From California’s Central Valley to the Native American lands of Oklahoma, more small- and mid-sized oil firms—many backed by private equity—are forgoing expensive shale drilling projects and opting for old-school wells instead. As crude prices languish under $50 a barrel, and with increasing costs for land, labor and infrastructure, some shale fracking operations are starting to look expensive. That has some investors turning to conventional drilling to make a profit. Tapping shale involves fracking, drilling horizontal wells that extend for more than a mile, then using a highly pressurized mixture of water and chemicals to break open underground rock layers. The process has attracted billions of dollars in capital because it can unleash huge volumes of oil, but at today’s prices most producers are losing money on every barrel they pump.
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Written by Lynn Cook at The Wall Street Journal