Thread on Oklahoma decision to let struggling oil producers halt output without breaking contracts
#Oklahoma #oil #Prorationing #Shale #Texas
1- First, here is the news item:
finance.yahoo.com
#Oklahoma #oil #Prorationing #Shale #Texas
1- First, here is the news item:
finance.yahoo.com
3- This is a dangerous slope and a preemptive strike before the hearing of the Oklahoma Corporation Commission on May 11. I will not be surprised if it is challenged in court
4- On its face value, it sounds like a great decision. It nullifies clauses in the lease contract that requires companies to drill and produce withing specific times. That means, producers can stop production and drilling without losing their leases.
5- Where is the problem then? It seems commissioners who voted for it (2 out of 3) and those who supported them learned from the hearing that the Texas Railroad Commission held on April 14: it all boils down to the definition of "waste". see earlier tweets in timeline
6- By defining unprofitable production as "economic waste" it is clear that the Oklahoma Corporation Commission has already made its decision before the hearing on May 11! Using the definition means that the decision to prorate production in Oklahoma is already a done deal!
7- The whole idea of the hearing is to define "waste" that enables the commission to force a production cut on all oil producers in the state. By defining waste, there is no need for the hearing! That is why we might see law suites. Extra cost to tax payers for nothing!
8- The issue is not nullifying some clauses in the land leases, it is about taking control of the whole oil industry in Oklahoma by defining "waste" the way they defined in their ruling.
9- What happened to free markets? Why in hell the government is involved in a contract between two private entities?
Why is the government involved in forcing private producers to cut production? Investment involves risk. It does involve losses. It is not a one-way street.
Why is the government involved in forcing private producers to cut production? Investment involves risk. It does involve losses. It is not a one-way street.
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