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My understanding is that there’s a lot of debt underpinning some of the new operation. Is it possible that even a “temporary” price reduction could cause a wave
by matthewdgreen 7y ago
My understanding is that there’s a lot of debt underpinning some of the new operation. Is it possible that even a “temporary” price reduction could cause a wave of deeper financial problems that make continued investment less likely out in the future?
- vardump 7y ago> ...debt underpinning some of the new operation... Also older. Those companies are not equal, though, the ones with the best geologists can still make ok profits with a bit of luck. > ... price reduction could cause a wave of deeper financial problems Of course, and shale oil hasn't been a money maker in general below $40-120, depending on geology. I guess most of it makes money at $60. Some wells might be profitable even slightly below $40. Then again, cash flow is king. Very low prices aside, like right now, at a certain point it makes more sense to produce oil below profitability just to keep the cash flowing.