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2020 Just what price is too low for Shale producers

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Price point opinions:

  1. In 2020 just what is the price point that will actually cause the majors in the US shale plays stop placing new wells into production?
  2. At what price point will the majors stop re-fraking and performing major maintenance on existing wells.
  3. What price point will cause the majors to basically just shut in the existing wells and wait for the prices to return to profitable levels?

I wont go into the small players because once the banks walk and the cash flow is gone the minors just dont have the money to shut in and wait out the bust. The prices will come back. I just don't think the little players have the endurance to wait for the boom to return.

My very uneducated guesses.

  1. Low 40's for 8-12 months with low forecasted growth in the immediate future.
  2. Low 50's for 8-12 months with low forecasted growth in the immediate future.
  3. Shut in starts in the 30's and complete shutdown of all operations sub 30 with no forecasted improvement on the horizon.

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Shutting in wells is something responsible producers may resort to in a legitimately tough situation.  My thoughts on that is that shale lacks legitimatcy and does not make sound decisions based on what is best for investors.  Also, guys like Ryan Sifton of the Texas RRC, even North Dakota's Energy Department does not mandate shutting in wells to prevent things like flaring off gas to boost pricing.  This is NOT a responsible industry nor are the effected producer states showing any signs of  resource leadership other then OK'ing all permits.

Everybody mostly talks about what the WTI price must be for shale to grow or break even, but few discuss what the price of natural gas or NGLs must be.  If you look at companies like CDEV, WLL, OAS, even FANG, all produce a significant amount of natural gas (like 65% or so of their BOE is oil) so the price of NGLs and natural gas goes along way in breakeven costs.

We know that these companies make no money in the priceband since 2015.  Can they ever?

There are different shale companies in different basins, so I don't think there is an answer.  Midland basin seems to be more weighted to WTI because its more oily then a Delaware basin, which requires higher natural gas or NGLs in my opinion as their BOEs produce much less oil-weight.

And then you have things like questionable geolgy and rising interest payments, etc.

So many problems for shale.  It's a questionable industry.  

I think they'll stop when they run out of money which seems to be happening.

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