Cardboard Posted March 10, 2017 Share Posted March 10, 2017 "My read is that getting labour back to shale is proving difficult. The high skill labour force has moved on to other more stable industries." I don't know about the Permian but, this is definitely true in Alberta. If you want confirmation, listen to ESN yesterday's conference call. And costs are going up. Already 10% and negotiating for another 10% in Q3 or for the winter drilling season. Cardboard Link to comment Share on other sites More sharing options...
SharperDingaan Posted March 10, 2017 Share Posted March 10, 2017 There is some commentary on the IV thread regarding an IT auditor who couldn't confirm the EIA data. While there were accurate data files he was able to confirm, there was other data that didn't come from them. Not that different to financial statements with 'additional information' in them - that doesn't tie back to the trial balance. It comes back to boots on the ground; look at the rig counts, day rates, local production area problems, the baltic dry, etc. and make your own mind up. Rating agencies have long claimed that sub-prime mortgages look like investment grade - & still do so today. Todays o/g market reminds me very much of the old gold market in the $300-400/oz range, when all the producers were going to huge mines & selling production forward - & it was that forward selling keeping the price down. It went on for years, & essentially terminated in a crash; but post crash - $3000-4000/oz was pretty common. This is when the easy $ are made. Once the trends become established, it gets a lot harder. SD Link to comment Share on other sites More sharing options...
JayGatsby Posted March 11, 2017 Share Posted March 11, 2017 How often did you hear mentioned this week that net oil products actually went down 2.5 million barrels in the U.S.? Or any indication about fewer loaded ships now being at sea explaining the large onshore build? It is interesting to compare these two charts: Total crude oil and petroleum products: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WTTSTUS1&f=W Total crude oil: https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WCRSTUS1&f=W Link to comment Share on other sites More sharing options...
JayGatsby Posted March 12, 2017 Share Posted March 12, 2017 Interesting stats: The oil market is showing signs of closer balance between supply and demand in early 2017. Although estimates of January and February crude oil production will remain unconfirmed for another month or two, voluntary oil supply reductions by members of the Organization of the Petroleum Exporting Countries (OPEC) and some non-OPEC producers (following agreements in late 2016) appear to be achieving a high degree of compliance. EIA estimates that global oil inventories fell at a rate of almost 1.0 million barrels per day (b/d) in February, which would be the third-largest monthly decline rate since the beginning of 2014. Global economic activity continues to remain robust and is supporting oil consumption growth. However, the outlook for the oil market remains uncertain because of supply developments. While supply from non-OPEC countries in the second quarter of 2017 is expected to be close to its level from the fourth quarter of 2016, OPEC supply is forecast to decline during the same period. Lower OPEC market share could complicate whether its members will renegotiate voluntary supply reductions for the second half of 2017. EIA expects increases in non-OPEC supply, particularly in the United States, to limit upward oil price pressure through much of 2017. In the United States, total commercial petroleum inventories decreased by 7 million barrels in February, the first February decline since 2013, driven by declines in petroleum products. The comparatively large draws in petroleum inventories likely contributed to the WTI 1st-13th spread increasing by 85 cents/b from February 1 to settle at -$1.50/b on March 2. As refineries return from maintenance in the second quarter, crude oil inventories could decline, which could put further upward pressure on the 1st-13th spread. https://www.eia.gov/outlooks/steo/marketreview/crude.cfm Link to comment Share on other sites More sharing options...
Joe689 Posted March 14, 2017 Share Posted March 14, 2017 Another wild day in oil. Imagine that. Volatility is back! Storage reports tonight and tomorrow will only make the volatility increase. Link to comment Share on other sites More sharing options...
Cardboard Posted March 14, 2017 Share Posted March 14, 2017 The war on oil never seems to end and the shorts are really in control right now. They took the OPEC report this morning which showed good compliance in my opinion and also pointed out to an increase in demand for 2017 and they really narrowed down the focus on non-OPEC production climbing 400,000 b/d this year. It is quite possible that we will see a large draw tonight from API. There has been such large swings in recent weeks that anything is possible. But, with what they are doing this morning, if we have a build tonight of any size, they will pound this down again tomorrow... Cardboard Link to comment Share on other sites More sharing options...
Cigarbutt Posted March 14, 2017 Share Posted March 14, 2017 A very stong case can be made that there has been significant under investment for future potential production and there will be eventually cyclical forces from the cost side that will creep up with time. Absolutely. But isn’t there an underlying tidal wave of structural/technological improvements that even « caught off guard » the captains of the industry? Necessity is the mother of inventions. « Saudi Arabia will not bear the burden of free riders ». Does not sound like bluff to me. Did any here ever try to save somebody who is drowning? Do not expect cooperation or rational behavior. If you get grabbed by a party who is willing to go after cash flows with little regard to long term fundamentals, better have deep pockets. Opinions vary here, but crunching some data/numbers, I submit that U.S. breakeven costs on unconventional oil will determine the high end of long-run price of crude, even if they are relatively marginal (not swing) producers. The « nationalized » producers are fighting for survival here. I’m only a small fish in the pond (looking from outside in) but I am amazed at the incredible intensity of the competitive rivalry. The competitors are showing their teeth. I wouldn’t want to be stuck in the middle of this. Time for another showdown? Link to comment Share on other sites More sharing options...
Cardboard Posted March 14, 2017 Share Posted March 14, 2017 "API data show an unexpected decline in U.S. crude supplies: The American Petroleum Institute late Tuesday reported a decline of 531,000 barrels in U.S. crude supplies for the week ended March 10, according to sources. That contradicted expectations for an increase of 3.5 million barrels forecast by analysts polled by S&P Global Platts. The API data also showed a fall of 3.9 million barrels in gasoline supplies and a drop of 4.1 million barrels in distillates, sources said. Supply data from the Energy Information Administration will be released Wednesday morning. April crude was at $48.45 a barrel in electronic trading, of $47.72 on the New York Mercantile Exchange." So last week we had a 2.5 million barrels decline in overall oil products and this week we are looking at 8.5 million barrels depending on how kerosene, other oils are doing. Tomorrow, this will be ignored. They will put our attention on the terrible storm in the Northeast and that demand is gone forever... Cardboard Link to comment Share on other sites More sharing options...
SharperDingaan Posted March 14, 2017 Share Posted March 14, 2017 Just for fun ... I looked at the last 12 months of API data. Notable is that US inventory rose a net 26.8M over the period. The sum of the actuals over the same period is 24.8M, & the sum of the forecast is 29.79M. It implies that the forecasts are fairly accurate, but there are significant methodology differences generating 'noise' - & the market is trading that noise. Opportunities ;) SD API_Numbers.xls Link to comment Share on other sites More sharing options...
Cardboard Posted March 15, 2017 Share Posted March 15, 2017 How misleading is the IEA? "Demand for oil is expected to drop from 1.6 million barrels a day last year to 1.4 million barrels a day in 2017, the International Energy Agency said in its report, raising further problems for producers as they try to ramp up prices." GROWTH in demand for oil!!! Still need 1.4 million barrels more per day than in 2016 or a growth in demand of over 1.4%. With the amount of attention that a lot of people spend on reading properly these days this can fool a lot of folks. Cardboard Link to comment Share on other sites More sharing options...
Cigarbutt Posted March 15, 2017 Share Posted March 15, 2017 From recent report: "Last November, OPEC orchestrated an impressive feat: corralling all (or nearly all) of its members to sign on to relatively aggressive production cut deal, and then actually convincing everyone to follow through on those reductions beginning in January. OPEC’s estimated 94 percent compliance rate defied the cartel’s own history of cheating and mistrust, and OPEC has taken around 1 million barrels of oil production per day off the market." Perhaps a good result is based on the big picture AND reading the footnotes/fine prints. Some here clearly have better grasp of the minutiae related to the global oil and gas sector. I respect that. However, compared to, say last year at the same period, aren't there essential ingredients for a costly price war in place right now? What happens next, as always in this area, is highly uncertain. Trying to read between some lines here, isn't there huge spare capacity in the critical spaces? (click max for long term view) https://ca.investing.com/economic-calendar/baker-hughes-u.s.-rig-count-1652 Link to comment Share on other sites More sharing options...
Joe689 Posted March 21, 2017 Share Posted March 21, 2017 Should be an interesting 24 hours in oil yet again. Will the cuts be felt tomorrow in the storage report? If we show a big build, watch out..... oil market needs to start seeing inventories come down, almost 3 months into to the cut. Link to comment Share on other sites More sharing options...
JayGatsby Posted March 22, 2017 Share Posted March 22, 2017 API data show U.S. crude supplies up 4.5 million barrels: sources The American Petroleum Institute late Tuesday reported a climb of 4.5 million barrels in U.S. crude supplies for the week ended March 17, according to sources. The API data also showed a fall of 4.9 million barrels in gasoline supplies and a decline of 833,000 barrels in distillates, sources said. So crude +4.5M and total petroleum -1.2M. Oil prices down as a result. Is there a good reason for everyone to focus on the crude rather than the total petroleum products? Link to comment Share on other sites More sharing options...
Joe689 Posted March 22, 2017 Share Posted March 22, 2017 API data show U.S. crude supplies up 4.5 million barrels: sources The American Petroleum Institute late Tuesday reported a climb of 4.5 million barrels in U.S. crude supplies for the week ended March 17, according to sources. The API data also showed a fall of 4.9 million barrels in gasoline supplies and a decline of 833,000 barrels in distillates, sources said. So crude +4.5M and total petroleum -1.2M. Oil prices down as a result. Is there a good reason for everyone to focus on the crude rather than the total petroleum products? Well now oil is up all of sudden. Just another wild Wednesday in trading paper oil. The market is driving blind. Untrustworthy data, untrustworthy research reports, untrustworthy producers, coupled with tons of emotional traders that don't look past today and tomorrow. I am bullish on oil almost only because of one reason. History. This is a cyclical industry. Link to comment Share on other sites More sharing options...
Cardboard Posted March 26, 2017 Share Posted March 26, 2017 http://www.cnbc.com/2017/03/26/opec-meeting-kuwait-output-cut-compliance.html A recommendation made to extend cuts by 6 months should carry a fair bit of weight in the oil market this week. And also Iraq staying in line. That quote is also interesting: "However, the end of the refinery maintenance season and noticeable slowdown in U.S. stock build as well as the reduction in floating storage will support the positive efforts undertaken to achieve stability in the market," it said. Who knows by how much floating storage has been reduced, but these guys must have a good idea. There was also a massive long position in the futures market held by speculators and it probably contributed a lot to the liquidation and sharp price decrease of the last couple of weeks. Cardboard Link to comment Share on other sites More sharing options...
SafetyinNumbers Posted March 27, 2017 Share Posted March 27, 2017 I thought this piece from seekingalpha was pretty interesting in summing up some of the constructive data. I'm amazed that VLCC rates are that volatile! https://seekingalpha.com/article/4058254-warren-pies-bullish-oil-oil-markets-daily Link to comment Share on other sites More sharing options...
SharperDingaan Posted March 28, 2017 Share Posted March 28, 2017 Keep in mind that those are spot rates for VLCCs. Part of the reason the rate is falling so fast is because the tankers are emptying and not being refilled, and those tankers are delivering because the purchase + prospective storage cost is > the forward curve. If you want to keep the storage option (pay the standby fees) ... you need the forward curve to rise. At some point the tankers will quietly start filling again in order to drive up the forward curve, against forward sales 2-3 months along the curve. A string of sizeable inventory draws & the upcoming summer driving season should be more than enough. It could be an interesting summer. SD Link to comment Share on other sites More sharing options...
Cardboard Posted March 29, 2017 Share Posted March 29, 2017 Thought the EIA report this morning was good for the bulls with high gasoline and distillates draws. And the oil build adjusted for SPR sales was tiny at 100,000 barrels. Gotta love the government for dumping oil at these prices from the SPR or 18 million barrels this year: https://www.eia.gov/todayinenergy/detail.php?id=29692 What they seem to forget is that a lot of the oil produced in the States from shale is unusable for U.S. refineries and a lot of it is being exported with 1 million barrels this week. Where is the heavier grade going to come from with Venezuela continuing to head downhill and a conflict with Iran always possible? They should sell these reserves when crisis hit vs trying to use it to balance their budget. Cardboard Link to comment Share on other sites More sharing options...
SharperDingaan Posted March 29, 2017 Share Posted March 29, 2017 We would suggest to you that they are relying on deliveries from the newly approved Keystone line. There might be some volatility for a period (light oil for heavy oil tanker swaps), but nothing long term. We would also suggest there needs to be some light oil refinery additions, as well as a gas compression facility. The shale output needs a structural place to go, and the Exxons control in these fields - would be materially improved were there vertical integration. It will be a while yet, but it seems pretty much a given. SD Link to comment Share on other sites More sharing options...
JayGatsby Posted March 29, 2017 Share Posted March 29, 2017 The UAE will be cutting oil production by more than 200,000 barrels per day this month as part of its commitment to Opec agreement, the country’s energy minister said in Abu Dhabi on Tuesday. “This month it [production cut] is going to be close to 200,000 and also little bit more. Next month and the moth after, we are going to cut production by more than 139,000. Over all, for the six months, we are committed to the agreement,” Suhail Al Mazroui told reporters on the sidelines of the Global Manufacturing and Industrialisation Summit. “The agreement is working well and the current increase in inventories is due to maintenance in the US markets. We know that maintenance is going to be over and we will see drawdown in the inventories in the second half of this year.” Asked whether he expects higher oil prices in the second half of the year, he said they are more concerned about balancing oil markets and attracting investments rather than oil price. “I see improvement in the supply and demand which will lead to the price. However, we are not concerned about the price. We are concerned more about balancing the market and attracting investments. We are achieving as we move.”http://gulfnews.com/business/sectors/energy/uae-plans-more-production-cuts-in-line-with-opec-deal-1.2001947 Link to comment Share on other sites More sharing options...
SharperDingaan Posted April 6, 2017 Share Posted April 6, 2017 http://boereport.com/2017/04/06/flood-of-u-s-oil-to-asia-comforts-tanker-market-trashed-by-opec/ Why do we get the feeling that the Chinese BOP issue with the US is going to be at least partially mitigated through purchases of crude? Exports from the west coast, imports into the east coast, with the difference coming primarily from US shale & Canadian imports. Elegant. SD Link to comment Share on other sites More sharing options...
Uccmal Posted April 12, 2017 Share Posted April 12, 2017 Oil is bouncing back nicely. Bought some Whitecap on the downturn a couple of weeks ago. It is now among my larger holdings. BTE is insanely cheap, if one believes oil will get above, and stay above $55. A big if I suppose. I may add a bit if it doesn't move up today. Link to comment Share on other sites More sharing options...
Cardboard Posted April 12, 2017 Share Posted April 12, 2017 One of the cheapest oil stocks of them all is PPR in Toronto. Good growth, good balance sheet, good hedge book, low decline rate, trading quite a bit below PDP NAV and at around $20,000 per boe/d. I didn't like their last 2 share issuance, but it is likely it for a while. However, the last acquisition was a pretty good one with lots of land potential too. They also have a large hidden asset or acreage in Quebec. This was worthless with the drilling moratorium but, this has changed. If you compare the acreage and valuation of Questerre with these guys it is quite compelling. Cardboard Link to comment Share on other sites More sharing options...
SharperDingaan Posted April 12, 2017 Share Posted April 12, 2017 Look a little closer at the WCSB drillers. Lot of rigs have come off recently because the ground is still soft, but it's drying out pretty fast. SD Link to comment Share on other sites More sharing options...
sculpin Posted April 17, 2017 Author Share Posted April 17, 2017 Have now finished building Cdn heavy oil portfoli0. Small cap Gear. Core mid cap position BTE. Core large cap CVE. High beta/high risk options on heavy oil in shares of Athabasca and Pengrowth... Cdn Heavy Oil Differentials Are Narrow In 2017, Likely Also Beyond Posted on April 11, 2017 We weren’t surprised to see Cenovus step up to buy high quality heavy oil assets or strategic investors take control of Northern Blizzard given that the fundamentals driving narrower than expected Cdn heavy oil differentials in 2017 are likely to continue in 2018 and beyond. Cdn heavy oil is trapped and has no option but to sell to the US. But the US is effectively trapped and primarily relies on Canada, Mexico and Venezuela (to a smaller degree Colombia) for its heavy oil supply. And with Mexico and Venezuela continuing to be in decline, the basic supply demand fundamentals continue in a positive trend for Cdn heavy oil. Volatility and seasonality will still be here, but the positive trends mean it is less likely to see Cdn heavy oil differentials blow out for any extended period or to the same $/bbl magnitude as seen in 2014. Its been a good start to 2017 for Cdn heavy oil differentials. We highlighted this in our Jan 16, 2017 blog “Narrowing Cdn Heavy Oil Differentials, Even Before OPEC Cuts Reduce Deliveries To US” [LINK]. By mid-Jan, Cdn heavy oil differentials had already narrowed by ~US$2.50/b to US$12.50/b. In the last two weeks, Cdn heavy oil differentials dropped below US$10/b driven, in particular, by the reported shut in of heavy oil at ConocoPhillips Surmount heavy oil that was caused by Syncrude’s shut in and a lack of synthetic oil to blend for shipping. Heavy oil needs to blended with a diluent (Syncrude’s synthetic oi is one, condensate is another) to meet pipeline specs. Rest here... http://www.streamasset.ca/blog/2017/04/11/cdn-heavy-oil-differentials-are-narrow-in-2017-likely-also-beyond/ The American exit of oil sands continues... http://af.reuters.com/article/energyOilNews/idAFL1N1HL0PQ?sp=true UPDATE 2-Chevron exploring sale of Canada oil sands stake worth about $2.5 bln -sources Commentary.... The move comes as international players are pulling back from the Canadian energy market, particularly the capital intensive oil sands. A range of factors are contributing to investor apathy toward Canada, including weak oil prices, the higher cost of Canadian operations compared with cheap U.S. shale plays and limited export pipeline capacity out of western Canada. The problem is the economics of Canadian LTO and cold flow heavy oil are being ignored and lumped in with oilsands. The majors all rushed into the oilsands @$100 oil because they sold investors on the longevity of the play to boost reserves. Now they have gone the other way ignoring reserves and focusing more on short cycle plays to boost production. The majors are trying to keep the generalist global investor in their stock with a hyped play rather then with good decisions. In 2015 the majors had one of the worst years on record only replacing 75% of their reserves and ExxonMobil reported oil and gas reserves dropped by 19 per cent last year. Investors should be bailing but instead they are buying into this Permania which the majors have created themselves be paying these huge premiums. Selling under-valued Canadian assets to buy inflated Permian assets probably wont end well for the majors or their shareholders. You have to ask if $40 oil was so profitable for the Permian why weren't the sellers drilling this inventory in 2015-2016? We are talking about the who is who of families who have been in the Permian for decades Yates, Bass, Clayton Williams who sold out. All the Permian M&A has come at the expense of M&A in the Bakken, Marcellus & Conventional US plays which are all down. Perhaps the sentiment in Canadian OG names has been hit the hardest with the added BAT hangover. Think over next 12 months we will see the Permian unravel with the hype not matching results. $60 oil should bring Canadian names greater US attention as growth profile with valuations becomes so compelling Link to comment Share on other sites More sharing options...
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