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28/05/16
10:54
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Originally posted by GortonGums
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No idea mate, but I'd hope they're very disciplined with this cash. Anyone reading aussie's posts should realise a credit event wasn't out of the question.
Great if they want to bolt on some production, but don't blow the whole lot because they think the floor is in for oil. Nearly had their pants pulled down once. Would be annoyed if they didn't keep at least of 20% of it on ice.
Positives seem to be that the shale "we're back at $40 or $50" meme is garbage. US lost 70% of its rig count at $50 on the way down, it's still dropping. EOG man has changed his tune from $30 to $60.
The saudis are talking nonsense about their capacity. Takes 3x as many rigs to keep output where it is as it used to. They had a massive infill drilling campaign to bring their output up to where it peaked in July last year, couldn't hold it. Can't just "turn on the taps".
And there's a lot of production not being replaced elsewhere that rarely gets reported. 2017 and things might get pretty tight for supply. But I wouldn't want to be cavalier about it.
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There may be some select areas that work at $40 - $50 dollars, but as a whole it will take more than that to turn it around. Shale production is dropping pretty fast now - it will take a lot just to stop the fall let alone actually start increasing again