This is Geology 101

One of the oft ignored facts about the fracking explosion in the United States is drop off rates.

The production of any oil well will drop off over time, with conventional oil wells declining between 5 and 10% a year, and fracked wells declining between 25% and 50% a year.

What this means is that the production numbers that have driven the financing of fracked oil and gas wells have been based on imaginary numbers, much like the numbers that came from assessors at the height of the housing bubble a decade ago.

I don't know who is going to end up losing, but, once again, Wall Street has managed to generate its profits and leave someone else holding the bag:

Thousands of shale wells drilled in the last five years are pumping less oil and gas than their owners forecast to investors, raising questions about the strength and profitability of the fracking boom that turned the U.S. into an oil superpower.

The Wall Street Journal compared the well-productivity estimates that top shale-oil companies gave investors to projections from third parties about how much oil and gas the wells are now on track to pump over their lives, based on public data of how they have performed to date.

Two-thirds of projections made by the fracking companies between 2014 and 2017 in America’s four hottest drilling regions appear to have been overly optimistic, according to the analysis of some 16,000 wells operated by 29 of the biggest producers in oil basins in Texas and North Dakota.

Collectively, the companies that made projections are on track to pump nearly 10% less oil and gas than they forecast for those areas, according to the analysis of data from Rystad Energy AS, an energy consulting firm. That is the equivalent of almost one billion barrels of oil and gas over 30 years, worth more than $30 billion at current prices. Some companies are off track by more than 50% in certain regions.

The shale boom has lifted U.S. output to an all-time high of 11.5 million barrels a day, shaking up the geopolitical balance by putting U.S. production on par with Saudi Arabia and Russia. The Journal’s findings suggest current production levels may be hard to sustain without greater spending because operators will have to drill more wells to meet growth targets. Yet shale drillers, most of whom have yet to consistently make money, are under pressure to cut spending in the face of a 40% crude-oil price decline since October.

………

Schlumberger Ltd. , the oil-field-services giant, reported in a research paper that secondary shale wells completed near older, initial wells in West Texas have been as much as 30% less productive than the initial ones. The problem threatens to upend growth projections for America’s hottest oil field, the company said in October.

Seriously, is there anything left in America that is not basically a fraudulent pump and dump scheme?