Revi - First, did you read my post about NY trying to sneak some alt electrticity across the Canadian border? That's the angle you shouild get your neighbors talking about. I actually thought about talking to my billionaire owner about buying all the TransCanada alt electricity and then screwing all you Yankees with rate hikes. LOL. But I am serious. There may be some long term contracts in place but when they expire he would have your asses right where he wants them. Hey, if not my owner then it would be someone else. As I keep saying: it ain't personal...just business. If you don't take steps to protect your interests that's on you. LOL.
"Do you think profit margins are high now?" For some companies, like mine, yes. In a couple of months I'll drill the third horizontal well in a 70 year old oil field I'm redeveloping. My last well cost $2.8 million...the next one $1.8 million. During bust prices go down. Did you take note of how cheap the 24 wells I drilled back in the 80's bust?
I don't know if folks think I making this sh*t up. I'm not talking about a f*cking theory. LOL. Remember I've been doing this for more then 40 years. I'll tell the same story again: you only think you just saw a serious drilling bust when the rig count fell from 1,800...you ain't seen nothin'. LOL. During the late 70's boom the rig count hit 4,500+...did you know that? You don't have a clue how much crap got drilled because oil prices jumped proportionally as much as happened in the recent boom. The latest boom that resulted in a dramatic increase in US oil production. Do you know how you can tell that those high oil prices in the 70's created huge LOSSES AND NOT PROFITS? Look at this curve and see for yourself how 4,500+ rigs drilling produced no significant increase in production:
https://outrunchange.com/2014/05/21/sha ... ak-oil-34/Now in you mind think how much capex was spent in one year with 4,500 rigs drilling compared to 1,800. Again I appreciate the difficulty of understanding the DOCUMENTED FACTS: profitability of drilling for oil/NG IS NOT determined by the price of oil/NG. It's a function of how much it cost to develop those reserves compared to how much you sell your production for regardless of the absolute price.
The biggest profit potential is developed when prices are low. Think back to companies that drilled up or bought oil production in the late 90's when oiooiol was less then $20/bbl. Do you think companies drilled prospects that wouldn't be profitable at that price? Consider what you could have bought (or drilled up) an oil field for in 1998 when the average price was $14.50/bbl. You would not have done it if it weren't profitable at that price, right? So how much more profitable would that investment be just two years later when oil averaged $30/bbl? IOW more then twice what you had run economics on.
Do I really need to explain the profit margin of drilling prospects that use $90/bbl to justify when a few years later prices fall to under $50/bbl.
And ralfy: you don't need to expect future growth to make a sh*t load of money in a downturn...you just need to drill profitable wells. Look at my post: I made a sh*tload of money for those investors in the 80's based on the low NG prices at the time. Those were short lived wells...they were going to produce much after 5 years or so.
Think about it: do you think anyone is drilling wells now the don't expect to make a profit on at $50/bbl? Do you think anyone is paying $50/bbl for PROVED PRODUCING reserves right now? Of course not: the going price is around $12 to $18 per bbl. IOW even if oil stays at $50/bbl for ever these are profitable investments.
All can offer is that y'all stop think the oil patch is one homogeneous dynamic. It ain't. There are companies not only drilling or buying profitable reserves today but also setting themselves up to make a sh*tload of money if prices jump up $10 to $20 per bbl in the next year or two.
