Hi Shelcomm I have no problem agreeing to what you have written, I also see AKK in a very good position within the unconventional sector in having no current debt and can control whatever debt they do need in the future. My caution is more related to the effect sentiment could have on the shale players during a swoon in prices and generally uncertain times for markets.
Your comments on HC and the debt they carry has also been a part of my thinking and is mitigated to some extend by the probability that in any extended period of low prices they will likely drill out their best and most profitable land first which would include the EFS.
Of course I have no idea how oil prices will play out over time but I have had to review my own thinking a bit, one thing is becoming increasingly clear to me and that is world economies struggle with extended periods of high prices, leading like now to demand destruction and lower prices. There will be no continuous rise despite oil becoming more scarce in the future.
Lower prices lead to less exploration and development hence lower production , lower prices also helps economies so they start to use more oil which is meet by less avaliable on the market leading to higher prices. Rinse and repeat.
Also in the mix that would change the dynamics again is the economies of Russia and Saudia Arabia in particular, which need oil at high prices to keep their economies afloat and prevent unrest. At some stage you would think they would reduce supplies avaliable to support the oil price if it got to low. Below $90BBL is mentioned by some analysts.
Very interesting times but one thing is acknowledged by all relevant authorities that I am aware of , is that conventional crude oil which makes up the bulk of all the oil and liquids produced , is the best bang for buck and the cheapest to produce is past its peak of production. There is less produced now than in 2005 yet the price has tripled. It's something that has been disguised largely by the shale boom in the USA but a lot of that is condensate and NG liquids and is more expensive to produce and has less energy and the best spots are drilled first.
Anyway if I was to make any summary of the above rant it would be that the oil price will see more and probably larger swings going forward and I will be watching much closer in the future for signs of those swings. I was reading somewhere recently that the "theoretical" price the world economies could cope with on a sustained basis was $117 BBL , Brent crude had been between $100BBL and $120BBL for almost three and a half years up untill recently.
All I need is a crystal ball...
Cheers Whisky
