The current oil price of $30/b is not a steady state price and is unsustainably low, and that, for example, prices can not stay at $30 for the next five years, Mark Papa, partner at the US private equity firm Riverstone Holdings LLC, former head of US oil and gas EOG Resources Inc., said in an interview with OPEC Bulletin in March.
"To predict what is going to happen with the future oil price, you would have to be a magician with a crystal ball to be accurate, but my expectation is that sometime in the next nine to 24 months, oil prices will recover back to a level of perhaps $60 to $70/b, not back to $90 or $100/b," he said.
The analyst said that that equilibrium price is $60 to $70/b.
Papa said that the oil and gas industry in the US has really suffered very significantly, particularly in the last six months, due to low oil prices.
The analyst added that of all the companies, those that have suffered the least have been the major oil companies.
Papa said that the smaller E&P companies, particularly those that have high levels of debt, have suffered grievously, and many of them have already declared bankruptcy or very likely, in the next six months, will declare bankruptcy.
"The US, which had been growing its oil production for the last four or five years due to the shale oil revolution, is going to suffer a significant decline in its year-on-year oil production in 2016 because the producers do not have any capital or cash flow to reinvest in order to continue the growth in oil production," he said.
"I believe the true breakeven price to develop the oil shale plays in the US is somewhere around $50 to $60/b," he said.
The price for June futures of the North Sea Brent oil mix hit $39.96 per barrel as of April 1.