RE:#TimingYes, I would agree. What I hope prevents this is:
1) - I think everyone knows that the Saudis will flood the market to keep US Shale down
2) - Given the above, who would provide the capital to shale to increase production. At prices below $60-$70 shale is a destroyer of value. This evident by the fact, that despite the great increase in Shale production 2015-2019 the amount of debt increased. This clearly indicates, that Shale does not generate a positive cash flow return when prices are below $70.
3) - It will take a lot of capital just to offset the decline rates.
4) - If you assume that finanical discipline will prevail, then the only wells that will have first call on capital should be the tier 1 locations.
5) - People will argue that the drillers have reduced cost. This has been done primarily on the back of Oil Service companies. That result is a lot these Service Companies have permanently reduced their capactitiy by disposing of equipment. Any serious increase in production will need to be supported by increase capex by the service companies. They would only do this if pricing returned to levels seen during the hey day of Shale.
Of course all of the above could be ruined by how the CEO's compensation packages are structured. Prior to Covid, they were primarily rewarded by increases in production, which of course is complete B/S. Pavlov could have trained a dog to do this. The key will be if CEO's are rewarded based on cash flow and shareholder value creation. The CEO's probably would not like this as it is much more difficult to achieve. I am hoping the bankers and shareholders insist on this.