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User 353732

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  • Exxon adds proven reserves totaling 1.5B boe [View news story]
    If XOM continues to add reserves organically during the price downcycle while reducing Capex and can produce them during the price upcycle it will continue to create real wealth for shareholders
    Feb 23, 2015. 02:49 PM | 2 Likes Like |Link to Comment
  • If Oil Prices Are Surprising, Then That Can Only Mean Demand [View article]
    1. The futures price is not a predictor but an aggregator of current views. It is as much as captive of the recency effect as any other price or market metric. Traders and investors make( or lose) money by expecting the futures price to be wrong, otherwise a massive amount of transactions would not occur

    2. The futures price is valuable for hedging, of course, but not for investing ; it has about as much inherent insight as the stock rating of a Wall St "analyst" which not only changes every quarter but lags the actual direction of price movement

    3. The current imbalance is about 1.5% of global supply which would be troublesome were it not for the reality that a demand response lags prices by about 6 months and reductions in Capex are generally not manifest in terms of actual output for at least 4 months: after that the logic of the decline curve exerts itself. By Q3 there will be much greater clarity about both the demand and supply responses to $50 WTI. If global consumption does rise by about 0.5% and supply does decline by 0.5 to 0.75% (from current trajectories) then the futures price will aggregate and transmit this information and the curve will shift yet again.
    Feb 20, 2015. 05:09 PM | 2 Likes Like |Link to Comment
  • Strategy of delaying rigs completions makes sense, EOG says [View news story]
    US shale production is now a manufacturing business with the ability to turn operations on and off quite quickly. Drill but not complete is the adaptation of just in time manufacturing techniques to oil and gas production allowing companies to manage cash flow and ROE much better than any other segment of the upstream industry.
    Contrast this with Russian operators who have no ability to ramp production down even if they want to( too cold) and need at least 12 months to increase it.
    Feb 19, 2015. 03:06 PM | 6 Likes Like |Link to Comment
  • ConocoPhillips target upped to $80 at Oppenheimer [View news story]
    Given that these targets change every quarter and contain no insight, retail investors are much better off relying on their own view of prices and conducting their own company analyses.
    Wall St is in the business of creating proprietary trading and transactional profits for itself; not making retail investors rich.
    Feb 19, 2015. 01:32 PM | 7 Likes Like |Link to Comment
  • Pioneer Natural Resources: Core Assets Economic At $60-$65 Per Barrel Oil [View article]
    Just because PXD can produce from core assets at $50 does not mean that it should. Shareholders will benefit far more if the resource is conserved and produced during the next price upcycle, which could be less than a year away.
    Margins not volumes create wealth.
    Feb 19, 2015. 01:27 PM | 2 Likes Like |Link to Comment
  • Noble Energy to cut 2015 capex by 40% [View news story]
    For all upstream companies, especially independents the strategy for 2015 has to be conserve cash, conserve resources, reduce costs and prepare to swiftly take advantage of the next price cycle, which could be as early as Q1 2016.
    The more rapid the Capex reductions, the more certain the next upcycle. During the next upcycle no set of players will be better able to ramp up activity and cash flow than highly focused small and medium independents, especially those who are pursuing drill but don't complete tactics.
    Feb 19, 2015. 08:48 AM | 1 Like Like |Link to Comment
  • Penn Virginia to cut 2015 capex by as much as 63% [View news story]
    PVA is doing the right thing financially and strategically: conserve cash; don't allow debt to consume the balance sheet; and husband the reserve base for production during the next price upcycle.
    These actions position PVA for a very large equity upside in the early weeks of the next upcycle.
    Feb 18, 2015. 12:36 PM | 1 Like Like |Link to Comment
  • Exxon says it is positioned to pick up assets in Australia [View news story]
    XOM is well positioned to buy assets in any part of the world or any segment of the value chain it chooses to invest in.
    The issues are whether
    1. size for its own sake, above a certain level, is a wealth creator for shareholders
    2. organic growth driven by proprietary technology and processes is a better source of wealth creation than acquisitions during a time of cash constraints
    3 a focus on efficiency and productivity of the existing portfolio is better than volumetric growth in this price cycle for margin expansion
    Feb 18, 2015. 10:59 AM | 2 Likes Like |Link to Comment
  • Upstream MLPs have outperformed YTD but hurdles remain, analyst says [View news story]
    Investors who buy now or if they have the patience to wait until late Spring, when there may be evidence that US production has reached the peak for 2015 and is on the verge of decline( even as global consumption responds positively to low prices), should do very well with Upstream MLPs.
    These entities are highly sensitive to perceptions about oil prices not merely their current reality. Any change of sentiment that the global liquids surplus has peaked and will shrink substantially by late Q4 could cause the prices of these MLPs to surge in anticipation of a surge in oil prices in early 2016.
    Feb 17, 2015. 03:23 PM | 9 Likes Like |Link to Comment
  • Analyst sees potential end to Noble Energy-Israel impasse [View news story]
    So far Israel has behaved more like Russia, Nigeria and Argentina in its treatment of foreign risk capital and technology in the oil and gas industry than like a nation that respects property rights and understands the once in a generation strategic opportunity provided by major natural gas exports.
    Feb 14, 2015. 08:20 AM | 1 Like Like |Link to Comment
  • Pioneer Natural Resources cuts 2015 capex by 45% [View news story]
    Shale is turning into fast manufacturing rather than traditional oil and gas development. Producers can switch on and off capital spending by 50 to 65% within 6 months. Moreover producers can drill but not complete deferring over half the total cost of a well, effectively storing oil in the well. Completion can occur in days when the price cycle warrants.
    North American shale has the great advantage of flexibility over other resources, steadily declining total real costs per unit of production(the real breakeven price keeps declining) and of course shale has a very long tail(after the rapid decline in the first 2 years, the well can keep producing for a quarter century or more).

    The Saudis will succeed in crippling arctic, deepwater, North Sea,most Latin American, Central Asian and African new E&P investments and new LNG projects but they will not choke the North American shale industry: indeed the attributes of shale oil and gas development make it even more rather than less attractive to entrepreneurs; innovators and global risk capital providers.
    During the next price upcycle shale producers will move swiftly to capture the cash and volume upside becoming stronger and more valuable than they were in Mid 2014 while producing nations ranging from Russia to Mexico , Nigeria to Brazil, Iran to Indonesia miss the opportunity.
    In the war between the Saudis and North American Upstream companies, the former use massed artillery and tanks while the latter use smart missiles and precision munitions.
    The Saudis have brought upon themselves tremendous volatility and financial fragility but have lost their multi decade long reputation for a stabilizing and reliable force in the market. Starting a war is not nearly the same thing as winning it.
    Feb 11, 2015. 10:26 AM | 1 Like Like |Link to Comment
  • Exxon cut to Hold from Buy at Argus, which cites worry about overreach [View news story]
    Investors applaud XOM's decision to conserve cash by reducing buybacks and look forward to a substantial reduction in 2015 Capex to accept the reality of reduced cash flows for the next 3 to 4 quarters.. XOM's management has learned from the XTO acquisition and is unlikely to make a sizeable acquisition at a premium so large that it dilutes earnings for any length of time.
    Feb 9, 2015. 11:36 AM | 6 Likes Like |Link to Comment
  • Bloomberg: Output cut by 20% at Chevron's Wafra project [View news story]
    Apparently this is Kuwait's contribution to reducing oil production ......

    CVX is well served by reducing Capex in projects that are high cost ventures and in limiting the rate of borrowings growth during the price downcycle.

    In 2015 cash conservation is more important than volume growth.
    Feb 9, 2015. 11:26 AM | 4 Likes Like |Link to Comment
  • Oil company investments in Libya plagued by renewed violence [View news story]
    The US intervened in Libya and changed the Regime from tyrant to terrorist. Libya's oil production collapsed.
    The Saudis declared a cash flow war on the US, Canada, Iran and Russia and Libya's meager oil revenues evaporated even more.
    No doubt this is the way to win the hearts and minds of ordinary Libyans... in the name of democracy deliver them to terrorism; in the name of market share deliver them to penury.
    Feb 6, 2015. 01:51 PM | 9 Likes Like |Link to Comment
  • Callon Petroleum says proved reserves rises 121%, cuts capex by 25%-30% [View news story]
    CPE is one of the best positioned small independents for the next price upcycle. It is trying to conserve cash while husbanding a resource base that can lead to very rapid volumetric growth during the next upcycle.
    Feb 5, 2015. 11:31 AM | 3 Likes Like |Link to Comment
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