RE:RE:Will IAE survive?Thanks Kensho.
Kensho wrote: If you mean, can IAE survive on $50 oil then no. $50 oil would result in $25 netbacks after Stella at best and probably something a tad less, so no it cannot. But remember, if IAE survives its spring RBL redetermination (which is looking extremely doubtful without a miracle) then it would have hedges at $61 oil until July 2017. And at $50 oil in the fall they would be sold. So, if they get through the spring (doubtful) and the FPF-1 does not have another setback (who knows after being delayed 3 years already) and oil is at $50, then you will make some money. However, $50 oil in the fall is very doubtful given the amount of production in the market and the inability for Russia to reduce production. They need every penny they can generate and their production will take at least a year to drop to a level that will impact global production. Remember, the US sanctions on Russia only apply to deep water and shale technologies. Conventional oil production in Russia can still benefit from collaboration with Western major oil companies. As well, Iran will not agree to reduced production, which means any cuts would result in Saudi Arabia giving up market share to their arch enemies in the middle east. That’s not going to happen. $50 oil before 2017? Well good luck with that.