Crude price collapse, now, could have long-term effects well beyond the "normal" impact of such a price move. Why? Shale cap-ex. At these prices, every dollar spent on new production is lost money. Every. Damn. Penny. In past cycles, PE speculation made it possible to do. 1/

But, if you haven't noticed, things have changed since 2016. Yes, only 4 years, but what a 4 years it has been! The PE cycle of 2017 was based upon a view of rising demand, TINA, and hope that throwing good money after bad, would save the day. 2/

It failed, spectacularly, for any number of specific reasons, that may or may not still apply. But, most critically, is the TINA aspect. New Energy (NE) destroys that key pillar and, most importantly, is combined with a vociferous ESG trend, and a zeitgeist of peak demand. 3/

Money don't give a shit. Money chases returns. That's why it spilled into O&G, even though it was obviously over priced, and highly speculative. Disabuse yourself of the idea that money is smart. It isn't. In fact, it's so dumb, it just follows the herd, hoping it's smart. 4/

So, what does that have to do with the price action of today? Well, unlike 2016, NE offers an alternative, nobody is throwing good money (even cheap money) after bad and, MOST CRITICALLY - shale needs to spend NOW, to not almost entirely stop the treadmill. 5/

But, no $. Not FCF, not new debt. A $ collapse now even makes the returned shut-in production a lost cause. That was the Hail Mary. It was an air ball. The returned production was supposed to pay for new cap-ex. It won't, at these $'s. The emergency chute failed to deploy. 6/

In the vernacular of options trading - here comes the pain. The ground is racing towards plummeting E&P's and no amount of screaming will do a damn bit of good. Not even CH. 11. Now add systemic demand destruction. Now shit be gettin' real, yo. 7/

This, combined with ESG, destroys even the bravest speculator, even those who swear NE is a scam. Remember, money don't GAF. It will, even begrudgingly, follow the herd. All the more so with ETF's and robo's. Does this mean O&G is dead? Decide for yourself. I say hells nah! 8/

What's dead is chaotic price/production response. This is almost exclusively shale driven (to impactful scale). But, it requires speculation - see above. Ultimately (as the energy complex will need shale, and oil sands), the price of crude has to reflect extraction real costs. 9/

Real extraction costs based on real money, not debt, because, again, see above. The best thing that can happen for NE, is expensive crude. NE needs expensive crude, because, let's be honest, we're all virtue signalling hypocrites. 10/

So, I would suggest one become familiar with the real cost of the marginal barrel, in an environment of too great of demand to be satisfied by supply. How long that environment persists, I'll leave to you to decide. /End.