Pulaski

I agree, and would add the following, from a different perspective: it is perfectly possible for a business to keep on running in the short term, meaning several years, while reporting losses, and many businesses do just that.

The important thing is that the business continues to generate cashflow even if it can't report a profit, because bills still have to be paid, and as long as oil is being pumped and sold money will continue to flow in and is available for paying employees, suppliers, contractors, and arguably most importantly, the banks, because if you default on your loans the banks will seize the business or its assets, then you won't have a business! Even if in theory you could shutter the business (and as Owen said, you really can't), you can't suspend repayments on your borrowings without defaulting.

The paradox is that when prices collapse the incentive is for a finance-constrained business (one with large loans) to pump MORE oil, not less so as to maximise profit (if any), and cashflow.

Bob

The one on the edge of town that is literally across the street from a place that is always at least 30c cheaper a gallon only seems to still be in business because they have a Dunkin' D's inside and they're a whole mile and a bit away from the next Dunkin' D's...that's attached to another petrol station and much cheaper

Mr Weeze

1.149 here today.

Cash on hand and access to debt will determine the survival of many of the E&Ps. The integrated companies also have the natural hedge that comes from having refineries - there is still a margin to be made in the downstream business.

After that, ability to cut capital while maintaining output at a reasonable level will be an interesting one (from the outside, anyway). Each individual unconventional well has a producing life of 40-50 years, but the initial decline can be greater than 70% in year one of production (from initial production - IP - through to day 365), depending on the basin. Different operators have different choke management strategies - rip it open now and you will get bigger rates, but have a negative impact on expected ultimate recovery.

There is also a fixed and variable component to OPEX; each incremental well I bring online costs me less to operate.

Expect to see more late life/mature fields shuttered early - there is little future upside to keeping them going. The resource plays can pause, and then be brought back with drilling when prices recover enough to get going again. Price probably needs to be $50-60 for that to happen, but that isn't enough to see long-cycle projects be approved.

zzrmark

After holding at $167.9 for seemingly forever, whilst the local competitors eventually caught up with that price, my local 7/11 today dropped two cents to $165.9.

scrubbedexpat099

$1.459 on the way back from the Parade.

Pulaski

I filled up last night at $1.479, down another 3¢.

cautiousjon

$2.something in CA yesterday. Oh well.

Bob

I was happy with $1.67G today.

In-laws said it was $1.53G on their way home from Portland, out around Yarmouth, ME.

dj6372

2.55 in Costco!

scrubbedexpat099

That was Costco.

username.exe

Filled up for $1.99 today... on the border

(Not the restaurant chain, the actual border).

Pulaski

$1.99 is just sooo last year!

SultanOfSwing

Seems to have evened out in the $1.50s round our way for now. It was at $1.39 last week.

username.exe

I was shocked to see a '1'in the price. Not used to seeing that in Southern Cal. Had to double check and rub my eyes a couple times.

scrubbedexpat099

1.399 at Costco, 28 gallons with filling my Can.