re: What’s bad about the price of oil dropping?

Bob Dudley recently retired as CEO of BP. He made a comment recently that was pretty eye-opening - that “ BP, Exxon Mobil Corp., Royal Dutch Shell Plc, Chevron Corp and Total SA are “only responsible for producing about 8% of the world’s oil. If we were all driven out of business that oil would still be produced” by national oil companies and other countries“ (from Bloomberg). Basically, they could all go out of business but O&G will still be produced by the national oil companies...

My fear is that the companies overreact to this cut. We are already understaffed with previous cuts and I’ve heard that many budgets for this year were expecting near $60 oil. With the warm winter and gas prices below $2, if you had gas in your unconventional, you were already losing money and new drilling had stopped. As the Initial Production (IP) in the first 2 years determines if you can break even on a gas well, many wells that were drilled and shut in aren’t going to be completed. It just might take a year or two for the current supply to catch up to demand...