Good post, I agree with the comment " The increases in DUCs is likely going to be a long term impediment to price - as these wells can be brought onto production quickly."
So for me I think it's safer to work on lower price for longer with incremental increases and not a steep curve. Also in the ND sept report it shows there are 13,025 producing wells and 14,741 capable of production which suggests 1,741 ready to go with the right price with very little capex. If we consider the capex is a sunk cost and then add the completion capex to those not completed then the breakeven cost on new production will be low and also the facilities are existing so at some point we will see the big picture that I think is currently being overlooked (put aside the sunk costs and I know we look at that differently).
The OP situation is the same for everyone so I think the differential for US based O&G companies is the production costs and primarily the fixed production cost. If we knew that number we can then get a true Breakeven point but at this time I expect the companies will only produce enough to generate enough cash to firstly survive and pay interest on debt if applicable and then a margin to meet reduced development growth. The more oil they can leave in the ground the better so the monthly reported production is imo not indicating natural decline so if EV is based on the reported production then companies more likely to be undervalued because of overall market sentiment.
Companies without production imo are still being value on "potential" so imo when they do start producing they may struggle because success is already built into their price. In the medium turn I suspect things won't change here but if my wacky logic is correct then at some point these things will become evident but I don't have a clue when. Either way the current environment affords us time to weigh out the risks without the hustle and bustle.
In a way O&G investors are in the same boat as the companies themselves as we have money tied up in assets not producing good returns and we can see many failed explorers now giving up and heading of in different directions. The OP has effected the companies business and the SP has effected our situation so ultimately we can learn a lot from the oilers. I read years back that exploration success odds is about 1 in 10 which means the chance of these Aussie oilers is not great so in some ways that may explain why I think things are not so bad here and at sometime things will improve for those that haven't given up. The odds of success are probably similar on most specky stocks so a positive here in the O&G sector is we can at least see the business drivers and form an educated opinion on the future based on actual production.
Hopefully the 10Q today and we'll then have some more interesting things to discuss.
Cheers
