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Gold/Mining/Energy : Big Dog's Boom Boom Room
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To: MIRU who wrote (190680)5/18/2015 3:20:41 PM
From: 30 Years Plus1 Recommendation

Recommended By
isopatch

   of 206249
 
Everybody's model was falling costs, improving well results, and higher prices. We were going to learn how to do it cheaper, faster, better and prices were going to hockey stick in the future. It was all part of the consultants playbook - the consultants that were hired to show companies how to transition to unconventional. Those consultants remarkably could also help with the reorganization and the financing.

Some of it happened, but nobody thought there was going to be much reservoir variability (not all shales are created equally) and nobody thought production in aggregate could rise so quickly that it would sewer the price. Except of course, the sum of everybody growing added up to the oversupply we are dealing with now.

I think it could be a viable industry, but the recipe for that is an increased cost of debt. We are now dealing with a textbook case of mis-allocation of capital.
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