Looks like Thack is sleeping in maybe I can help. When the price of oil goes down so does the cost of exploration, drilling and producing. Lease agreements also effect cost’s and those can always be renegotiated. To put a bottom line price is difficult due to the variances in agreements. Right now I schedule my drilling almost a year in advance due to the lack of rigs, when the price goes down there’s more rigs available and they compete for the work. As far as mineral’s go we own over 750 sections with 42 sections of that being minerals and surface. We’re not the only ones in that situation and we can survive when others shut the doors. In 98 when the price of WTI went below 10 dollars a barrel we started our largest drilling program due to the extremely low costs. All drilling was done on the 42 sections where we owned both surface and minerals, we still have room for 80 to 100 wells. During that time the majors had shutdown and started laying off while we expanded.
When the price of oil goes down so does the cost of exploration, drilling and producing.
That is a difficult concept to grasp if supply and demand is left out of the equation.
I’m getting less for my product, but the price of exploration, drilling and producing would appear to remain somewhat constant due to labor costs. Drilling rigs could be idle and so more available to drill thus oversupply and reduced demand. Producing, less available crude equals competition for available crude. Not sure I’m looking at it correctly.