longoil

$125 Oil Not Sustainable for the Time Being

Hello len811,

You need to look at the cirucmstances to see if it is good negative FCF or
bad negative FCF.

In the case of PWE, it is good negative FCF. PWE acquired Vault and Canetec in Jan 2008 and this would explain the negative FCF. Buying assets to replace declining reserves or add to existing reserves is always a good thing and is a sign of good management.



On Jun 11 02:27 PM len811 wrote:

> So, no one thinks the changeover to a negative cash flow is a problem?

$125 Oil Not Sustainable for the Time Being

$125 oil is sustainable (unfortunately) in the long term for the very simple reason that world production capacity is only 85 million barrels per day and demand is much more.

According to T. Boone Pickens (who I think knows more than most people regarding oil production) quoted by bloomberg.com April 17, 2008 "There is only 85 million barrels of oil globally in the market coming a day and I don't think you can increase that 85 million,'' Pickens said.

We are well past peak oil production and the now difference is being made up by Gas-to-Liquids, Oil Sands, Deep Sea drilling and other technologies that are desperate measures to extract the world's remaining oil.

Current oil prices are not a bubble, but simply Economics 101. Decreasing supplies, increasing demand and an inelastic commodity with no practical substitute.

Even Alan Greenspan recently stated that current oil prices are not a new bubble.

" ... skyrocketing prices for oil and other commodities, notably grains like rice and wheat, do not signify the growth of a new market bubble following the ones in U.S. housing and, earlier, in technology stocks."

See www.canada.com/montrea...