Let’s start with my favorite question: is shale a Ponzi scheme? 100% no. But like the answer you give your doctor when they say “how many drinks do you have a week?”- the truth may be somewhat different than you like to believe. (FYI – my doctor friends tell me they multiple the number you say by 3).

With a b factor of 1.3, you produce approximately 30% of the total reserves in the first 12 months.; The AVG US oil shale well produces 16 BO/ft in the first year and is 7500’. 120 MBO in a year; 400 MBO EUR; 25% royalty; $35/bbl margin; $10.5 MM. $6MM well. ROI: 1.75x (OK drags down the avg and that’s why all the rigs left)

That’s the math. Some plays are better. Some plays are worse. Some have more parent-children than others. But hopefully- you feel good about single well economics. Now. Let’s revisit EP Energy. EP had $4.8b debt in Q4 ‘15. It had 3x D/EBITDA. It focused on debt repayment; sold assets and grinded for 3.5 years. From ‘16-‘18, EP generated $810 mm of free EBITDA… but also paid interest of ~$810 mm (PS- interest expense isn’t included in EBITDA!). It made 0 progress in 3 years and went C11 last week with $4.9b of debt. $SN and $AMR destroyed billions faster than $EPE, but it was a close race.