As usual, I find Boone to be one of the smartest men on oil in the world. Two definitive statements from Boone that differ from most of the big analysts on Wall Street struck me in particular as important and correct.
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First was his belief that oil was only temporarily depressed and would see $100 a barrel again, and sooner than most everyone else expects. On this point, I think Boone is entirely correct. Global demand continues to increase even though supply has temporarily run ahead of it.
But Boone sees lower prices as enforcing quick discipline on production, and particularly on shale production, bringing supply and demand again in line. While Daniel Yergin, The Wall Street Journal and others have spoken about a "paradigm shift" in the pricing of crude oil, both Boone and I see this drop in oil prices as a temporary speed bump in the trajectory of oil prices above $100 a barrel.
A second place where Boone and I agree is in the speed in which production cuts here in the United States and elsewhere will come. Many analysts see production as already "baked in" and difficult to back out of despite the deep drop in oil prices. Morgan Stanley is looking for tremendously reduced production growth in 2015, but it is still looking for growth of 7%.
Both Boone and I also agree that shale production of the smaller exploration and production companies is quickly scalable and will need to be cut back more rapidly by many of the companies if they wish to survive 2015 from the onslaught of their bondholders. I believe that you will not only see no production increase from U.S. shale in 2015, you'll more likely see a cut in production of close to a half a million barrels a day.