“Shutting down the well and reducing cash flow to zero will shrink profits even faster.”
Well, the other side of the argument is that a zero profit is better than a negative profit. It all depends on how much reduction in price can the companies take before they decide to just stop.
You understand that your "negative profit" is a function of sunk costs -- acquisition, drilling costs, etc. -- which are unaffected by production.
My point is that production income will generally exceed cost of production, creating positive cash flow.
Businesses, countries...they’ll get over it. The Indians—sorry—Native Americans did. If we (as in the sane members of the West) don’t do for all these bastards (Iran, DAESH, House of Saud, etc.), they will do for us much worse. Later there can be recoveries and profits. If they need a rope to hang you, don’t sell them that rope.