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Discussion in 'Killingsworth Court, Formerly The General Forum' started by jake102, Mar 9, 2020.
Hotel industry checking-in. Not great here either...
Any truth to this series of tweets O&G guys/gals?
I have heard $40/barrel is kind of the magic number and once the price drops below that, the plug is pulled on a lot of rigs, and new drilling more or less stops. Probably way too simplistic but is that about right?
i don’t necessarily disagree but it’s simplistic. i think what you’ll see a lot of companies do is drill wells but not complete them (DUCs). drilling is ~30% of CAPEX so you could keep you rigs running to make sure you have a good base inventory for when prices return. granted each company is different depending on cash flow.
I agree that sub 40 wti is when you start seeing the industry change significantly.
Close enough. Honestly a lot of these companies would struggle at $40 tho, things aren’t as advertised
In any fight like that, Russia loses. The Saudis have been playing this game for a long time, and MBS is a wee bit more ruthless that previous leaders.
Problem is, it'll take time for Russia to notice it's losing...
Pigs get slaughtered and there are some with the debt for which they cannot survive a few quarters
The market always recovers eventually. Not real worried about it.
Buyling opportunity for sure.
Us contrarians are counting our cash for our next move. I hope to make a big chunk of yankee dollars on this movement of the market.
Yep, it's a little bit scary...but the economy is sound and when this is all over there will be a quick run-up. For certain.
(Even if you're not prone to "buy low", please don't panic and sell within your retirement and non-retirement portfolios. You'll hate yourself later!)
This is true, and the younger you are the truer it gets.
No longer “young” but young enough.
dont play liars poker with the saudis
Oh yeah. About two months ago a distressed shale CFO told me “you don’t want to see what happens if we don’t grow”. What happens when you not only can’t grow (via debt) but can’t sustain operations profitability? They will be filing before 2Q is over
Seen on a pick-up truck bumper in the late 80's: "Oh Lord, Please Let There Be Another Oil Boom. I Promise I Won't Piss It All Away Again."
One of the better buying opportunities I missed was a big auction of heavy equipment repoed by various creditors from the first bust of the Fracking Patch. Lots of dozers and other goodies. Sadly, the Tax Day Flood was that very day, and we never made the auction.
Heard on fox business news today that companies make no money at $33 a barrel
Smith & Wesson
Russia has the balance sheet to play this out.
Breakeven in the Permian is high $40s low $50s.
Saudi is squeezing Russia. Both have the luxury of the balance sheet and time. Unfortunately U.S. producers will fall victim, and both Saudi and Russia are loving it. Force the mid and major U.S. producers to file BK when maturities hit and both Russia and Saudi win. In the meantime, the little guys are going to get stomped.
.... and the tanks