twiggs oil prophecy, page-2

from above

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Make no mistake. Fracking oil shales became attractive ONLY after the price rose. When I refer to high depletion rates, I mean on the order of ~4%/month versus on the order of ~9%/year for giant fields (after 'plateau'). For the 'new production', the 'stuff' will still be there but no one will drill it if $40~$50 holds for a significant length of time.

As for hedging, any CFO wants well costs recouped and hedging ensures this. The shale plays can pay back well costs in a year or so and the hedges in place can ensure capital recovery. That's about it.

New wells at $40~$50? CFO: "Nope." COO: "OK. I understand."
New wells at $50~$60? CFO: "Nope." COO: "I'm going to loose people and contractors. It will be hard to get them back."
New wells at $60~$70? CFO: "Maybe. I still need cash flow to cover ongoing expenses but I will have to add debt" COO: "OK. I understand. Only the really good ones."""