It seems almost certain that the Coronavirus is going to have a major impact on society, the economy and the price of oil. WTI could be in the low $40’s-upper $30’s/bbl for months. I was wondering how oil companies/operators handle situations like this. Do they continue to operate wells or suspend production until the oil prices rise again?.
In my experience it’s not a very nimble industry. A few private companies may shut wells in to save reserves for higher prices, but pretty much everyone will just keep producing as much as they can from existing wells. Sustained low prices eats at cash flow which eats at budgets which eats at rig counts and overhead. Eventually. People lose their jobs. Minerals get less valuable. Etc.
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OK. Thanks.
On a positive note, it is a temporary situation. And hopefully, (for reasons beyond economic), the pandemic will pass ASAP.
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