“Because it is around $100/barrel, they are increasing the drilling.
If it was $30/barrel, the rigs would be setting idle.”
Thack, What’s they make or break per barrel on this technology for extraction ?
Each one is going to be different by some degree. At $10 a barrel, almost no modern drilling could be done almost anywhere.
Even similar fields can have significant difference.
As the number goes higher, you will see incremental increases, as it goes lower, you will see incremental decreases.
But it takes time to locate, lease, drill, complete then set up production. Some companies will continue to increase during a downturn if they see overall economics to turn around in a reasonable time for them.
Other companies, even if sure the price is going to rise soon, are on too shaky financial turns to handle the decrease in cash flow and get out while they can.
I know that is no answer, but there is no one magic number.
Other things that effect it are how fast price changes. If the oil price rise very quickly and lots of new players get in the game all at once, the cost of doing the same business climbs fast as well. If you overrun the local workforce or material and equipment supply, you will have to pay inflated prices to bring that in from other areas or professions. Boom and Bust is all to common in the oil patch for just this reason.