RE:RE:Pretty simple
Without a doubt, the track record of price performance has been poor. But this drop off is different, it is largely premised on the underlying resource price. The excessive leverage LTS had was always a problem and it caused it to be a poor performer - post 2008 - companies with high debt loads were viewed unfavorably than their peers. Add on some overpriced acquistions and you have a situation where it can take years to rectify. LTS was actually beginning to turn a corner - by completing and exceeding their sale of non-core assets and reducing debt. Without that, they would be in an almost untenable position right now. All that to say, and reiterate, the drop off is more than fundamentals of the company, as such, with high leverage it has been beaten up worse - as it is riskier. But if oil prices recover to $70 level (you think they won't, that is fine, and you may be correct), then the rewards can be handsome. That point shouldn't be missed.
The arguments you present are all very relevant, but like all arguments holes can be punched through. For instance, you state that the US was going to be oil self-sufficient by 2016....you realize that is a complete falsehood. Production in the US has recently hit a lofty 9.2 million barrels per day, but you realize their consumption is closer to 18-19 million barrels per day. Thus, unless you forecasted a 10 million bpd (lol) increase in less than two years, you are operating under faulty information.
Also, as a counter argument to the fundamentals discussion - oil supply and demand is actually in about a 2% imbalance - this was known for the past year. Thus, why a greater than a 50% drop all of sudden. If it is OPEC (read: Saudi) decisions, and more importantly comments, then perhaps one can argue that level of decline is overdone. Of course, if the price is forecating a big slowdown in China, further European pain, and a stable political climate in oil producing regions than $40 might be just right or even too high. To suggest one can predict these things with precision is outright ridiculous.
OPEC can certainly impact prices and they certainly have an intent to harm high cost US and Canadian, among others, production. But Saudi Arabia needs $70 oil to balance its books or it has to dip into its sovereign wealth fund - which it does not want to do. They may be strategically saying they will take pain for a while for longer term gain - but they have no clue how well that will work.
Also, you seem to imply that if oil is to recover to $70-80 that shale oil production will be just as active and grow as quickly as before. That is, and I apologize for this, a very ignorant comment. For example - how are these companies funded to explore and drill - through debt and equity. Well, it is safe to say that debt will be much more costly for oil companies, and you will have less willing participants in the equity markets after this shellacking. So, for those companies (large integrated) that have lots of cash lying around - sure they can ramp up reasonably fast. But for most of the small and medium-sized companies (which contributed greatly to overall US and Canadian production) access and cost of capital will, going forward, severly constrain the ability to "ramp up" and drill like they did before. I suspect companies will also be much more conservative than before - after being shocked this go around, I suspect the aggressive use of debt will subside drastically. For the next month or two you will see the remnants of 2014 carry out, but don't confuse that with industries ability to grow production as they had before.
Also, there is a very important thing I like to think about. Prior to the crash of 2008, the $150 oil price was considered as a key, but not fully emphasized factor of causing the global economic wheels to fall off. To be sure, the financial crisis was likely inevitable, but oil price spikes has ominously preceded many downturns. Shouldn't the reverse be true - economic growth and hence demand for oil is likely to ensure from this recent decline. Of course, in real terms this takes a while to play out, but in terms of sentiment and confidence that impact can be felt already in some places in the world. This inevitably helps oil prices.
You may think I am bullish on oil now - perhaps - but it is more of a case that these overdone price swings tend to reverse. Even during the crash of 2008, the price levels of most commodities and stocks were clearly overdone, but most didn't dare say that as things just seemed to get worse and worse until mid-2009 when a reversal began - it didn't take long - some things were reversing by Feb/March 2014. I will go out on a limb (my opinion) to say that oil is not sustainable at $40 - it just isn't. Economics and common sense defy this - but short-term could it go to $20? Of course it is possible - emotions are high in this market, and another Saudi comment about $20 oil will cause more sell offs. But doesn't that tell you something? Saudis, and others in OPEC, keep making comments about willing to bear lower oil prices, and that helps the further decline. Why would they do that? Is it causing a further overreaction? Think about that.