Desiree Production, page-4

R15, as always remember I make this stuff up based on my own experience and research so this is only my opinion which is hopefully balanced but undoubtedly biased by the things of importance to me.

The questions above are interesting as you say but I didn't look for the answer as I prefer to focus on the specific stocks I watch and their ability to withstand low prices. Imo those with low admin and sufficient cash can tough it out and will be able to drill or purchase cheap assets whilst the others start cost cutting. I watch the oil price and think somewhere between $60/bbl and $80/bbl for 2015 is likely. Below is my chart which I had put some random trendlines which gives some historical perspective. To date the drop isn't as big as 2009 but could keep going I guess. Date comes from: Crude Oil Prices


For us here the lower price would reduce oil profit but the extra gas production from Abita and West Klondike will offset a bit as will the lower US exchange rate. Hopefully gas prices will also rise during winter like last year and this would also help protect the bottom line. Taking these in account I think we would still cover admin and be profitable at around $50/bbl and any additional volume from a new well would also help protect year on year result which I hope is a goal.

An elephant in the room imo for many junior unconventional O&G is if there is a move back to GOM onshore and offshore. Many conventional targets have low drilling costs, are close to infrastructure and very good paybacks, the technology and pad drilling gives good economics and therefore can operate with a low OP, any increasing volumes from these will also add to supply and also compete for available capital. The wells can target gas or oil so a mix of both gives diversification. To date not much interest has been shown in these stocks but imo they are very well placed for 2015.

On the last point I think yes but no doubt that won't surprise anyone.

Any other views?
Cheers