Mmarrkk

The SEC Surrenders to the Oil Industry

Most of the large write downs that have occurred over the last few years (Shell, El Paso) have occurred due to price shifts. The resources and reserves were estimated at a given price. Wehn prices fell, the resources were not drilled and the reserves had to be written off. Here's the little secret: those resources are still in the ground and will be drilled when prices go back up. Just a matter of time. As a reserves engineer who has worked for a major for over 30 years, I can tell you that the current SEC rules (the old ones as the new ones have yet to actually go into place just yet) are anitquated and do not allow the use of technologies that have been proven over the last 20 years. These changes will give all of us a better insight into companies' resource base and the likelihood that they will be deemed reserves and developed. Yes, it will take a bit more intelligence to read through the reports and make heads or tails fo this. But investing in O&G is not for the simple minded. You need to understand the chances of success and you need to understand the pricing threshholds that make the resource economic. If you can't, I'd suggest you invest in other industries and leave the O&G segment to those that can.

The Oil Casino: SEC Heading for Monte Carlo, Part III

Current SEC rules are over 30 years old I believe and no longer take into account modern technological advances. As they stand now, a company can drill a well in the Barnett Shale and just because it is more than one spacing unit away from an existing producer, it is termed an "exploration" well. Thousands of wells have been drilled in the Barnett and drilling less than 1000 feet from an existing producer and you still have to call it an exploration well and call the resources "unproven"? Get real.

The new rules will be more more "fit for purpose" for reserves engineers. I've done reserves accounting for over 30 years and I fully support the new rules. If anything, they don't go far enough in changing the way we account for reserves.

And, having a lot of reserves doesn't really matter. Its the VALUE behind these reserves. Having 100 million barrels of oil in the oil sands or in a high tax rate state such as certain middle east companies is not the same as having 100 million barrels of oil in the shallow Gulf fo Mexico. Its all about dollars and profit, not barrels.

Options Trader Thursday Outlook: CRE Data Day

I'd rather ask Timmy a couple of other questions:

1. How does one have the **lls to go from a tax cheat to the Treasury Sec.? Or better yet, how does one avoid criminal prosecution when it is found that you are a tax cheat?

2. How does one request additional taxation of the common, everyday citizen when the Treasury Sec. cheated on his own taxes?

3. As Treasury Sec., how does Timmy intend on paying off the trillions of dollars of debt he and his boss are saddling us and our children with?

4. Why doesn't he scream about the additional deficit spending being taken on by his boss? Trillions more spending in healthcare reform, even if you cheat and use the gov't estimates which we know will be at least 50% too low!

The Slippery Truth About Oil Price

Thanks Henry's father. You've got a great list started. Missing one where the "liberal progressive" plans to tax the crap out of refineries, thus driving up the cost of refined products for all Americans, driving our economy deep into a depression.

What's missing? Anything that remotely looks like a plan for the near and mid terms. Seeking Truth, you have anything constructive to add? Two verses of kumba yah does not count!

No Climate Bill This Year, Senators Say

erewhonman: watch how "level" that playing field gets when the Chinese and the Indians, to name a few, laugh their butts off at us. They will continue to grow and pollute while we will tax into oblivion industries in the U.S. that are actually doing a good job of controlling their emissions. Then, watch how lots of industry relocates to these countries. All the while, consumers back in the U.S. will be paying heavy premiums/fines/excess cost for everything we buy.

And where will all this money go? Why, to our friendly tax collecting hogs in the federal government who wil then take it, give it to slugs who aren't working or waste it on pet projects. Never ever give the government more money! They will waste it! Give it to private industry and they will create jobs! Real jobs, not made up jobs like our beloved President has done. Liar!

No Climate Bill This Year, Senators Say

Its really "Crap and Tax and Screw"!

I only hope that more of the Socialist-in-Chief's plans and programs go down in flames! We must push forward with a Fail-Baby-Fail plan that renders him and his jack-booted fellow socialists toothless and harmless. 2010 elections will be a great start.

Hat's off to Sen. Lieberman for standing up to this Joker!

Natural Gas Extraction May Be More Expensive Than It Seems

Plenty of water for use in most of the areas where the shale gas exists. Fracing uses a fraction of golf course maintenance does.

The water goes down into the ground and the volumes pumped out are put in retention ponds, treated, and re-used for frac'ing future wells.

BTW, many of the shale plays use plain old sand, not ceramic proppant.

The chemicals used in fracing make up less than 1 % and most are found in your home right now. Look at the contents in a bottle of Formula 409 or Windex!

Look at the "back-end" costs for building a freaking Toyota Prius. Those batteries contain some pretty nasty crud too, you know. As does the plastices/fiberglass that makes up the body. And did you know that NATURAL GAS is used as a raw material for making many of those parts? Get a grip you NIMBY!

Natural Gas Extraction May Be More Expensive Than It Seems

The fact that wells decline quickly off their initial rates is no secret. In fact, if you will go through all of the technical and investor presentations, all of the companies accused of "promoting" the shales will readily tell you that first year declines are enormous. Most quote numbers like 70-85% decline in the first year. Yes, that comes from the companies that supposedly "hype" the plays. So, this rapid decline is ALREADY BUILT INTO the economic and production forecasts. Wells that come on at 10 MMCF/day are down to 1.5 MMCF/day by the end of the first year. Who cares? Its all about a) the total reserves produced in the first few years and b) the number of wells lined up in the cue to replace those that are declining. Estimates of total well counts are in the tens of thousands, hence the term manufacturing. By the way, that term was used a long time ago when folks were (and still are) drilling coalbed methane gas wells in San Juan Basin.

The price of gas will probably be driven by the rate at which companies will be able to access these resources, the ability to get experienced rig and frac crews and the overall macro economic conditions. If demand stays low, gas will be plentiful, prices will stay low and drilling will be slow. But if demand picks up, there will be a temporary shortfall that drives prices up. As prices go up, drilling will rapidly increase since the shale developments can be turned "on and off" with somewhat relative ease. As drilling ramps up, supply will outstrip demand and prices will fall a bit. Then drilling will slow down and production will go down, falling below demand, and the whole supply/demand pricing cycle will start over again. Watch for prices bouncing along between $4 and $8 for a while!

Prices can't stay low forever, since new drilling won't occur below $3-4/mcf. That will cause shortfalls, rising prices and, well, you know the cycles!

ConocoPhilips: Time to Embrace Natural Gas Transportation

Fitz: not surprised with the lack of response. BOD's, unfortunately, just like to get along!

Yes, $145/BO was a disaster in general. Yes, it helped me out a lot as an investor in oils and an employee of oil/gas co'. But on a macro level, given the state of the economy, it was bad. Now, layer on that oil price on top of the ever increasing debt, the soon to be increasing taxation, the anti-business legislation we seem to see everyday, and the precarious condition of the stock market, I think it could be the straw that breaks the camel's back! The stimulous money only stimulated a lot of government pocket books and executive salaries and union chief's savings. It isn't going to what needs stimulating. My wife's small business is doing well, but will probably not make it through healthcare reform due to the taxes and requirements that will be placed on them. Based on what she's read of the bills so far, she'll just shut it down and lay off the employees and let them go as contractors. Fine with me...I get my full-time wife back! But the employees will probably not be too happy!

I'm still pushing nat gas as a transport fuel and I'm fighting with all of my energy and money the cap/tax/trade bills. Those will drive costs way too high at the wrong time. Its too much, too soon, at the wrong time, for the wrong reasons and needs to be put on the back burner (nat gas burner BTW) until our economy is out of ICU.


On Oct 30 05:10 PM Michael Fitzsimmons wrote:

> long_on_oil: hey, i love BP and STO. of all the earnings released,
> i think you'd have to say that BP and CVX had the best quarters.
>
>
> Mmarrk: i have sent emails to Conoco's BOD. no reply, and obviously
> no success. in light of all their investments in natural gas plays,
> i just don't undertand COP management's aversion to natural gas transportation.
> what jim cramer tonite, he's in OK interviewing some natural gas
> heavyweights. i am sure they'll be talking about it. the U.S. will
> have to migrate to natural gas transportation at some point - we'll
> have no choice. the question is, will the government wait until there
> is rioting in the streets, or will we do it before a crisis. of course,
> i think last year's $145/barrel oil was a crisis...
>
> auto44: if you are compariing to the US dollar, it's a good question,
> but a better question maybe this: china, india, brazil, france, and
> germany have all said they are in favor of a new world reserve currency
> not based on a single country. so, the real long-term question is
> this: what will the U.S. dollar be valued to wrt a new world reserve
> currency based on a basket of currencies, gold, and silver? the answer
> to this question, i believe, is: "less than it is valued today".

Recycling U.S. Coins into Silver

Fitz: one thing to be concerned about with LNG is the overall low low cost of incremental production. Once the liquifaction plant, ships and re-gas plants are built and financed, the cost to run the Middle East plants and get the gas to the U.S. shore is dirt cheap. Think less than $3/mmBtu. Imports are down right now (thank goodness) due to there being other markets. If the Europe market dries up, then LNG will hit our shores and will displace some of the more expensive gas.

Now, overall, that won't kill off the general premise of using Nat Gas for transport; LNG will keep the price low for a while. But it does get us back into a dependency we'd rather not have. Going forward, big LNG exporters will be Qataris, Iranians, Russians and Australians. Only one of which I feel totally comfortable with!

ConocoPhilips: Time to Embrace Natural Gas Transportation

Increasing dividend? Good.

Borrowing money to pay dividend? Bad

Increasing dividend while increasing borrowing to pay for said increasing dividend? I just don't understand!

You are right about the natural gas transportation. Maybe we need to direct this line of thinking to the B.O.D.'s?

Shale Gas: Promises, Promises, Promises

Desert Fox: I believe the rapid decline in Total Texas Production is due to the decline in new wells being drilled. No one has masked the very high decline rates of shale wells. In fact, everyone admits and premises it! 70% in year one is a low end number but all are using this in their calc's. The key with the shale plays is continuing to drill in a manufacturing-type operation. I still think Dr. Berman's analysis is flawed. But confidentiality issues prevent from showing/discussing details.

Two Ways to Profit from New York's Uncertainty About Drilling for Natural Gas

makeitsafe: you are a fool. the only difference between horizontal well frac'ing and the frac'ing that's been done for decades is that the well is laying horizontal. BTW, these wells are 6000 to 13000 feet below the surface and several thousand feet below any known fresh water aquifer. And the chemicals used are very similar to those found in your home today...Formula 409, Windex, etc. Do you ever, ever, ever, get Formula 409 in your sink or bath tub? Where does it go when you rinse it? Answer: into the fresh water supply! These chemicals are used in very very very low percentages (think less than 1%).

This is just another Greenie Weenie attempt at ruining American Industry.

And the difference between "alleged" and "proved" is a huge one! Anyone can "allege" that someone killed another person, but you gotta prove it! Many of the cases I've seen of "alleged" pollution of ground water by frac jobs are just crappola! The science doesn't back up the claim, and by science I mean simple things like physics, geometry, fluid dynamics.

Shale Gas: Promises, Promises, Promises

Tudor Pickering Holt gave a point by point assessment of Berman's evaluation. They, in short, said Berman is Flat Out Wrong and way out of his league. We shall see.

Is Exxon Betting on $100 Oil?

Alan:

XOM invests for the long term. For those on Wall Street, "long term" means something more than 1 or 2 quarters out!! Just wanted to make sure you knew that. XOM is looking 5-10 years out. Oil >$100 in 2015-2020: almost a dead-certain cinch!

While you talk about political risk in Ghana, the current U.S. Congress and Administration make investing in the U.S. much more risky. For example: at their whim, the Congress is talking about completely changing the tax rules for only the major oil companies. We have that blubbering idiot Sen. Markey wanting to re-write contracts with companies just because prices are high and Congress wants to! Thanks, Supreme Court, for reminding him that when you sign a contract, you adhere to the terms on that contract!! Investing in capital projects in the U.S. carries an ever increasing amount of risk due to a) overwhelming budget deficits, b) nothing on the horizon that shows our government will do anything about spending c) in fact, rapid rises in social giveaways and increased government control and spending d) the desire to change tax law to continue to soak the successful e) the desire to change tax law to discriminately tax single industries or companies deemed as not "politically correct".

Sorry, I vote with XOM over the next ten years! They have more money in the bank than most banks have in the banks! And have proven management, not like our political leaders who are only proven as failures.