When did breakeven price become the pinnacle of shale success?

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Falling oil prices have brought more and more discussion of the breakeven costs for US shale oil production. We know that unconventional oil is much much more expensive than conventional oil production, but the question has been how much more expensive and have those costs come down over time. 

From a Peak Oil and daily rate of production point of view this is important because you start to wonder when (and how severely) low oil prices will start to affect production.

Before long we started seeing articles like these:

Never fear, the shale promoters countered. Breakeven prices are much lower than originally thought or, as Steve Everley described it, a "Peak Oil Fail." 

Other analysts rightly pointed out that there is no such thing as a single shale breakeven price. It's all over the map with different prices per company and per play. 

Here it's worth revisiting Arthur Berman's excellent talk "Reflections on a Decade of Shale Gas." Including a section where he covers breakeven costs, where Art is careful to remind the viewer to dig deep into the data and assumptions behind reported breakeven costs. "You can always show enough profit if you don't show enough costs," Art says.

All of this talk of breakeven costs have just one purpose - calming investor fears while waiting for the rising price of oil to return the shale companies to a better position. But let's be honest, this a pretty terrible calming tactic. 

Here's Art again from the video:  "What does a serious investor look for? Are you looking for something that just breaks even. No, of course not. You're looking for something that has long-term value."

Art continues with what should be an obvious point to everyone: "You're not going to put your money in anything that doesn't make at least 10%... and most will say 20%... Somebody says I can break-even on a shale play. Well whoopie do. You're not going to get  my money for a break-even deal." 

In Forbes, Christopher Helman follows this same thread in his article "As Oil Plunges Further, Why It Might Be 'Game Over' For The Fracking Boom"

Helman writes: "Let’s get real — breakeven just isn’t good enough. Investors need returns on capital, not just returns of capital. And for myriad small drillers this fall in prices has virtually eliminated any possibility of turning real cash profits. Over the long run, a company that can’t generate a profit is worthless. Though oil prices are down 'just' 30%, shares in some drillers with shaky balance sheets have plunged 60%..."

The takeaway is a simple one: If the market has forced you into a position where you're talking about the breakeven price as a selling point, you're not in a good position in the eyes of investors.

When investors run, they place the brakes on US shale boom growth. And since recent global oil production growth has come primarily from the US shale boom, any slowdown will be significant.