/90 days from new wells(11) Decline rates from new and old wells(12) Wellhead prices (not futures prices) relative to full life-cycle costs ofdrilling and completing new wells

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