This issue will concentrate on the situations faced by U.S. producers. In particular we will concentrate on the independent producer. For those of you not familiar with the term, independent generally applies to a producer of oil or gas which does not also own downstream facilities such as refineries, gasoline or diesel distribution, or retail stations. Of course the average for these companies and the reality for many other companies are quite different. Average production costs are just that - averages.
Many oil fields have much higher costs.
In some cases, as much as four times the average. I had a call a some time ago from a small independent producer who said he could survive two more months at current prices. It has been two months. Any further reduction in production would cause significant damage to the reservoirs. The price that a producer receives is heavily influenced by location and quality, and in almost all cases the price is significantly less than the prices quoted on the various exchanges.