Seeking Alpha

User 353732

User 353732
Send Message
View as an RSS Feed
View User 353732's Comments BY TICKER:
Latest  |  Highest rated
  • Exxon makes second Vaca Muerta shale find [View news story]
    Assuming Argentina does not expropriate XOM and CVX Vaca Muerta assets as soon as they reach commercial production in about 3 years, Argentina could become a net exporter of oil in the next decade and become one of the most significant oil producers in South America in 10 years.
    If Argentina does do the predictable and try to steal these assets then instead of Vaca Muerta it will be Vaca Argentina. Presumably XOM and CVX have profitable exit strategies in place in the event Argentina reverts to type.
    Dec 18, 2014. 04:40 PM | 4 Likes Like |Link to Comment
  • Drilling Down Into Laredo Petroleum's Recent Price Crash [View article]
    Hedge funds that can depress an entire class of stocks(small/medium independents) by their vast capital movements and mass transactional capabilities are at least as much a threat to companies such as LPI as a Saudi price war.
    Hedge funds sell stocks based on what category they belong rather than their specific risk/return profile, resource position or management ability.
    This kind of programmed buying and selling is just as disruptive to proper allocation of risk and capital as Saudi behavior is to cash flows.

    Most independents have at least much of Q1 2015 production hedged, keenly understand the need to conserve cash and can reduce capital spending by 25 to 50% on fairly short notice. Consequently most will survive and emerge both technologically stronger and managerially wiser at the end of current price downcycle.
    Dec 17, 2014. 12:40 PM | 2 Likes Like |Link to Comment
  • Canadian heavy oil drops below US$40 as output surges [View news story]
    1. The most expensive production operated by the financially weakest producers will indeed be shut down in Q1 2015

    2. Positive capital momentum during the upcycle will be replaced by negative momentum by Q3 2015, meaning no new projects will be initiated for the next 2 years at least, even if the next upcycle starts within 12 months. Canadian production may well be flat after Q2 2015 for 4 to 5 years

    3. However, the next generation of projects will be much more capital and operating cost efficient than the projects now coming on stream, ensuring that in the next decade Canadian production will again grow vigorously.

    The Saudis can delay but they cannot extinguish innovation driven production of either oil sands or shale in North America. What they can do is drive capital away from Russia, Africa and Latin America, creating implacable enemies and strategically isolating Gulf OPEC.
    Dec 15, 2014. 06:32 PM | 11 Likes Like |Link to Comment
  • Range Resources +3.4% on 2015 capex budget, record Utica well results [View news story]
    Outside North American onshore production from shale and tar sands total unit production costs are likely to keep increasing. The incentive price for new production outside Gulf OPEC and Iraq will be in the $85 to $100 /bbl range for the balance of the decade.
    For North American shale and Canadian tar sands all in unit costs, in clear contrast are on a trajectory of 5% to 10% annual declines depending on operator and sub basin( driven by continual innovation and multiple efficiency improvements) . Each year North American production, especially US shale, will become more competitive compared with new production in Asia, Latin America, much of Africa, Australia and Russia. By the end of the decade the incentive price for new production from tar sands and North American Shale may well be in the $70 to $85 /bbl range.

    Saudi Arabia will succeed in curtailing capital flows into Africa, Russia, Brazil, Mexico, Central Asia , Venezuela and Australia among others for the balance of this decade but it will not succeed in choking North American onshore growth once the next upcycle begins.
    Dec 15, 2014. 12:36 PM | 1 Like Like |Link to Comment
  • ConocoPhillips: New Capital Plan A Drop In The Bucket [View article]
    Global upstream/LNG capex is likely to fall by over $150 billion in 2015. It will take several months of prices close to $100/bbl to undo the negative momentum from compressed gross cash flows for upstream companies and state owned oil and gas companies.
    The capex downcycle caused by a year of low prices will not be fully reversed without 3 years of high prices. It is far easier to shut down capital expenditures sharply over a six month period( just say no) than to reinvigorate them vigorously( just say yes has a small audience after financial trauma) once the price upcycle begins.
    $50/bbl WTI in Q1 2015 creates a very high probability of $100/bbl WTI in Q1 2016.
    Dec 14, 2014. 02:35 PM | 6 Likes Like |Link to Comment
  • Mexico oil boom outlook dims as U.S. drillers cut investment budgets [View news story]
    The current downcycle will cause Mexican production to decline in 2015 and increase pressure on Mexico to offer more attractive terms to private and foreign capital. This will create longer term benefits for Mexico since its Gulf and shale(extension of EagleFord) resources are excellent candidates for development, especially by US companies.

    If Mexico resets the temptation to be Brazil ( vast resources; hostile environment for foreign technology and risk capital and a deeply corrupt national oil company) it can be a favored destination for capital during the next upcycle.

    Vast resources are not enough: the proper investment and tax environment , physical infrastructure and water availability are also essential for oil and gas development
    Dec 12, 2014. 12:20 PM | 5 Likes Like |Link to Comment
  • ExxonMobil: The Safest Way To Play The Oil Rebound? [View article]
    XOM is the only stock in the world that behaves like an appreciating bond.

    The safest way to play the rebound is to invest in the top 5 midstream companies.
    Dec 11, 2014. 03:33 PM | 2 Likes Like |Link to Comment
  • Energy firms slash spending on drilling as crude’s decline accelerates [View news story]
    Capital flows in the oil and gas industry are responding much faster than in previous cycles. This means that the great majority of E&P companies, including those small/medium independents who are hedged through Mid 2015, will not only survive the current downcycle but be shrewder and nimbler when the next upcycle begins. While US liquids production will still increase in the first half of 2015, decline rates will prevent any growth in the second half.

    Outside the US, capital starvation will cause production in Russia, North Sea, Central Asia, much of Latin America and non -Gulf OPEC members to be stagnant or decline in the second half of 2015.
    Shale development in Austalia and Argentina will be substantially delayed.Canadian tar sands growth will be sharply curtailed for the next 2 years and Iraq/Kurdistan will not be able to increase production much at all in 2015.

    Worldwide, offshore projects that have not been initiated in the first quarter of 2015, will be delayed by a year to three years.

    Financial deprivation will lead to even more, not less, violence in the Middle East and Africa.

    The next price upcycle will be as sudden and swift as the current downcycle. The more rapid the capital response the more pronounced the cyclicality in physical output, greatly amplified by Wall St financial engineering and market manipulation abetted by Big Media hysteria.
    Dec 11, 2014. 12:07 PM | 13 Likes Like |Link to Comment
  • Weaker oil prices dim prospects for LNG projects [View news story]
    US Gulf coast LNG projects are now the most competitive in the world and will proceed. Almost everywhere else any LNG project that can be delayed or cancelled will be.
    The window of opportunity for US producers to profitably participate in Global Gas is now wide open even as it closes( temporarily) for Canadian, Australian and African producers.
    Dec 11, 2014. 11:50 AM | 3 Likes Like |Link to Comment
  • Goodrich Petroleum cuts planned capex in half, eyes Eagle Ford alternatives [View news story]
    This is very much the right thing to do: cut capex; lower costs; monetize non core assets to the extent possible to survive the downcycle and be positioned for tremendous boost in value during the next upcycle. The sharper the descent the steeper the ascent.
    This is the model for all small E&P companies: adjust swiftly; preserve the core and avoid denial.
    Dec 10, 2014. 10:18 AM | 1 Like Like |Link to Comment
  • Chevron delays release of drilling budget until next year [View news story]
    Worldwide Capex by the oil and gas industry is likely to be cut by $125 to $175 billion in 2015. The consequences of this will become apparent by the 3rd quarter of 2015 in terms of deep reductions in exploration activity and either stagnant or falling oil production in several countries ranging from Russia to Brazil, from Indonesia to Nigeria and in much reduced growth in liquids production in North America and Iraq compared with projections made in early Fall.

    It will also become obvious that the required true breakeven price for new liquids production in non Gulf OPEC is higher than for shale in the US. In declaring economic war on North American E&P and financial war on Iran and Russia, Saudi Arabia is inflicting and will continue to inflict serious damage to non-Gulf OPEC, UK, Norway , Brazil and Mexico.

    The Saudis started something they will not finish on their terms. Innovation will accelerate in North America and Russia and Iran will become more not less vicous and belligerent.
    Dec 9, 2014. 04:31 PM | 8 Likes Like |Link to Comment
  • Oil industry’s multibillion-dollar projects come under new scrutiny [View news story]
    Low prices are self correcting. They choke cash flow which chokes capex and overhead while impelling companies to even more rapidly assimilate efficiency and productivity enhancing technologies; low prices also stimulate consumption.

    Within 2 to 3 quarters trends begin to reverse and inventories start to decline visibly. Within a year prices ascend as rapidly as they descended as people realize that multi billion dollar LNG, deepwater and frontier basin projects cannot simply be switched on and off at will(unlike onshore shale); once deferred these projects require two to three years to reconstitute. Scarcity replaces glut as the narrative and prices overshoot. Low prices can undo in a year what high prices took 3 years to do.
    Dec 9, 2014. 12:19 PM | 10 Likes Like |Link to Comment
  • Oil stock downgrades - and some upgrades - continue as sector is slammed [View news story]
    Many E&P companies have attractive hedges in place thru mid 2015 which means their actual near term cash flows are much better than these manipulative downgrades indicate.
    Moreover, small independents are nimble and can cut capex and overhead quickly to conserve cash. Most small independents will endure the downcycle and be well positioned to profit from the inevitable upcycle.
    The more precipitous the decline in oil prices, the more vertical the subsequent ascent. Each cycle creates a more innovative and efficient industry.

    The more retail investors panic the better for Wall ST.
    Dec 8, 2014. 04:48 PM | 6 Likes Like |Link to Comment
  • Oil slumps to new five-year low as Morgan Stanley cuts forecast [View news story]
    Where were these pronouncements in August or even October?

    Wall St amplifies volatility and cyclicality in the oil market.
    Who loses: retail investors.
    Who gains: Wall St
    Dec 8, 2014. 12:00 PM | 5 Likes Like |Link to Comment
  • ConocoPhillips sets 2015 capex budget at $13.5B, 20% lower than 2014 [View news story]
    Global capital spending on E&P and LNG projects will decline by scores of billions of dollars in 2015 as North American companies conserve cash and position themselves for a step increase in efficiency in 2016 and countries ranging from Russia and Nigeria to Brazil and Mexico face tremendous cash flow issues.

    There will be production declines in several countries in 2015 even as production increases in North America and Kurdistan . Major LNG projects outside North America will be delayed or cancelled. Quite likely there will be a modest stimulus to oil consumption in Asia. There will be, as yet, unforeseen social and economic pressures leading to violence in the middle east as spending is sharply curtailed.

    Moreover, as long as the dollar keeps strengthening oil will keep falling.

    By mid to late 2015 the dollar may have reversed direction and there will be a realization that oil market imbalances are correcting themselves while Mideast violence may spread even to the Gulf countries. The combination of circumstances might well propel oil substantially higher by the 4th quarter of 2015.

    The Saudis have started the current down cycle, the strong dollar has given it impetus and Wall St has amplified the deep fall for its trading benefit.
    The Saudis have miscalculated both the extent of the fall and its geo strategic consequences.
    Dec 8, 2014. 11:56 AM | 3 Likes Like |Link to Comment