Replies to This Discussion

Permalink Reply by Skip Peel - Mineral Consultant on April 27, 2016 at 10:35

I hope $50 will do it as I don't see the price getting much above that until the second half of 2017.  I'd love to be wrong.

• ▶ Reply

Permalink Reply by P.G. on April 28, 2016 at 3:06

Wouldn't it be against the Saudi's best interests for them to allow prices to get to a profitable range for US frackers?
Spikes into a profitable range would be like bonuses for them.

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on April 28, 2016 at 3:14

Not if they can maintain their market share.  Low prices have hurt the Sauds economy.  They could benefit significantly from higher prices.  As long as they can maintain their customers and export volumes I suspect they would be happy with $50 crude.  Keep in mind that $50 may bring back U.S. production from the better rock in the better basins but not all the production that existed at $100.  Many domestic E&P companies won't be able to make a sufficient return on investment at $50.

• ▶ Reply

Permalink Reply by P.G. on April 28, 2016 at 5:17

Yes, I'm sure they would like as much as they could get but still be somewhat in a position of control of production. What price that may be they'll try finding out..
US production from fracking is price sensitive. A price that would allow some production but not enough to interfere with their market would be likely be tolerated. And as long as it they who are doing the majority of the production. Cutting production doesn't work for them like it has in the past.

They aren't the only game in town any more....

• ▶ Reply

Permalink Reply by Skip Peel - Mineral Consultant on April 28, 2016 at 5:23

The entire global energy dynamic is in flux.  What happens if other countries get around to developing their shale reserves?  The old paradigm is fast receding into history. A new one will emerge incrementally over the next ten years or so.  The Sauds may just be too late to diversify away from oil and build a more stable and diverse economy.

• ▶ Reply

Permalink Reply by William C. Morrison on May 4, 2016 at 11:04

In my family's case, it takes $100 a barrel to get the drillers interested in us.  We are in the deep zone and it is much more costly to drill that deep.  While it is believed TMS extends down to us, and we know the Tuscaloosa is down there, it is more likely for us that they drill for gas.  And gas is dirt cheap, no where close to $100 BOE for us.  So it will be for my heirs.

• ▶ Reply