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Lionel Yeo  

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  • How Much Does It Cost To Produce One Barrel Of Oil (BP, Chevron, Exxon Mobil, And Shell In 2014)? [View article]
    I wrote a SA piece on almost the same topic except looking at shale.
    Apr 12, 2015. 11:17 PM | Likes Like |Link to Comment
  • How Much Does It Cost To Produce One Barrel Of Oil (BP, Chevron, Exxon Mobil, And Shell In 2014)? [View article]
    The tax number looks a little too low.

    Royalties are between 6 - 15% while other production shares taxes can be up to 15%.

    Should also factor income taxes and insert a 10% margin to account for risks such as the bp oil spill.
    Apr 8, 2015. 12:45 PM | Likes Like |Link to Comment
  • Oil: The Bottom Is In And It Is Time To Add Stocks [View article]
    Hi River,

    It's a logistic and price issue. Refineries have a portfolio of suppliers to ensure consistent and regular pricing. There's also winter disruption and pipeline considerations.

    Everyone's very focus on US storage. But I'm not too concerned as this is a great time to buy more oil. Great numbers coming out of SUV sales and rig numbers coming down.

    Good drop in offshore, which is critical long term. Hopefully we put a dent to solar and new technology (sorry guys, but it's all about $$$). Just need to ride out this swing.
    Mar 30, 2015. 12:20 PM | 1 Like Like |Link to Comment
  • Oil Will Bottom In 3 Weeks: A Comprehensive Analysis Of Domestic Oil Production [View article]
    Good article. building on what we already know in the oil patch. Few pointers.

    1) Decline curves do not go flat for 30 years in shale. There's no pressure so after 5 years they drop to 0 and need to be re stimulated.

    2) Initial high production rates are due to longer laterals and more fracking columns. So it's difficult to compare 2010 to 2014. It cost more to go longer. Some of it is also better pinpoint where a play is discovered efficiently.

    3) After 6 months production declines.

    4) Old wells supporting new wells is the other way around. It's newer wells supporting new wells.
    Mar 23, 2015. 11:57 PM | 1 Like Like |Link to Comment
  • Penn West - Lenders Drive A Hard Bargain [View article]
    No change in news. Basics are that oil prices came down 60% and companies are cutting costs and dividends. PWE got infront and secured a relax of covenants.

    I have no doubt that nobody is making money at $43 WTI prices and if prices drop to $30, there could indeed be lots of bankrupts.

    But my bet remains. In an average price cycle of $70 USD. We're going to be siting on a company that produces 95,000 Barrels of oil and I'm only paying $6/bbl of 2P reserve.

    That which was cheaper is now even cheaper.

    There are going to be times when Mr. Market goes crazy. We've seen a few. 1998 Asian Financial Crisis. 2008 CDO crisis and housing market collapse. You could have picked up Las Vegas Sands at $2.00 before it hit $50. Ge at $7.00.

    There will be some pain. But if you do your home work properly and pick up shares when other people are fire selling. You need not do anything for the next 5 years.

    There are a lot of things I find different about PWE than the US players.

    1) They are in CAD so costs are coming down along with CADs.
    2) They had already begun restructuring before the crisis and had sold over $1B in assets.
    3) They've streamlined their costs before the crisis.
    4) Their assets are conventional and EOR type assets. Not shale. I'm never a big believer in Shale due to costs above $85/bbl.
    Mar 19, 2015. 02:49 AM | 3 Likes Like |Link to Comment
  • American Shale Is The New Swing Producer [View article]
    lots and lots of facts and data but no conclusion. Basically, your guess is as good as mind and it could be hot or it could be cold.

    the US is not the swing producer because it does not act as a single entity. Hence the title is incorrect.

    Will oil swing be less violent? I doubt so. The real estate market is very fragmented but that doesn't stop boom bust cycles. This current oil shale boom has less to do with oil and more to do with financing. So I think you need to re-do your title.
    Feb 11, 2015. 03:37 AM | Likes Like |Link to Comment
  • Natural Gas: Groundhog Day [View article]
    I'm long term long gas. But I have to admit, the volume of production coming from Marcellus continues to baffle me. On how NG companies continue to produce with no sense of cash flow is really stumping me. How can anyone make money at $4mmbtu? no idea. $6.50 is in reality the right number to make a decent profit and cover finance costs.

    The $2.00 handle is already priced in today. I don't expect it going much lower. Will have to wait and see if production slows.
    Feb 9, 2015. 10:20 AM | 1 Like Like |Link to Comment
  • Case For A Crude Oil Boomerang [View article]
    If oil goes to $150, those rigs that are left open will simply come back on. I think we'll see a much more stable market going forward.
    Feb 8, 2015. 09:28 PM | Likes Like |Link to Comment
  • The Natural Gas Rebound Will Be Fueled By Low Oil Prices [View article]
    HI Robin,

    I agree with your analysis on Permain and Eagle Ford, but what do you make of marcellus shale which is almost all dry gas?
    Feb 5, 2015. 08:19 PM | Likes Like |Link to Comment
  • Penn West Is Talking With Lenders As It Faces A Liquidity Crisis [View article]
    They just sold some assets in Oct, so that should keep the interest payments at Bay. The $200 odd repayment amounts can be refinanced with their credit. The only issue is probably the covenant on EBIDTA, which I'm sure is hitting 3/4 of the E&P firms. Most likely we'll see capex dropped by 50% and maybe the dividend scrapped. I'm in big favour of dropping their capex. There's no point spending with oil at these prices and they might as well wait for contractor costs to come down next year. I like what they're doing at lightstream and pgh.
    Jan 26, 2015. 02:45 AM | 1 Like Like |Link to Comment
  • Penn West Is Talking With Lenders As It Faces A Liquidity Crisis [View article]
    Doesn't look like a liquidity crisis. Probably a re-negotiation with the lenders. I think the Canadian lenders are quite experienced with oil cycle drops.

    The cap spending is a little high, I would have expected they drop it 60% like the dividend. Then again, oil price is moving very quickly. We were only talking about $65 oil 30 days ago, so I suppose PWE didn't want to over react to the capex.

    The bet is always going to be oil prices rebounding and the degree of return you want when it goes. I don't think this is a bankruptcy candidate.
    Jan 24, 2015. 05:19 AM | 5 Likes Like |Link to Comment
  • Oil Price Is At Irrational Level: Biggest Opportunity Since Lehman [View article]
    Ok everyone, I keep seeing this point coming up. So i'm going to say it again. OPEC is not cutting because this is a non-opec supply problem. There's no point in cutting supply because other producers will just make up the difference. This already happened in 1980s. Maintaining market share is just another way of saying not cutting production. You can always maintain market share is EVERYONE CUTs.

    And again 100x there is no conspiracy. Do you possibly think you can motivate any OPEC member to follow a US strategy? Do you think that Iraq, Libya and a whole bunch of anti US countries will willingly increase production and shoot themselves in the foot to so-call injure Russia?
    Jan 22, 2015. 09:50 AM | 2 Likes Like |Link to Comment
  • So How Much Exactly Does It Cost To Produce A Barrel Of Oil? [View article]
    Hi Tavir,

    I covered this in the summary that interest cost differ from company to company widely. it would be difficult to input the interest costs as a measure of breakeven costs. As commented above, the reader can do their own input on this to evaluate the interest cost of their company.

    Royalties and Production taxes are based on gross revenue regardless of tax.

    On point 6. No company invests to drill wells to simply break even. They need make more profit to cover opportunity costs and cover dry holes. In this case, their breakeven ROI is even higher given 37% tax rates.

    drilling costs will come down. But even a 10% drop is only a $3-4/bbl effect.

    Jan 18, 2015. 08:45 PM | Likes Like |Link to Comment
  • Money Dries Up For Oil And Gas, Layoffs Spread, Write-Offs Start [View article]
    This is their own stupidity to drill to this level. Another boom goes bust. We should see drill rigs drop to 1000 and stay there. Producer only when full cycle profits make sense and only spend 75% of cash flow. Not 225%.
    Jan 18, 2015. 08:33 AM | 12 Likes Like |Link to Comment
  • So How Much Exactly Does It Cost To Produce A Barrel Of Oil? [View article]
    That's what Jim Chanos is saying at $100 oil. I'm saying it at $65 oil. Basically it means you spend $1 to make 80 cents.
    Jan 17, 2015. 10:32 AM | 1 Like Like |Link to Comment