backinblack I think you hit the nail on the head. I've just started looking at SUR, acreage and management mishaps etc over the last few days. Will get my head around where they are and what they have and how prospective it is shortly. They have been plagued by mishaps and that happens to the best of them in this business. As I always say, you are only as good as your last well and if this current well comes in then all is is largely forgotten and we move on. The more interesting thing to consider with the "resource plays" right now may be the economics. I noted that Euroz downgraded oil price f-casts last week or the week before. Pretty typical of most banks really ( if you can consider Euroz a bank ). Reactionary and back foot opposed to taking a formulated longer term view. The facts are that the shale players have a higher cost per BBL than the non shale players. Its all about the economics and decreeing that well cost for each additional well as you unlock the key to drilling and completions. I'm reading articles all over the place saying $70 oil and these guys are all in trouble. That is actually not correct. Each company will have a cost to D&C and have a per BBL cost to produce. If you are in the $70 cost range you would be a little nervous if you were not hedged. But, most of the bigger guys are utilizing "reserve based lending - RBL" to develop their acreage. RBL requires a level of hedging in most cases so most of these guys will be selling at or grater than $US100 per BBL. SUR will not be in this realm as yet obviously.
On the macro side and oil prices think about this. As the US gets closer to being a net exporter again (US and Canada are pretty much the total growth supply in world oil outside of OPEC until 2016) there is less emphasis on the US to have boots on the ground in places like the middle east....i.e Iraq. When the US loses focus there and moves focus to its on home ground game things tart to go wrong in the middle east as we are seeing right now. So while pundits say the US's new production will force a decrease in prices they are not looking at what is happening in the ME and what could happen there. This reduces global oil output and price is either stabilized or moves higher. Interesting to note that there is no main stream news on Yemen as well. The Iranian backed Houthis just waltzed in Sanaa ( read link below )the capital and have taken it over. Police and the army just stepped aside and let it happen. Any company there (OSH, PSA) I suspect will have a long wait to regain their assets if at all. ISIS now openly recruiting in Tunisia! Its just the beginning of what i can only imagine is a long stint of a more than usual level of instability in the ME. History says that this is a positive for oil on a price level.
