While a low oil price environment may adversely affect producers’ topline, it’s important to recognize the potentially positive effect on input cost in the form of lower energy.
So today’s post highlights how some producers with process intensive production like MCW may have reduced exposure to oil price volatility.
As seasoned energy investors hawk over day-to-day indications of production forecasts from OPEC nation oil ministers - dissecting every nugget of information about storage levels, rig counts, etc. - certainty won’t be restored until oil’s price stabilizes.
However, producers like MCW whose bottom line depends greatly upon energy costs could be gaining comfort with the current pricing environment.
Upon analysis of MCW input costs, we see a meaningful reduction in our production cost per barrel to $28 (1/27/15 MCW Energy news), which due to its correlation to oil price could be reduced even further if oil continues to decline as some project (Citi Cuts Oil Outlook).
The plan for MCW Energy is to grow revenue and profit from energy volatility we see currently.
Lower energy costs are a crucial driver of MCW profitability and serves as a key differentiator from less energy intensive production methods.
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[Photo Credit: Sergio Russo]
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