Oil Pro / Mark Harrington / 11 January 2016
As noted in prior pieces, this crash is far different and far more fundamentally impactful than the 86/87 calamity. In 86/87, a major culprit was grossly bloated corporate overhead. My colleague William Weekley and I launched the Energy Vulture Funds in 1986 to grab those opportunities, and were fortunate to do so very effectively. Subsequently, tighter regulatory diligence on G&A scraped away the heretofore omnipresent: corporate jets, fishing and hunting camps, and in many cases, inflated C-level executive cash compensation.
Why is this price downturn fundamentally more impactful? Because this time the unmanageable culprit in depressed margins is at the field level. You can cut corporate G&A, but you can’t change what Mother Nature gives up if you are already employing state of the art completion technologies.
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