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Cheese Head

Cheese Head
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  • Why Cheap Oil May Be Here To Stay [View article]
    Timmies and others, we need to be careful and differentiate CapEx (drilling, completion, flowline, facilities) from OpEx (lifting and well repair /workover costs). I think the number you are quoting is OpEx.
    Dec 21, 2014. 09:08 PM | Likes Like |Link to Comment
  • Why Cheap Oil May Be Here To Stay [View article]
    Brian, you can increase production from producer wells by increasing reservoir pressure, typically from water injection, and also by better outflow by installing artificial lift. Also, to say that Exploration and Development costs NEVER decline is not true. Many of these costs are a function of size, location, complexity, and political and commercial conditions. For example I suspect that much of Mexico's Gulf of Mexico will yield many great lower E&P cost fields.
    Dec 21, 2014. 08:58 PM | Likes Like |Link to Comment
  • Why Cheap Oil May Be Here To Stay [View article]
    jprizzuto, I work in the oil industry and (ignoring geological time to make oil from dead leaves etc) I agree that hydrocarbons are non-renewable. But that doesn't mean the amount of them that is developable is in any way small as demonstrated by new Exploration methods, new extraction methods such as Hz well multi-stage fracing, and deeper and deeper water developments. Thus while I agree that the more we use the less we have, we on Earth still have 1000's of years of production, and therefore there is no short term link that reduced remaining amount results in higher wholesale price.
    Dec 21, 2014. 08:49 PM | 1 Like Like |Link to Comment
  • $60: Not A Reasonable Price For Oil [View article]
    Three Cheese, I don't know about other OPEC countries but here in GCC I don't believe they hate the US. Lots of Americans here and American elementary and high schools, US chain restaurants from MacDonalds to Red Lobster, and Hollywood movies at theatres. Also here in Qatar they have brought in mostly US Universities to train their kids:

    As to cutting production, why should they? OPEC hasn't increased it, it is non-OPEC oil production in ie US and Canada that has been increasing.

    Plus even if they did cut, how does that "allow the US to keep pumping", I don't understand the connection?
    Dec 21, 2014. 10:13 AM | Likes Like |Link to Comment
  • $60: Not A Reasonable Price For Oil [View article]
    Agree with a lot of what you say, but I am a Canadian working in GCC and I see more Qatari's of working age working than I do in Canada or US and yes here they have top or govt jobs but next door in Saudi or Oman many have to take more menial taxi driving type jobs to make ends meet.
    Dec 21, 2014. 09:54 AM | Likes Like |Link to Comment
  • $60: Not A Reasonable Price For Oil [View article]
    Keith, thanks for article and to commenters on the discussion. I think there are two additional variables in the supply demand curves not discussed here.

    First is natural gas with it's associated liquid condensate production. Globally there has been a lot of new gas/cond production, not just from hz well fracing primarily in N America, but also from global LNG projects. This additional gas and liquids supply has filled part if the increasing global energy supply/demand.

    Second, just like all other industries, and even with a lower oil price, the march of technology will continue in all areas of exploration and production. The understanding of reservoirs and the technology now employed in the petroleum business now vs ie 30 years ago is incredible. For people not in the industry thus is hard to fathom, so think of more well known industries such as cars & planes made 30 years ago, or food industry vs 30 years ago, or electronics industry 30 years ago.
    Dec 21, 2014. 09:40 AM | Likes Like |Link to Comment
  • 3 Reasons To Buy Royal Dutch Shell, Despite Lower Oil Prices [View article]
    Bakermre, Div witholding tax is for NL, not IRS. As Canadian RDS-A dividends will have 15% tax! RDS-B will have 0%. As Canadian, cannot claim that 15% on tax return, thus recommend buy RDS-B, not A.
    Dec 15, 2014. 09:31 PM | 1 Like Like |Link to Comment
  • BP: Recent Price Drop Makes It Hard To Resist [View article]
    Also why not Shell or CVX or XOM, whole sector is down and same logic applies to them?
    Dec 14, 2014. 08:43 AM | 4 Likes Like |Link to Comment
  • Understanding Kinder Morgan's Oil Exposure [View article]
    So, KMI share price has held up very well, while crude oil and LNG and oil operating companies have dropped significantly, as KMI is minimally and indirectly linked.

    KMI is my biggest position, yet as someone posted, it feels like everyone is already in on KMI, all on that side of the boat. And probably all the news on KMI is already baked into the share price, ie 2015 dividend, 10%/yr div increases, easier to buy out competitors, Kinder semi-retire etc.

    If you believe we are now at the bottom of that drop and time to start rising, then now is a good time to re-allocate from safe KMI into much depreciated oil company shares, RDS CVX etc.

    So far I've reallocated from my safest stock, a utility NGG to BHP twice in two tranches and am underwater on both investment changes.
    Dec 13, 2014. 09:34 PM | 6 Likes Like |Link to Comment
  • Stock Purchase - 11/28/14 - BHP Billiton [View article]
    Thanks Broke, good points, so with continued crude oil price drop today, BBL dropped below USD45 today, with 1.24x2 divvy that's 5.5% yield! And they will maintain that divvy when demerge from "Newco" which today was announced named Southern32. So as a glutton for punishment, just bought another tranch.
    Dec 8, 2014. 12:35 PM | Likes Like |Link to Comment
  • Report: Kinder Morgan considering exporting condensate [View news story]

    Just to add, you can get natural gas from reservoir that just have "gas" (allied non-associated gas) and from reservoirs that have oil (called associate gas) where when oil is produced to surface it drops in pressure and goes thought the bubble point and the natural gas naturally in oil breaks out into a separate phase, similar to opening a bottle of Coca Cola and the gas breaks out.

    You can also get some oil reservoirs where pressure is initially the same as bubble point and you get a free gas cap above the oil (as lighter than oil). Normally you don't produce the gas cap until you produce as much as reasonably economic from the oil, but sometimes you can produce the gas cap, strip out the liquids (condensate) at surface and enough re-inject lean gas to replace the gas production and not move the gas oil contact.

    Lastly, while gas some liquids "condensate" drop out coming up the well and can be measured at the wellhead. You can recover a lot more of these liquids in a downstream gas plant. Hope helps.

    Of course oodles of knowledge from many years in the oil industry doesn't make me any smarter on where oil price is going or a better investor ;).
    Dec 7, 2014. 08:17 AM | Likes Like |Link to Comment
  • Stock Purchase - 11/28/14 - BHP Billiton [View article]
    Well this has been like catching a falling knife, bought more 1 week ago and yesterday Friday Dec 4 BBL closed at USD46.09, the lowest since Apr 2007 (ignoring GFC).

    At that time profits were much lower and 6 month divvy was only USD0.54 not current USD1.24.

    Next week I'll buy again, but what is the catalyst for share price to move up?
    Dec 5, 2014. 11:07 PM | Likes Like |Link to Comment
  • Report: Kinder Morgan considering exporting condensate [View news story]
    Actually condensate is condensed liquid phase of natural gas production kind of similar to condensed steam from a kettle. It is normally very clear liquid who's specific gravity is similar to very very light crude oil, ~70 API.

    The amount or rather ratio of condensate is normally measured at the wellhead as bbl/mmscf of natural gas. Historically condensate wholesale price is similar to oil, so as natural gas price is low, a high ratio is always nice.

    The ratio is determined by the amount of longer chain hydrocarbons Mother Nature gave you in the reservoir, how you produce the reservoir, and how many of them you strip out of the natural gas at a natural gas plant.
    Dec 5, 2014. 07:39 PM | Likes Like |Link to Comment
  • Kinder Morgan: Don't Throw Out The Baby With The Bathwater [View article]
    Thanks for article on KMI, another good one on which I fully agree with:
    Nov 30, 2014. 10:05 AM | 1 Like Like |Link to Comment
  • Why Every Dividend Growth Investor Should Own Kinder Morgan [View article]
    Rich, merger now closed and WTI closed at $66 (ouch) and thus competitors share prices down, time for KMI to go acquisition hunting?
    Nov 29, 2014. 09:36 AM | 1 Like Like |Link to Comment