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Raymond James Energy Stat of the Week
by J. Marshall Adkins

Energy Stat: Will Lower Oil Prices Push the DJ-Niobrara from Tomorrow's Shale Play into Next Week?
December 22, 2014

The collapse in oil prices over the past several months has caused most energy investors to dust off their trusted basin-by-basin wellhead economics chart in order to better gauge the relative winners and losers. While no liquids play will be immune from the overall reduction in drilling activity, few are questioning the resiliency of the Permian and Eagle Ford economics relative to several more marginal Mid-Continent plays. But as it becomes evident that U.S. drilling activity may have to take it on the chin much harder in order to correct the supply problem, we are forced to take a deeper look into some of the lower profile plays, such as the DJ-Niobrara. Where should investors line up the DJ-Niobrara play within the oilpatch pecking order? In today's Stat, we will take a closer look at the DJ-Niobrara formation, both from a geological and wellhead economics perspective, in addition to discussing the potential ramifications of lower oil prices on DJ basin production growth and consequently on the midstream space.

This is a summary of a much more detailed commentary. Please contact your financial advisor for the full report.

There is no assurance any of the trends mentioned will continue in the future. Past performance is not indicative of future results. Investing involves risk and investors may incur a profit or a loss. Specific sector investing can be subject to different and greater risks than more diversified investments. Investing in commodities is generally considered speculative because of the significant potential for investment loss. Commodities are volatile investments and should only form a small part of a diversified portfolio. Markets for commodities are likely to be volatile and there may be sharp price fluctuations even during periods when prices overall are rising.

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