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iPhone x case If we have a sustained backwardation where longer dated (three years out or longer) prices continue to trade at a substantial discount to near term prices, US shale companies will be in the unique position enabling them to hedge out a large portion of their production at much higher prices than longer term future prices.Their Free Cash Flow (FCF) generation profile will improve markedly and will very likely lead to an increase in mergers and acquisitions (M as executives at the larger integrated oil companies scramble for the last remaining packets of competitive acreage. In fact, if this thesis proves correct, many if not most oil executives sitting on large cash piles or possessing a lightly geared balance sheet, will probably end up kicking themselves for not taking advantage of the depressed valuations in some of the mid tier E companies that prevailed during 2016 and 2017.Furthermore, we would also point out that in the event that a peak in global oil demand does materialise sooner than expected, OPEC and in particular, the Arabian Gulf States would probably (or least initially) continue to cut production in order to support the market. Given that these countries generally require an oil price of around $60 per barrel to support their fiscal commitments, it will be preferable to forgo some production but maintain prices at higher levels for as long as possible iPhone x case..
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