Slump In Oil Price, October 1, 2014 -- December 31, 2014: Pricing, Part II

Slump In Oil Price, October 1, 2014 - December 31, 2016


Pricing, Part I
Pricing: Part II, The "Right Price" For Crude Oil 

Pricing, Part III

Permit Status

Saudi Arabia Market Share

Mid-East Geo-Politics

OPEC Realities

The "right" price for OPEC, Brent, WTI oil means different things for for different "folks"

Saudi Arabia:

• historically able to manipulate prices due to relative "monopoly" 
• one player: the state
• state owned, state controlled; completely different model than US, Canadian model
• price of oil is independent of cost of producing
• price of oil is correlated almost completely with the kingdom's budget
• over time, one would expect the kingdom's budget to increase (and, by extension, the price of Saudi oil needs to go up)
• expectations
• inflation
• military necessities

US/Canada

• historically, greatly affected by OPEC supply, pricing, strength of dollar
• free market capitalism; different model than Saudi's model
• many players; no state unity
• break-even point is only one factor
• more than just profit; also rate of return, cash flow, CAPEX
• mature operators vs new, growing operators
• trickle-down costs; as price of oil comes down, "cost" of components to produce oil come down
• mature fields vs new fields

The break-even point is somewhat irrelevant in big scheme of things for reasons I have discussed before.

Updates

OPEC's benchmark crude drops below $30 for first time in 12 years, January 7, 2016
Brent crude oil now less expensive than bottled water, December 11, 2015
Real oil prices, from 1983 to 2015
Brent hit 5-year low ($60) before rallying back to $62 -- December 15, 2014
Fracking, well completion delays -- December 13, 2014
Trickle down costs will lower break-even prices; welders earning $100/hour during boom -- December 11, 2014
Break-even points for various locations in the Bakken -- December 11, 2014
Note break-even points for plays in the US -- December 10, 2014