1986 Texas Bumper Sticker, "God, grant me one more oil boom and I promise not to screw it up"

[BLA + 1,666]

This bumper sticker was mentioned in a Forbes article on the boom/bust cycle of the industry and the assessment of risk

The 1985 - 1986 downturn was one of four times that Saudis put the squeeze on U.S. oil to maintain high oil prices.  

This Saudi squeeze + coronavirus and Green movement make it different this time.  The industry will never be the same.  Hard to predict what the industry will look like in a couple of years. 

No doubt it will have fewer players.

The only hope for Saudi/OPEC is the Super Majors scoop up the failed shale companies and are more restrained regard production then previous levels. 

There will be plenty of acquisitions available for the taking.  The prices will be at a fraction of the recently paid price per acre.

There is a reason that the lines of Chevron, Conoco and Occidental (before they bought Anadarko) are low cost producers.  They had million of acres of legacy mining rights in prime Permian basin with little or no royalty and didn't have to pay over $100,000 an acre like Marathon did for some select Delaware basin property.

The whole business model of those that spent all cash flow grabbing expansion property when WTI was in the $90s. 

Now to compete with Saudis you need size to garner efficiencies, deploy latest technology and get access to pipelines, export terminals and marketing and logistics.

Gonna look different .

Another interesting look back to 2008 where Chesepeake Aubrey McClendon sees floor of $9.00 to $11.00 per mmbtu for Natural gas.

" I think we'll stay in the $9-11/MMBtu range," 

https://www.naturalgasintel.com/articles/18556-chesapeake-output-soars-ceo-sees-gas-floor-of-9-11

 

Edited March 31, 2020 by BLA