This thesis is due to my passion for both energy and for finance and it is a result of my university career at Politecnico of Milan: a Bachelor’s Degree in Energy Engineering and a Master’s Degree in Management Engineering. The aim of this work is to investigate on the oil price collapse that happened in the second quarter of 2014 as a consequence of the Shale Revolution that was born in the United States of America, to understand the business model of this new shale drillers and to make some considerations of possible future financial implication given the high debt of the industry. The first chapter is dedicated to the oil market: it wants to clarify how the supply side is composed, which are the main actors as far as oil production is concerned and which countries represent the demand side of the market. Furthermore, an historical analysis of the main oil price shocks has been performed by looking at the papers in the literature. The second chapter focuses on unconventional oils to understand which are the main differences from the conventional ones, which type of oil is possible to extract from unconventional fields and which are the main enabling technologies that made the Revolution possible. Finally, an explanation of the shale oil companies’ business model is given to the reader. The third chapter focuses on U.S. Shale Oil Revolution, it describes which are the main plays in the United States and the evolution of unconventional oil production after 2010. An analysis of the evolution of breakeven prices is also given. The fourth chapter gives the results of a financial analysis that has been done based on the annual reports of five companies operating in the shale oil Exploration and Production industry. Considerations on the financial impacts of the industry debt exposure are drawn with a comparison between shale debt and subprime mortgages debt.

Analysis of shale oil industry and considerations on related financial impacts

GEROSA, GIACOMO
2015/2016

Abstract

This thesis is due to my passion for both energy and for finance and it is a result of my university career at Politecnico of Milan: a Bachelor’s Degree in Energy Engineering and a Master’s Degree in Management Engineering. The aim of this work is to investigate on the oil price collapse that happened in the second quarter of 2014 as a consequence of the Shale Revolution that was born in the United States of America, to understand the business model of this new shale drillers and to make some considerations of possible future financial implication given the high debt of the industry. The first chapter is dedicated to the oil market: it wants to clarify how the supply side is composed, which are the main actors as far as oil production is concerned and which countries represent the demand side of the market. Furthermore, an historical analysis of the main oil price shocks has been performed by looking at the papers in the literature. The second chapter focuses on unconventional oils to understand which are the main differences from the conventional ones, which type of oil is possible to extract from unconventional fields and which are the main enabling technologies that made the Revolution possible. Finally, an explanation of the shale oil companies’ business model is given to the reader. The third chapter focuses on U.S. Shale Oil Revolution, it describes which are the main plays in the United States and the evolution of unconventional oil production after 2010. An analysis of the evolution of breakeven prices is also given. The fourth chapter gives the results of a financial analysis that has been done based on the annual reports of five companies operating in the shale oil Exploration and Production industry. Considerations on the financial impacts of the industry debt exposure are drawn with a comparison between shale debt and subprime mortgages debt.
ING - Scuola di Ingegneria Industriale e dell'Informazione
21-dic-2016
2015/2016
Tesi di laurea Magistrale
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Utilizza questo identificativo per citare o creare un link a questo documento: https://hdl.handle.net/10589/131263