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Oil slumped last week as volatility in Chinese markets fuelled a rout in global equities and U.S. stockpiles remained more than 120 million barrels above the five-year average.

Pat Carlson, Seven Generations’ chief executive, said commodity prices have fallen to “unsustainable levels.”

“We are financing part of our development with debt and when the prices go down, the cash flow goes down and when cash flow goes down, to do the same program, we have to borrow more money,” he said in an interview.

“To make matters worse, our debt is in U.S. dollars. The Canadian dollar gets weaker when oil prices drop, so that’s makes our converted debt higher as well. So it’s prudent for us to scale back our program a little bit.”

FirstEnergy Capital commodities analyst Martin King said in a note released early Monday the oil price meltdown is a result of sentiment as opposed to fundamentals, with its origin in the lack of interest in quotas at the December meeting of the Organization of the Oil Exporting Countries or OPEC.

“Putting all rationality aside, there is the increasing chance that there could be one more major technical flush in crude oil prices below US$30 per barrel to around US$25 per barrel,” he predicted. “Such an event would be rapid and likely followed by a quick rebound back into the mid-$30s per barrel range.”

Seven Generation’s Lator 2 gas plant was completed last year to take its natural gas processing capacity to 250 million cubic feet per day. Its Cutbank plant is under construction and expected to add another 250 mmcf/d when it is completed in the spring.