SI
SI
discoversearch

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor.  We ask that you disable ad blocking while on Silicon Investor in the best interests of our community.  If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.
Gold/Mining/Energy : Big Dog's Boom Boom Room
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  
Recommended by:
JimisJim
To: MIRU who wrote (186751)12/1/2014 8:03:24 AM
From: Ed Ajootian1 Recommendation  Read Replies (1) of 206338
 
MIRU et al, thanks for your thoughtful replies. Even if there is no "HBP-oriented" reason to keep drilling oil wells, will the fact that a rig has been contracted until a fixed date into the future be enough reason to keep it going drilling wells that are uneconomic based on current oil prices? Or will the E&P companies try to negotiate with the drilling companies to just cut them a check today for what would in effect represent the drilling companies' present value of the net margin that they would have enjoyed if the rig had continued to be deployed for the duration of the contract? The latter would make the most sense IMO but it would take a lot of guts on behalf of the E&P company since they would stand to be second-guessed if oil prices were to recover before the drilling contract ends.

Its interesting that you believe deep offshore is over -- I was thinking that that activity would remain in high gear since the lead times until production starts are so long. To decide to drill an exploration well for a deep offshore target now requires an estimate of what you think oil prices will be in about 5 years since it usually takes that long to get your field into production. WTI crude oil futures for Dec. '19 are at about $77 as I type. My hunch is that most prognosticators are expecting WTI prices to be higher than that by that point.
Report TOU ViolationShare This Post
 Public ReplyPrvt ReplyMark as Last ReadFilePrevious 10Next 10PreviousNext  

HomeMailHotSubjectMarksPeopleMarksKeepersSettings
Terms Of UseContact UsCopyright/IP PolicyPrivacy PolicyAbout UsFAQAdvertise on SI
© 2026 Knight Sac Media.  Data provided by Twelve Data, Alpha Vantage, and CityFALCON News