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Hey! Great post! Thanks...

To add to this discussion, following is the example of typical company's Exploration, Development and Production Cycle:

One starts with Market Price of Energy
- less Royalties / Levies / Fees / etc.
- less Lifting Costs
- less General and Administrative Costs
One ends up with Production Cash Flow.

Provided Production Cash Flow is positive and healthy, company follows this with Investment (Re-investment) Program. Investment Program breaks up into two streams:
- Exploration / Development Program
- Acquisition Program
Both streams, ultimately, result in Reserve Replacement.

Finally, to put some meaning behind this Exploration, Development and Production Cycle, following are some current (and typical) target numbers oil companies (in Canada - since I am looking from Canadian perspective) shoot for:
- aim is to realize Operating Cash Flow of $10 - 12 per boe
- aim is to acquire / find / develop replacement reserves at cost of not more than $7 per boe
- aim is to replace at least produced-out reserves

So, the bottom line is: regardless what the daily rates for 'rigs' are, as long as company is able to maintain above stated 'cycle' numbers, life of the company is sustainable. Any improvement on these numbers means a bright future.
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