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User 353732

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  • 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
  • Plains All American cuts 2015 growth forecast [View news story]
    Just maintain the payout would be enough for most retail investors, especially those buying now: an increase is impressive and indicates how much infrastructure still needs to expand for the next several years. Reducing Capex is prudent cash conservation positioning PAA to make opportunistic acquisitions of midstream facilities from producers or weaker midstream MLPs
    Feb 5, 2015. 08:22 AM | 2 Likes Like |Link to Comment
  • No bust in sight as North Dakota oil firms maintain staff levels [View news story]
    This suggests that these producers expect the next price upcycle to begin by end 2015/beginning 2016.

    Why might this be so?

    The net annual decline for oil globally is 2.5 % but of course much higher for shale ( 60% first year, 30% second year with a very long and lucrative tail after that).

    Current production is a little above 90 mmbd so without any Capex the decline would be 2.25 mmbd. At a 25% reduction in global (and 30 % or more in shale) upstream Capex there will be some decline from current levels by Dec 2015( increase thru Q2 , decline starting in Q3, accelerating in Q4).
    E&P executives guess that the decline from current levels might be 0.5 mmbd or maybe 0.75 mmbd from the Q2 peak.

    Current excess production is 1.5 mmbd worldwide and increasing. Global ( especially US)consumption is starting to respond to the drop in prices with the usual 6 month lag, meaning that the full lagged effect of $80 oil will not be felt until Spring and of $50 oil not until Q3. The executive guess on increased global consumption by end Q4 is 0.5 mmbd.

    This brings the imbalance, according to hopeful executives, to 0.5 mmbd by end Q4 or very close to balance. By Q1 2016 the decline will gain momentum as might the consumption growth switching the market from near balance by end 2015 to net inventory drawdown by very early 2016.
    Feb 4, 2015. 03:28 PM | 4 Likes Like |Link to Comment
  • Israel says Noble Energy, Delek must sell some offshore reserves [View news story]
    Israel is engaged in the same kind of creeping expropriation that one finds in Russia and Nigeria with the same strategic consequences.
    Apparently Israel shares the same contempt for property rights as Putin......Iraq and Kurdistan seem to be more hospitable to foreign risk capital in the oil and gas industry than Israel.
    Iran must be giggling........
    Feb 3, 2015. 12:04 PM | 1 Like Like |Link to Comment
  • Deal Talk: Energy Transfer Partners LP Buys Regency Energy Partners LP [View article]
    At the end of the current price downcycle the midstream industry will be dominated by the Big 5 companies: scale, scope and cost of capital are the dimensions of competitive advantage. Industry consolidation has barely started while the pressure to consolidate to maintain distributions(or dividends in the case of KMI) is increasing.
    Feb 2, 2015. 12:10 PM | 1 Like Like |Link to Comment
  • Exxon up premarket as earnings fall but beat estimates [View news story]
    1. Why not cease the share buyback program to conserve cash? How is borrowing to maintain the dividend payout and share buy back program a contribution to real wealth creation?
    2. Investors will seek major reductions in Capex in 2015 and will not be troubled by volumetric reductions or exits from negative or no margin upstream operations: volume at the expense of value added is a wealth destroyer
    3. Despite its tremendous organizational capacity and executive talent XOM has experienced very large project cost overruns on major projects in recent years: the price downcycle is an opportunity to address this one important flaw in XOM's performance
    Feb 2, 2015. 12:07 PM | 3 Likes Like |Link to Comment
  • Update: Chevron - Lower Earnings, Higher Dividends [View article]
    Borrowing to pay dividends is not a sustainable strategy. Its admirable that CVX is protecting shareholder income but it is long term wealth creation not debt that supports a predictable and slowly expanding dividend stream.
    In the current downcycle both CVX's Capex and project and organizational cost structures are too high. It is very difficult for global company to be agile yet agility is a key attribute of companies that enhance their competitive profile during times of cash flow compression.
    Jan 31, 2015. 01:16 PM | 8 Likes Like |Link to Comment
  • Chevron's Q4 Results: Is The Balance Sheet Strong Enough? [View article]
    CVX Capex plus dividends substantially exceed cash flow during this price downcycle. CVX has been too slow to respond to its cash flow squeeze. Borrowing billions to finance the large cash deficit is bad management since it creates the illusion of prosperity for shareholders even as wealth is being destroyed.
    The right response is a further and drastic curtailment of Capex while preserving the dividend. Volume growth in a price downcycle is vanity not wisdom since the same resource can be produced at much higher prices during the next upcycle 12 to 15 months from now.
    Jan 30, 2015. 12:37 PM | 3 Likes Like |Link to Comment
  • Reuters: Rosneft will not resume drilling in Kara Sea in 2015 [View news story]
    Russia will likely see a production decline in 2015 and another in 2016. It will respond with more not less belligerence and seek ways to retaliate against the Saudis.
    Arctic , deepwater drilling and oil sands will see the greatest reductions in Capex over the next 2 years compared with other resources
    Jan 30, 2015. 10:36 AM | 5 Likes Like |Link to Comment
  • Goodrich Petroleum to cut 2015 capex by 40%-55% [View news story]
    This allows GDP to survive the price downcycle and be in a position to rebound strongly during the next price upcycle. Small/Medium independents are, in general, responding with much greater agility and regard for cash conservation than the Large Independents and Majors whose Capex budgets for 2015 are still too high.
    Jan 30, 2015. 10:33 AM | 4 Likes Like |Link to Comment
  • ConocoPhillips cuts capex by another 15% [View news story]
    Why grow production during the price downcycle when the resource can be sold for 2 to 3 times higher prices during the next price upcycle?
    Moreover, capex still seems to be too high for 2015 given the cash flow and need to protect the dividend.
    Jan 29, 2015. 08:27 AM | 2 Likes Like |Link to Comment
  • Energy stocks hit hard as crude inventories surge [View news story]
    How are these Wall St experts able to distinguish between inventory build up because of domestic production and foreign crude that is increasingly stored in the US because the only place in the world with spare onshore storage now is the US Gulf? The EIA certainly provides no disaggregation by source, only by location.

    Prices will keep falling until there is at least a 25% reduction in global upstream capex for 2015 versus 2014 and much greater recontractng of rigs worldwide, but especially in the US, at day rates that are 30 to 40% below the 2014 peaks( ie scores more rigs will have to be idled in the US alone). 4th Q 2014 drilling momentum is so great that US production will keep increasing in Q1 2015 and probably Q2 2015.
    Jan 28, 2015. 05:20 PM | 3 Likes Like |Link to Comment
  • Are Exxon, Chevron And Shell Low Cost Oil Producers? [View article]
    There are no competent or even reasonably honest NIOCs. Where these entities dominate production is stagnant or declining( eg Mexico, Brazil, Venezuela, Nigeria, Iran, India, Indonesia). Russian oil growth has also been driven by private or quasi private risk capital. Almost all major discoveries in the past 10 years have been made by private companies.

    Production growth has come precisely in areas where private risk capital is the driver( North America, Kurdistan, Southern Iraq, Africa outside Nigeria).

    There is no public information that allows a reliable comparison of total F&D costs amongst Integrated Majors, Super Independents, Large Independents and Medium/Small independents.
    Jan 28, 2015. 10:57 AM | 6 Likes Like |Link to Comment
  • Energy Transfer deal could pave the way for more sector M&A [View news story]
    Maybe the next step is to do a KMI?

    Scale, scope and competitive cost of capital are becoming the defining attributes of strategic and financial success in the North American midstream business. tremendous new entry into a growth business is usually followed by massive consolidation once rapid growth and indiscriminate financing come to an end for a couple of years.

    When growth resumes during the next price upcycle the top 5 midstream players are likely to completely dominate the industry.
    Jan 27, 2015. 02:42 PM | 2 Likes Like |Link to Comment
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