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OIL, Discussion
mullokintyre
post Posted: Dec 12 2014, 07:47 AM
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OK, so oil is now below 60 bucks.
Some have suggested oil down to 40 bucks, that may be possible.
Probable?? Who knows.
But statistically, the upside is now much greater than the down side.
Hence, now that there is blood in the streets, so to speak, I am starting to load up on oilers.
Its the old risk reward scenario.
The reward is significantly greater than the risk of major losses.
So in I go.
Got orders for STO, SXY, DLS and HZN on the boil.
These have all fallen a minimum of 60 % since March or later highs.
For some reason though, the big one, WPL, has barely fallen 28% since its September high.
Interesting times ahead.

Mick



--------------------
sent from my Olivetti Typewriter.
 
wren
post Posted: Dec 9 2014, 05:02 PM
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In Reply To: jacsar's post @ Dec 9 2014, 02:31 PM

" . http://dollarcollapse.com"
Might be time to change the website name….

 
Optionsman
post Posted: Dec 9 2014, 04:16 PM
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In Reply To: Optionsman's post @ Dec 9 2014, 03:41 PM

Here are some numbers I just found - hot off the press too it seems

http://www.eia.gov/naturalgas/crudeoilreserves/

US PROVEN oil reserves are around 36 billion

North Dakota is just under 6 billion


 
Optionsman
post Posted: Dec 9 2014, 03:41 PM
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In Reply To: Carsha's post @ Dec 8 2014, 05:54 AM

Hi Carsha

The Pioneer statement seems to imply that one third of their production is not sustainable below $50/bbl, while their hedge is in place. Most likely it will be worse when the hedge is removed. is this how you read it? If so perhaps many other producers are in the same boat. In which case supply levels are NOT sustainable. What do you think?

Regarding the Bakken - we need to remember that this shale is not your typical shale. It is a naturally heavily fractured shale (vertical fractures) which make it ideal for horizontal drilling and fraccing technology. Most shales do not possess these qualities. total Bakken oil production is approaching 1 mmbbls/day. Reserves are largely guess work but figures of up to 8 billion barrels of oil recoverable are being thrown around. Whilst not insignificant, it is still only a fraction of the reserves in the Middle East

Each shale play, each area within those plays, is unique and each will have its own minimum economic oil price. Don't extrapolate too much from the Bakken as it really is an outlier.


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jacsar
post Posted: Dec 9 2014, 02:31 PM
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In Reply To: Carsha's post @ Dec 7 2014, 11:38 AM

Re oil black swans, a couple of articles highlighting problems.... http://www.cnbc.com/id/102223823?trknav=homestack:topnews:1 and this article was written when oil was US 80/barrel... http://dollarcollapse.com/credit-bubble-2/...oil-junk-bonds/




 
Carsha
post Posted: Dec 8 2014, 05:54 AM
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In Reply To: Carsha's post @ Dec 7 2014, 11:38 AM

“When it comes to crude and other hydrocarbons, the US is bursting at the seams,” said Edward Morse, Citigroup’s commodities chief. “This situation is unlikely to stop, even if prevailing prices for oil fall significantly. The US should become a net exporter of crude oil and petroleum products combined by 2019, if not 2018.”

Saudis risk playing with fire in shale-price showdown as crude crashes

I have posted two different views on the current situation with oil.
The interesting part is the production costs for shale oil.

Pioneer Natural Resources said it has options through 2016 covering two- thirds of its likely production. “We can produce down to $50 a barrel,” said Harold Hamm, from Continental Resources. The International Energy Agency said most of North Dakota’s vast Bakken field “remains profitable at or below $42 per barrel. The break-even price in McKenzie County, the most productive county in the state, is only $28 per barrel.”

The above figures are well below what I thought.

CS





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Carsha
post Posted: Dec 7 2014, 11:38 AM
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Given the presumed 17% expansion of the global economy since 2009, the tiny increases in production could not possibly flood the world in oil unless demand has cratered.


The Oil-Drenched Black Swan

 
Optionsman
post Posted: Dec 5 2014, 05:39 PM
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In Reply To: Optionsman's post @ Dec 5 2014, 05:38 PM

apologies for the format - cutting and pasting from a PDF is always problematic

 
Optionsman
post Posted: Dec 5 2014, 05:38 PM
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In Reply To: Optionsman's post @ Dec 5 2014, 05:11 PM

Some serious $$$ planned to be spent in offshore Australia in the coming years - see below. Will be interesting to see if they honour their commitments if oil prices continue to drop.


From Pex Publications.

[/size]
Ceduna still seems to be on majors’ radars


What a bizarreand difficult to read market we are heading into in 2015. Oil prices have plummeted with no real signs of a quick recovery,austerity and shareholder returns are theorder of the day, exploration budgets are being slashed, a fossil fuel divestment campaign

appears to gainingmomentum, etc. While Oil & Gas Radar wouldnever be presumptuous

enough to try and read the Texas tea leaves to pontificateonwhat the next year will bring,one fairly recent development warrants close attention. It has alreadyhad ramifications forthe regional industry and threatens to seriously disrupt its progress over several years; divestment of Australasian projects and assets by large multi-nationals. Of course Apache isleading the charge (or should that be retreat) away from our shores tofocus instead on its projects closer to home in North America. Howeveranother far more ambitiousproject that has caught our eye lately.



BP and other stakeholders continue to make all the right noises in regardsto a seriously expensive, planned drillingcampaign in frontier acreagein the Ceduna Sub-basin. Only inthe last couple of weeks plans were announced for a chopperbase at the town of Ceduna to support the drilling operations, and a significant seismic programis happening. You onlyhave to check the size and scale of the bid BP won the acreage with to get an idea of its eye-watering magnitude. EPP-37, -38, -39 &-40 were awardedin 2011 on a record work program pledge of $1.437bil. The firm component of BP’sbid included four wells,each with a budgetof $120-140mil, plus 11,400km2 3D seismic valued at $58mil. There are an additional six wells plus 5000km2 3D in the secondary program. Three of these outboardblocks are Designated FrontierAreas and so are eligiblefor tax relief, but it will still require a majorfinancial commitment from BP and its JV partner Statoil to drill in this region.



So far the partners have remained steadfast, but for how long? Statoilhas already been burnt this year by an unsuccessful onshore drilling& fraccing campaign in the Georgina Basin, understood to have cost it in the vicinityof US$50mil. Last month it withdrew from at leastsome of these permits. However it has consequentlybeen awarded a new deepwater permit, WA-506-P, in the outer Carnarvon Basin with one of the highest bids offeredfor some time of $266mil, plus has started a seismic program inits Reinga Basin permit in north-westNew Zealand. But the Norwegianmajor is facing pressures after a disappointingand expensive exploration campaignin 2014, includingunsuccessful results in Angola, theBarents Sea and the Gulf of Mexico.Reports suggest the state-controlled company is looking at reining in investments in favour of maximising shareholder returns.BP is not immune fromthe trend of super majorswinding back spending and increasing shareholder returns either.



Working in the Ceduna Sub-basin partners’ favour are the long lead times, with already-granted permit extensions pushing expiry dates out by a few years until 2020. The worldmarket may be more favourableto high-risk exploration in late 2016 when BP expects to be handedover the newbuilddeepwater rig Ocean GreatWhite to be used for the Ceduna Sub-basin program. Then again,it could be the same or worse!

[size="3"]


 
Optionsman
post Posted: Dec 5 2014, 05:11 PM
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In Reply To: Optionsman's post @ Dec 5 2014, 05:09 PM

Threat to US shale productionTuesday, 2 December 2014

Gomati Jagadeesan

WITH the Organisation of Petroleum Exporting Countries maintaining status quo on crude output, there are signs that investment dollars and drilling activities are already being pared back.





Nowhere is the impact being felt more acutely than in the US shale patch, which relies heavily on a higher oil price environment. OPEC decision, primarily driven by Saudi Arabia, to keep official output figures unchanged means that it is now largely up to non-OPEC producers including US shale companies to trim production.



Indeed, many contend that the cartel’s move to keeping production quota unchanged mostly targets the US shale oil producers, who may find it hard to continue drilling amid lower oil prices.



Oil prices have fallen 12% since the OPEC member nations agreed to keep its production quota of 30 million barrels of oil per day last week. Benchmark Brent crude fell to the lowest level in five years yesterday to $US67.53/barrel, while US benchmark West Texas Intermediate also slipped to a five-year low of $63.72/bbl before recovering.



As oil prices search for a bottom, output economics is being recalibrated with major revisions likely for 2015 E&P budgets across the world in line with the new price environment. For countries that rely on oil revenue, a sharply lower oil price scenario means potentially tougher budget measures.



While larger international oil companies have the ability to absorb the price shock, the impact of low prices is being felt most in the shale space.



Analysts say with most US shale oil projects being viable at a break-even price of oil at around $US65-80/bbl, a sustained lower price could wreak havoc on the shale sector. Already, there are signs of a downturn.



Key shale producers such as Continental Resources and Pioneer Natural Resources have trimmed their 2015 drilling plans, while drilling contractor Transocean has booked an impairment of $US2.8 billion, stemming from a lack of demand for its drilling rigs.



Oilfield services company Baker Hughes reported a drop in active rig count to around 1568 rigs in early November, the lowest since August this year. Many expect drilling rigs count to drop further next year.



Industry data shows that new well permits for shale plays in the US have dropped by 15% for November, indicating that shale slowdown may well have started. While permits still remain significantly higher than four years ago when there was an upswing in shale activity, there are signs of drilling activity cooling off.



Experts project the slowdown in new permits to be followed by a further drop in rig counts, which could eventually lead to trimmed production possibly in the second half of next year.



Analysts point out that in many ways US shale could have become a victim of its own success. While a surfeit of shale production has contributed to lower global oil prices, it has also led to a supply glut, spiralling prices down further and in turn making shale projects unviable.

 
 


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