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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum
GLD 494.42+3.8%Jan 28 4:00 PM EST
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KyrosL
To: Jacob Snyder who wrote (108101)10/24/2014 7:54:55 AM
From: Elroy Jetson1 Recommendation  Read Replies (2) of 219848
 
I think you'll find it difficult to find documentation for elmat that offshore oil production in Brazil has a break-even of $80 per barrel. - - - Not necessarily because you're wrong, but because the offshore fields are new and the accurate information which does exist is confidential.

In August 2014 Petrobras reported a "lifting cost" of $14.57 per barrel. But this excludes:
A,) severance taxes imposed by Brazil;
B.) depreciation of the capital invested in the wells and transport network;
C.) amortization of capital cost which went into exploration.

In 2008 Petrobras asserted that their offshore exploration would prove to be profitable with oil prices below $35 per barrel, but I doubt their bluster is supported by a complete cost analysis.

Offshore production costs (lifting cost + Parts A and B above) in Angola run about $40 per barrel. Goldman Sachs estimates the break-even costs of pre-salt offshore production in Angola is $80 per barrel - $40 to find the oil and $40 to produce it.

Wells in Angola are slightly more shallow and the geologic formations less problematic and costly to drill. On the other hand Angola is unstable with much higher security costs and severance "tax/bribe" costs.

So is the break-even cost in Brazil higher or lower than $80 per barrel? Petrobras and Shell are discussing exploring new offshore fields with a break-even cost of $120 per barrel.

Current offshore Brazilian wells break-even at $35 to 40 per barrel according to Goldman Sachs. Based on what I'd like to know - but their guesstimates make for an interesting chart.

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