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The week's question
In December 2024, in the thread "Re: BRK: Why Not XOM?", BreckHutHigh asked the members: "What about the long road trips with kids?" This week it is put to everyone again. The button below opens the small thread re-asking it - read what others have said so far, then give your own answer as an ordinary reply.
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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A)
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Author: Aussi   😊 😞
Number: of 21944 
Subject: Re: Why Not O&G? Is it the IEA Energy Outlook_
Date: 07/14/25 5:11 PM
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Texirsh

They assume 5-6% percent annual declines in existing fields. Yet newer production has much higher decline rates – ranging from 28% in the Permian to 13% in Brazil. XOM estimates the current decline rate to be closer to 15% without annual investments. This is a KEY point in projecting future oil supply needs.

Exxon has a high percentage of horizontal wells in tight formations so their decline will be higher. Most existing wells in the world are conventional, so a decline rate of 5-6% is reasonable.

With regard to their forecast, it may not be a political document but it is prepared by engineers who are subject to a subjective ranking system. After the initial estimates of future demand, it is reviewed by first line supervisors. The initial question is "are the assumptions inline with senior management viewpoints ". At that point the assumptions are massaged to match the employee incentive system and the report is passed upwards with similar ongoing questions.

Aussi who worked for XOM for 25 years and then as a consultant for another 5 years.
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This community has written 21,448 posts about Berkshire Hathaway. The article-length ones it recommended most:
BRK: Why Not XOM? · 62 recs · 2024
Second quarter comments · 60 recs · 2023
Berkshire's Profit Contributors · 57 recs · 2023
Summary of 2Q 2026 · 54 recs · 2026
3Q Summary · 53 recs · 2024
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