3 ms·
>Oil producers going bankrupt isn't going to magically make their assets and production capacity disappear. It will just get bought up by better capitalized inv
by crdoconnor 11y ago
>Oil producers going bankrupt isn't going to magically make their assets and production capacity disappear. It will just get bought up by better capitalized investors.
Oil that can't be pumped profitably at < $80 / bbl isn't going to be magically become profitable when a better capitalized investor steps in.
- xixi77 11y agoNo; but it will be pumped as soon as it hits 80 again, preventing price from going up from there. Although 50 is probably a better number.
- the4aces 11y agoA lot of the cost comes from CAPEX at the front end of the life cycle of the well. There are a lot of wells out there that can produce a marginal barrel of oil for <$20. Once the companies get recapitalized or go through bankruptcy that is the new cost that will need to be looked at.
- AnimalMuppet 11y agoNo, but it means that the Saudis can't raise prices much past $80/bbl. And I'm not sure that $80 is the right number for a lot of the fracking wells - the number that I seem to recall is $50. (I freely admit that I'm working from vague memory here, and could easily be wrong...)