Average prices will go down, including for the break even costs. But some of that isn’t a change, it is just shelving the more expensive side of items.
For an example, say a company has 10 areas where they were considering investing for new oil production. Break even cost for them are: 51, 53, 55, 57, 59, 61, 63, 65, 67, 69 $/bbl. Their average break even costs are $60/bbl.
If they just shelve the top 5 most expensive projects, they just lowered their break-even cost to $55/bbl. No technology change, but still lower average cost. They will just produce less until prices climb up.
Combine that with during a slow down, the premiums being paid the past couple years for equipment, material and labor go down.
I agree they and many others will operate and continue to exist at that price, at least for a while.
But many small companies that took on too much debt will be selling assets to the stronger financial companies. Maybe they will pick them up at the bankruptcy auction.
But they won’t be drilling and expanding like we saw the last couple of years. And any significant duration of deep prices will have plenty of people loosing jobs. Nature of the business, has always been that way. Part of the reason it pays well.
The fracking industry won’t go away or be delt a fatal blow with this downturn ?
Or the barrels a day production decline ?