Through an economic lens the producers look stupid. However, RRC and Co. are likely maintaining this because of the availability of cheap capital. Almost literally a day after this crash money poured in from distressed funds- flooding the sector with enough capital that by and large distress has yet to be an issue, though some shareholders might disagree. If among the crowd a "wise" CEO decided to only produce enough to cover the fixed cost until prices rebounded- he would deny his company access via EBITDAX multiple. Ultimately his company would shrink relative to others and be no better off.
I do know of 3G and DEO is the type of target they would seek. I just question the story. I mean a story of the principal of 3G is "contemplating" a takeover of DEO seems too weak to act on. The story didn't mention that they would use AB/Inbev as the vehicle but it would make sense and make it more digestible.
I don't want to rain on anyone's parade myself, but this story is sourced from an outlet in Brazil and Bloomberg ran with it. A deal of this magnitude requires a lot of capital- over $100B of it. That kind of capital isn't in Brazil. Only in London and NY is where that kind of capital is available and if that were the case the FT or Wall St Journal would have almost certainly picked up on it.
Followed this stock forever and if history repeats they'll pull something off when sentiment is mostly negative which is where we're at. Knowing how close or not they are to something that could put to rest the liquidity issue is really powerful leverage. Each passing day is bait for more shorts to pile on. Take the institutional- insider shares out the share float is 54mil that against a month prior 48mil shares shorted could lead to a big move. Placed a small bet on May and June $2.50 calls
At 3% below book Einhorns annual 2% charge is more than covered. The market is effectively discounting by 1% a pool of capital plus some float that happens to be managed by one of the worlds best money managers who's track record is 20% per year. So the question is does DE use some of the capital to buy back the cheap stock--- even if it reduces the capital base on which he charges an annual 2%? He does on the other hand own a lot of the stock.