RE:RE:Are you guys insane?CashflowaDay wrote:
"The US pure play producers are the swing producers with higher costs. $1.50 is impossible, end of dicussion. Chesapeake and others are already slashing capex. Not very smart."
Partially incorrect..........Because you're not seeing the REAL problem and it's not the pure plays like Chesapeake that's the issue. You say Chesapeake isn't too smart by cutting Capex, but i disagree, i think they are. Why? Because they foresee what's coming AND they been through these fark times before & have leanred their lessons since. You do know that Chesapeake has gone *its up once before right? And i've even told told many investors that Chesa 1.0 was going BK a year before it actually happened back in early to mid 2020 i believe. So they KNOW what is coming and don't want to get caught in the same damn trap as before.
The US players have lower base costs in both Oil AND NatGas. Breakeven for US oil producers is about $50 Wti for most large US operators and for gas its ZERO. Why 0? I'll tell you why in an moment. For the Canadians, most of them require at least $75 WTi (and for many its even more than that!) and north of ~$3.50 for NG. And as a Canadian operator it doesn't matter if your're a pure gas play or not. You really NEED north of $3/3.50. Except if you're Peyto, who can get away with a little less.
So going back to the orginal argument, of WHY US operators have a cost of ZERO for natgas, because for them, when they pull the profitable oil out of the ground in spades, and more so when Trump gets into office, the gas that comes with it, they WILL flare EVERYTHING that's not profitable or viable and the rest will flood the North American market like it did between 2016-2020. So a resounding NO $1.50 is not "impossible" at all. We're close to $1.50 RIGHT now, so just imagine when these US producers go on a drilling spree when/IF Trump gets into office.
Yeah......sure.....the pure plays like Chesapeake might be "in trouble" again like a few years ago and some might find themselves insolvent or BK, but where one sees a fataleend others see opportunity. And guys like Xom, Chevron, ConocoP, & other super majors would like nothing better than for them to come right in & pick up those assets REALLY cheap while those companies are in distress. And another thing, NEVER underestimate what the paper markets can do with commodity pirces, especialy when it comes to the energy markets. NatGas can just as easily go sun $1 at HH as Wti went totally negative, all the to -$50 for a barrel of oil back in 2020. And stayed quite low for many many months before eventually recuperating.
Most of the folks on this forum are still very green, very inexperienced and don't know all the risks involved. And many are quite misinformed or ill prepared to be invested here. A few are even quite foolish, ignorant & stupid, and rthose people KNOW who they are. So i sotrngly suggest you guys do some more DD before being invested in something where you don't know the full risk. Or pay the consequences in the end......Your Choice!
What say you?
GLTA
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