OutlookThis to shall pass.
September 30, 1859 Abraham Lincoln
It is said an Eastern monarch once charged his wise men to invent him a sentence, to be ever in view, and which should be true and appropriate in all times and situations. They presented him the words: "And this, too, shall pass away." How much it expresses! How chastening in the hour of pride! How consoling in the depths of affliction!
Time,
that is the question how much time will it take to pass? Whitecaps, lower declines and hedges buy time about the rest of 2020.
History shows most previous oil craches last a few months at the bottom. History does not repeat but it ryhmes.
If oil stays at high teens lows 20's through to the end of the year Whitecap will cut the dividend and it's solvency would be precarious. Obvious oil price risks.
Financial contagion, an equal risk is a functional fiancial system. Financial system failure and it's lights out. Lights out for more then just Whitecap, but for banks, and airlines etc etc. This scenario is depression 2.0 and the world as we know changes, and not in a good way. Decades of time to recover.
It is just as possible that oil barrels could be removed from the market at any moment in many manners of ways. Saudi, Russia, American oil supply reductions. War, regime change, or infrastructure damage.
So lot's of potential outcomes, time will tell. Cheers Matthew