GREY:LSTMF - Post by User
Post by
chantal2468on Sep 13, 2015 11:30pm
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Post# 24100664
marginal operating cash costs are COMPLETELY different
marginal operating cash costs are COMPLETELY different
from breakeven full costs.I wish more people would get this through their heads.Most large oil sands and shale producers have positive cash flow under $20.They will not shut in wells above $20.All that is being affected by low prices is future drilling.Of the 9 million b/d in US they is about 5M b/d of shale.If everybody stopped drilling it would only drop by 1M b/d.BUT their are companies who are still growing production and many staying flat production and very few like LTS who stop completely and drop 23% per year.Overall the entire US shale will drop MAXIMUM about 10% over next 12 months.That is about 500K b/d.This is why the slowing of shale won't reverse the glut of 2-3M b/d overnight.It takes all other non-OPEC producers to cut 30% capex and let their declines decrease supply by 300K-500K b/d.This is why everyones new estimates reflect a minimum 2 more years to balance the market.Longer if OPEC members keep adding to supply and thereby negating the decreasing effects of the other countries declines.