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To: thackney

I would agree with that. If I had a well already drilled and I could still turn a profit, I’d definitely keep pumping...and not deliberately hold out for higher prices. Bird in the hand...


31 posted on 01/20/2015 1:47:05 PM PST by lacrew
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To: lacrew

Cash flow. Cash flow is King.

Take away the steep initial decline of the shale well and look at a more simple example.

Have a well that would produce 50 barrels a day for 25 years, then just stop. Not real life, but it helps make this point understandable.

If you shut it down for a year, waiting for a higher price, you go a year without income, but still paying on the debt of the well, shut-in fees, etc.

Now instead of producing from year 1 to year 25, you produce from year 2 to year 26.

If you were running the well from the beginning, you still would have had income in year 2. What you have done is moved your income from year 1, to year 26.

Reality is more complicated than that, it is a declining flow rate so you get a piece of year 1 in year 2, another piece in year 3, etc...


32 posted on 01/20/2015 1:54:48 PM PST by thackney (life is fragile, handle with prayer)
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