What is worthless?, page-44

psi - i think you are splitting hairs again and missing the point while doing it.

it isnt '100% production will sat online for 12 months - nor is it 100% exploration will all be mothballed. the bigs will run both but fewer. the smalls will presumably mothball exploiration but run their lowest cost wells. the pre-cashflows companies will stop everything unless they have huge cash reserves.

i'd focus on what the analysts have said ie. they think that production growth wont be sufficiently curtailed to meaningfully stop the current US supoply growth for 12 months.

i said id assume 6 months - as the suppliers might get really brutal about shutting down supply if the price falls far enough.

but remember that most of the production isnt coming from the juniors. You could probably see 40% of drills pulled and only see a 10% drop in US oil outout - going on the economic profile ive sene in most resource sectors.

the other thing you need to bear in mind is that russia and venezuala have both increased output to lower their cost per barrel.

i do agree the US private sector will be most responsive to the price attrition.

im just trying to warn you against the flaws in the v shaped thesis - as i saw the same hopeful optimism in fmg

this has all the hallmarks of $low 40s - 30bbl oil. Only once it exhausts at those levels do i expect a pop then move to a more sustainable longer term price level as we see who can really operate at these low costs on a sustained basis

but the saudis are in this to kill. they wont take their foot off the accelerator any time soon imo

and vlad will force russian cos to do the same to maintain his political status as unflinching hardman