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Strategies & Market Trends : 2026 TeoTwawKi ... 2032 Darkest Interregnum

GLD 374.27

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Nov 21 4:00 PM EST

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To: TobagoJack who wrote (156394)	4/12/2020 8:41:21 PM
From: sense	Read Replies (1) of 217986

Note, also, that keeping the oil price higher, now... is an inducement to the sustained production from lower cost wells ? What's the impact of that ? Oil operators are used to having price volatility happen... so you often end up making choices that have you continue pumping, even though losing money by pumping, because its better to lose money in the short term, than lose a well's production for years into the future in the longer view... Either you hedge the price risk away... or you just accept it... and manage around it. If I owned a couple of oil wells... I'd have to make that decision for each one... based on its unique characteristics ? What I would most want to avoid.... was turning them off... which I would be forced to do when the tanks are all full. But, a lot of low rate wells might take months to fill a tank anyway... so if they empty the gathering systems now... they'll buy more time... potentially a lot more time. If I were deciding ? I'd manage my local storage keeping it as close to empty as I can... and gain time by controlling the local fill rate. Throttle a well back from 50bbbl/day to 10 bbl/day... and it might go back to 40 bbl/day when I need it to. Throttle it back from 50bbl/day to 0... and I'm lucky if it comes back on at all, but maybe luck makes 10 bbl/day ? Then, I'm going to have to spend money I don't have now on work overs to try to get them going again... which I should do only if that's the best use of the money I have at the time. That will probably happen at some point, if wells are shut-in... but likely not until the price of oil is high enough to help cover the large costs of the work-overs needed to restore a shut-in well to whatever potential it has... Some won't come back even after you spend the $... so that cost structure controls the time lags... Both sustained higher prices now... and failure to coordinate production restrictions... works to foster a larger swath of destruction in the well bores of marginal wells when all the tanks are filled... Ignore what they say, watch what they do... but you still have to understand the impact of what they do ?

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