End game to the oil rout, page-70

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CaptainGrumpy

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25/08/15

13:04

Post #: 15870921
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Originally posted by rizzla ↑

its fantasy and no-one in the industry would like this, but for companies with minimal debt, i'd love to see them give the finger to the bankers and market and just say "we won't produce at these prices. we are all going home, we are turning off the taps and will service our debts and invest our cash reserves carefully. get your crude from somewhere else. see you when it makes sense to be back in business".

if just a few did that, it would send a message. better than this ridiculous practice of pumping harder than your neighbour, hoping they fail before you and ruining the whole thing for everyone.

a company like senex could actually do this. they could say "look, we've got 50M in cash and our property is worth plenty. you, the market value us at 170M and you are idiots. we will shut down, go into care and maintenance and give all employees a contract where they return as normal at some point in the future if they wish".

even though cashflow would cease apart form interest received, the reserves would stay in the ground and ultimately see a better return for shareholders. meanwhile, costs of services and materials will continue to drop. i bet that would actually increase their shareprice. that's how bad things are.

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Unfortunately the C&M would far outweigh any interest earned.

DLS Price at posting: 63.7¢ Sentiment: Hold Disclosure: Not Held
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End game to the oil rout, page-70

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