Cmon, excellent article thks for sharing, a must read imo in...

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Rob79

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11/05/15

10:01

Post #: 15252805
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Originally posted by cmonaussie ↑

Published by Richard Zeits
http://seekingalpha.com/article/316...icky-concept?isDirectRoadblock=false&uprof=45

"The risk of confusion can be illustrated by looking at the following three definitions of breakeven oil prices:

Well-level breakeven price: The minimum price of oil that renders a new well in the play NPV-neutral (i.e., by drilling the well, the operator can expect a return on investment at least equal to its cost of capital);

Company-level breakeven price: The price of oil that allows the operator to grow production at a minimally acceptable growth rate (for example, mid- to high-single digits) without increasing its debt;

Industry-level breakeven price: The price of oil that allows the entire industry to sustain its market share."

He then used CLR's last reported metrics for illustration, as they had some great slides in their report. He references a slide that shows the "breakeven" by their different plays. Followed by a great discussion on EBITDAX and of course the Cash Margin (not broken out by different plays but noting the location advantage/disadvantage).

Worth a read IMHO.

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Cmon, excellent article thks for sharing, a must read imo in understanding the current situation. An important thing to note is the difference between "New Well" breakeven and "Existing Well" breakeven and forming an opinion on where SSN fits in that distinction. Those companies that have drilled and completed their wells imo now have a competitive advantage in the low OP environment and can generate cash even at current OP or lower.

GLTA
SSN Price at posting: 0.8¢ Sentiment: Hold Disclosure: Held
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0 Great analysis

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