RE:RE:RE:RE:Don't Worry About the Price of Oilmarsbonfire
I appreciate that there are lots of factors at play here and I certainly agree that things have dragged on longer than the Saudi's intended. I think the length of time a company or sector can hang on after moving to an unsustainable pricing model is often underestimated, the Saudi's are probably no exception in this.
I would say though that becuase the US rig count is now just over one quarter of what it was before the price falls, the Saudi's have already destroyed shale. The delayed effect of drilling cessation takes a while to work through. Well half life for shale is a little over a year so the drop off is small so far, even if 1,500 new rigs started drilling tomorrow there would be a huge production fall out from later this year and throughout 2017.
A useful metaphor might be axis post Normandy break out. They were finished, no way back, but the axis wheels of war carried on turning for another year, strongly turning for another 6 months. I am not saying here that shale will never make a comeback, it probably will, but don't expect output to hit last year's peak for 2 or 3 years, at least.
Doug