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Richard Zeits  

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  • Oil And Gas Stocks - That Evasive Inflection Point [View article]
    Mike,

    There are certain price levels when decisions become very economic.
    Mar 19, 2015. 01:43 PM | Likes Like |Link to Comment
  • Oil And Gas Stocks - That Evasive Inflection Point [View article]
    Mike,

    Heavy oil, EOR, tar sands are just some examples. I would keep in mind, however, that North America is just a small part of global supply. Just a thought, Russia produces over 10 million barrels a day and has very high taxes on oil.
    Mar 19, 2015. 01:12 PM | 1 Like Like |Link to Comment
  • Oil And Gas Stocks - That Evasive Inflection Point [View article]
    Mykie,

    "...additional lost production would be more than what has already been lost..."

    Has any production been lost? If it has been, does not look very inspiring based on the inventory numbers. Please have a look:

    http://seekingalpha.co...
    Mar 19, 2015. 12:41 PM | Likes Like |Link to Comment
  • Oil And Gas Stocks - That Evasive Inflection Point [View article]
    Mykie,

    I would argue that for quick and significant shut-ins of existing production to occur, the price of oil would have to drop below $40-$35 per barrel. That would impact a significant portion of high-cost production (such as heavy oil water floods and steam floods, tar sands, production in certain remote locations or with high tax areas, such as Russia, just to give some examples). Operators would have to curtail existing production to avoid cash losses.

    Such curtailments would be temporary, of course. However, turning production off and on will temporarily reduce supply and give the market a chance to absorb the inventory glut. This appears to be the only mechanic that can quickly and reliably fix the oversupply problem and re-set the pricing regime for oil from constraining to stimulative.
    Mar 19, 2015. 11:43 AM | 4 Likes Like |Link to Comment
  • Oil And Gas Stocks - That Evasive Inflection Point [View article]
    Hi Mike,

    Just to be clear, I was referring to existing production (as opposed to new drilling). Production costs in the Bakken (which I would define for simplicity as LOE, gathering costs and production taxes) are typically less than $15 per barrel, assuming $40 per barrel. Even assuming local differentials of $12-$15, the decision to shut in production would be discretionary - not driven by negative operating cash flow - possibly all the way to ~$25-$30 per barrel (or even lower, given that some costs are fixed).

    There are may other categories of operators that will have to take their production off the market before most Bakken producers have to.
    Mar 19, 2015. 11:31 AM | 1 Like Like |Link to Comment
  • Crude Oil - Pressure Building Up [View article]
    Canadian Red Neck,

    Thank you for the great insight, that is my view as well.

    Shutting down an upgrader is an extreme measure. So if the price is around $40-$45 for WTI, operators may elect to run rather than shut down completely. What if the price drops to $35 and stays there for, let's say, two weeks? Investors and Boards may start asking questions.
    Mar 18, 2015. 05:12 PM | 4 Likes Like |Link to Comment
  • Crude Oil - Pressure Building Up [View article]
    Yeagley,

    Imports are often driven by refinery configurations. As a thought, the U.S. refining complex is generally highly complex and is best configured to process heavy/sour grades, whereas growth in the U.S. supply has been on the light/sweet side. So it is not particularly surprising that complex refineries continue to import a significant amount to foreign crude for processing. Also of note, refinery utilization increased slightly this past week.

    On a separate note, 5MM equals to 3 VLCCs. There is, obviously, some lumpiness to these numbers.
    Mar 18, 2015. 04:37 PM | 2 Likes Like |Link to Comment
  • Crude Oil - Pressure Building Up [View article]
    Rseye,

    I am not familiar with GASL structure, but I believe it is a nat gas-linked instrument. I will leave nat gas fundamentals for a separate note, hopefully soon.
    Mar 18, 2015. 04:31 PM | Likes Like |Link to Comment
  • Crude Oil - Pressure Building Up [View article]
    TimmiesRegular,

    I totally agree with you that oil sands production is difficult to turn off, but I certainly can see a scenario where operators reduce system utilization to optimize the economics. Same relates to steaming/flooding projects, as well as projects with high transportation-driven differentials.

    Shale producers are indeed feeling tremendous pains (just like everyone else), but may have little motivation to curtail the existing production. Let's not forget that many shale operators have cash operating costs of $10-$12 per barrel (I do not include basis differentials). So drilling/completions may be deferred, but that is not enough to cure the supply glut quickly.
    Mar 18, 2015. 03:37 PM | 3 Likes Like |Link to Comment
  • Halcón Resources: Eagle Ford Update [View article]
    Gayle Gregory Goodman,

    You may wish to consider HK's hedge position for 2015.
    Mar 13, 2015. 04:57 PM | 4 Likes Like |Link to Comment
  • Whiting Petroleum: With Oil At $50, Is It The Right Time To Pursue A Sale? [View article]
    Here we go again:

    http://bloom.bg/1xkY7wc

    Bloomberg's article makes me wonder if by any chance the alleged "auction" process was a response to a preceding unsolicited bid.
    Mar 13, 2015. 04:46 PM | 1 Like Like |Link to Comment
  • Halcón Resources: Eagle Ford Update [View article]
    Fliper2058,

    Euro/USD may have contributed, but the oversupply appears to me to be an overwhelmingly bigger factor.
    Mar 13, 2015. 04:41 PM | 3 Likes Like |Link to Comment
  • Halcón Resources: Eagle Ford Update [View article]
    Bbob68,

    I am working on another note on HK, will post in a day or two.

    With regard to the inventory build, I must say that the price of oil collapsed almost exactly in tandem with the inventory build.

    Please take a close look at the graphs in this note - you will see storage build accelerating at the same time when crude oil prices took a deep nosedive:

    http://seekingalpha.co...
    Mar 13, 2015. 04:22 PM | 3 Likes Like |Link to Comment
  • SM Energy: The Strong Balance Sheet Is An Asset [View article]
    bspSTUD,

    What would be rationale?
    Mar 13, 2015. 12:07 PM | Likes Like |Link to Comment
  • Whiting Petroleum: With Oil At $50, Is It The Right Time To Pursue A Sale? [View article]
    Rawenergy,

    If that is indeed the case, WSJ should have known better. (Or the investment banker. Or both. Or the company, who needs to manage the process tighter. Having said that, let's admit, the stock is up, albeit at the cost of investors asking the question whether they should interpret the rumor as a possible indicator of the company not having enough confidence in the upsides).
    Mar 13, 2015. 12:06 PM | Likes Like |Link to Comment
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