3 ms·

The US producers have promised they would turn fracking back on if oil crossed above the mid-40s. Canada will also be back online as the wildfires have burned

The US producers have promised they would turn fracking back on if oil crossed above the mid-40s. Canada will also be back online as the wildfires have burned out. http://www.cnbc.com/2016/02/29/us-shales-message-for-opec-above-40-we-are-coming-back.html http://www.cnbc.com/2016/02/29/us-shales-message-for-opec-ab...

jdhawk 10y ago
These prices need to show some resiliency before any producer is going to throw serious cash towards more production. There is a pretty large lag time to build back all the services and bring new wells "online", 6-12 months?. Producers need to be confident that those prices will maintain at $45+ before you'll see any major activity.
_FKS_ 10y ago
Smoke & mirrors. Art Berman has shown that none of the Tight&Shale producers are/has been profitable. They are largely there because of credit/debt (which of course can't grow for ever) "Tight oil companies outspend cash flow by an average of 120%: spend $2.20 for every dollar earned from operating activities." "Tight oil company debt-to-cash from operating activities ratio averages 3.3: would take more than 3 years to pay down debt if all cash flow was used." Please see: http://www.artberman.com/wp-content/uploads/The-Shale-Revolution-The-Current-Oil-Price-Collapse-21-Sept-2015-copy.pdf http://www.artberman.com/wp-content/uploads/The-Shale-Revolu...
- emp_zealoth 10y ago
  Does it really matter if you can just print more money? As in borrow indefinitely at tiny tiny rates?
ArkyBeagle 10y ago
I have seen (unsupported) estimates for the quantity of zero-coupon debt that's most likely just evaporated since 2014 in the Eagle Ford shale alone run in the low trillions - maybe one, two or four or something. Meanwhile: http://fortune.com/2015/12/10/oil-zombies-debt/ http://fortune.com/2015/12/10/oil-zombies-debt/ One thing to consider ( although it's pretty different ) - the 1980s oil crash was in around 1983; the S&L bailout (FIRREA) was in 1989. Six years' latency.

jdhawk 10y ago

These prices need to show some resiliency before any producer is going to throw serious cash towards more production. There is a pretty large lag time to build back all the services and bring new wells "online", 6-12 months?. Producers need to be confident that those prices will maintain at $45+ before you'll see any major activity.

_FKS_ 10y ago

Smoke & mirrors. Art Berman has shown that none of the Tight&Shale producers are/has been profitable. They are largely there because of credit/debt (which of course can't grow for ever) "Tight oil companies outspend cash flow by an average of 120%: spend $2.20 for every dollar earned from operating activities." "Tight oil company debt-to-cash from operating activities ratio averages 3.3: would take more than 3 years to pay down debt if all cash flow was used." Please see: http://www.artberman.com/wp-content/uploads/The-Shale-Revolution-The-Current-Oil-Price-Collapse-21-Sept-2015-copy.pdf http://www.artberman.com/wp-content/uploads/The-Shale-Revolu...

emp_zealoth 10y ago
Does it really matter if you can just print more money? As in borrow indefinitely at tiny tiny rates?

ArkyBeagle 10y ago

I have seen (unsupported) estimates for the quantity of zero-coupon debt that's most likely just evaporated since 2014 in the Eagle Ford shale alone run in the low trillions - maybe one, two or four or something. Meanwhile: http://fortune.com/2015/12/10/oil-zombies-debt/ http://fortune.com/2015/12/10/oil-zombies-debt/ One thing to consider ( although it's pretty different ) - the 1980s oil crash was in around 1983; the S&L bailout (FIRREA) was in 1989. Six years' latency.