[misterno]

This is by far the best research I have ever seen

https://srsroccoreport.com/the-blood-ba ... -industry/

Comments are welcome

[KaiserJeep]

Comment: This web page is selling precious metals, and dissing energy stocks. This HAS been done before, many times. There is nothing like precious metals for losing money, nothing at all.

[ROCKMAN]

m - "Comments are welcome". Not much to add: the industry has been cyclic since Col. Drake poked that first well. If someone thinks the situation looks bad today go back to June '08 to Feb '09 when oil dropped from $139/bbl to $35/bbl. Or Dec '98 when it hit $13/bbl. Or '90 to '94 when it dropped from $62/bbl to $20/bbl. Or during '86 when it dropped from $60/bbl to $25/bbl. Or the mid 80's when it dropped from $119/bbl to $60/bbl. Same sh*t...different day. LOL.

And obviously the financial stats of Big Oil paralleled the price of oil. And often with worse outcomes then we've seen in this latest bust. Go back to each of those busts and you'll find the same articles as the one you posted.

[rockdoc123]

I went through the article quickly and I think they have screwed up somewhat in their analysis. All of these companies report information including dipersal of dividends and looking at what these guys come up with the numbers are a lot different than reported in at least Chevron's financial reporting. Not that it matters given the fact this is a couple of years out of many. Chevron's market cap grew from around 110 billion to 209 billion since 2000. Their debt is 24 billion or so. What that means is that if the company were sold it would still bring in ~180 billion in revenue to the seller (the shareholders) even without a bump in sale price (almost always the case). So I don't think any of these guys are about to collapse.

[AdamB]

$this->bbcode_second_pass_quote('misterno', 'T')his is by far the best research I have ever seen

https://srsroccoreport.com/the-blood-ba ... -industry/

Comments are welcome

[misterno]

This is the part that caught me

Some oil producing companies like CVX is borrowing in record values just to pay dividends?

Because most of the shareholders are dividend investors?

God Bless Wall Street

[Zarquon]

1) The majors have been described as "widows and orphan funds" for a long time. They can't grow much bigger than they already are, so the value of their stock comes mostly from exorbitant dividends, and stock buybacks.

2) The web is full of "news sites" like srsroccoreport. It's a large network of snake oil peddlers who set up these sites from the comfort of their living room, google end-of-the-world stories, cherry-pick their facts, embellish them a little and then post them in the guise of sensational new market analysis. They typically quote each other for additional credibility.

If you look closer at srsroccoreport, there's a Georgia gold & silver coin dealer behind it. Lowest prices anywhere! Also active in historical autographs and Christian television. You're free to draw your own conclusions.

3) Take ExxonMobil. Since 2000, they've bought back ~40% of their own stock. But IIRC these shares don't simply disappear, they end up in the piggy bank. And when prices are low and smaller firms are hurting, Exxon takes that piggy bank and goes shopping for new reserves. Why it makes financial sense to buy a company with Exxon shares instead of cash escapes me. But they're done that for a long time.

[rockdoc123]

$this->bbcode_second_pass_quote('', '3')) Take ExxonMobil. Since 2000, they've bought back ~40% of their own stock. But IIRC these shares don't simply disappear, they end up in the piggy bank. And when prices are low and smaller firms are hurting, Exxon takes that piggy bank and goes shopping for new reserves. Why it makes financial sense to buy a company with Exxon shares instead of cash escapes me. But they're done that for a long time.

[ROCKMAN]

m - "Some oil producing companies like CVX is borrowing in record values just to pay dividends?" Someone seems to have a very different view of the dividend potential at Chevron the the professional stock analysts at Market Watch. From 3 days ago:

"Chevron's strong balance sheet and the stock’s cheaper-than-peers valuation make the energy company “one of the best positioned” in face of flat oil futures prices, one that could reward shareholders with a dividend increase or even a share buyback, analysts at Citi said in a note Tuesday.

At flat oil prices, defined at between $55 a barrel and $65 a barrel, Chevron CVX, +1.26% “offers one of the strongest 2016-19 (cash flow) growth trajectories in the Big Oil group, a flow-through of a period of intense capital investment (from 2009 through 2014),” the Citi analysts wrote."

Do you know how much dividends Chevron pays ever quarter? About $1.08/share. You might want to look up how many outstanding shares there are and calculate how much that amounts to for a year and compare to its cash flow and revolving debt.

[onlooker]

http://www.independent.co.uk/voices/oil ... -303429069

Well this confirms what is becoming evident. Humanity is not and cannot walk away from FF voluntarily. A few excerpts
$this->bbcode_second_pass_quote('', 'F')inancial markets are now betting against the future of the planet. This won't end well

[peripato]

$this->bbcode_second_pass_quote('onlooker', 'h')ttp://www.independent.co.uk/voices/oil-tycoons-financial-markets-climate-change-environment-betting-against-future-planet-a7604021.html?utm_source=Daily+Carbon+Briefing&utm_campaign=b4254f380e-cb_daily&utm_medium=email&utm_term=0_876aab4fd7-b4254f380e-303429069

Well this confirms what is becoming evident. Humanity is not and cannot walk away from FF voluntarily. A few excerpts
$this->bbcode_second_pass_quote('', 'F')inancial markets are now betting against the future of the planet. This won't end well

[ROCKMAN]

p - Exactly. What I learned as a "Malaysian monkey trap" decades ago. An examples I don't think I've used on this site. Thanks for reminding me.

[CL]

Hi there! I'm new to this board and i have a question that im hoping someone can answer.

I've been reading the SRS Rocco report and recently heard an interview in which the Steve St. Angelo predicts that increasing EROI = falling production (which makes sense to me) and also a falling nominal oil price (which does not make sense to me).

He says that commodity prices are not determined by supply and demand but by cost of production. For that reason, he expects gold and silver prices to rise (because new production simply won't be possible due to lack of energy.)

Here's my question: why would the same not be true for oil production. If the cost of production is going to rise dramatically, wouldn't that mean that the price of oil would also rise?

I'm open to the idea that falling output = falling prices. I just don't understand how that makes sense.

Thanks in advance !!

[Subjectivist]

$this->bbcode_second_pass_quote('CL', 'H')i there! I'm new to this board and i have a question that im hoping someone can answer.

Here's my question: why would the same not be true for oil production. If the cost of production is going to rise dramatically, wouldn't that mean that the price of oil would also rise?

I'm open to the idea that falling output = falling prices. I just don't understand how that makes sense.

Thanks in advance !!

[ROCKMAN]

CL - "I'm open to the idea that falling output = falling prices. I just don't understand how that makes sense."

As sub explained. But here's the short version: falling prices = falling output = increasing prices...eventually = increasing output...eventually. That is the price/supply dynamic that has always ruled the industry. And the length of each phase is dependent to a degree on the global economic condition.

In that sense the fossil fuel industry has never "collapsed". It has just repeatedly gone thru the boom/bust cycle. And will continue to do so in the future. At least until the world has enough economic alternative energy sources to replace fossil fuels 100%. Yes: 100% because even in the far future in a world that consumes only 5% of its current appetite someone will be making money satisfying that demand. And even then that little bit of the remaing industry will still be subject to boom/bust cycles.

[asg70]

$this->bbcode_second_pass_quote('pstarr', '
')the mortgage crisis . . . all started in 2005 when conventional oil (<45api, deep, dirty) production peaked.

[ROCKMAN]

pstarr - "Those types (see RM, vt) believe that somehow every consumer can afford any prices". Moi??? LOL. I have no idea what you think you read. Did you not see my post a few months ago when I pointed out that there were still hundreds of millions of folks in the world who couldn't afford much if any oil at $26/bbl?

And no: EROEI will never be used to make development decisions. For instance an oil sands project might burn 20% more Btu's of NG then the Btu's contained in the oil produced. But if that oil sells for 30% more then what that NG cost the oil will be produced.

And even if diesel is used to drill a well the EROEI can still be low: folks continue to greatly overestimate how much fuel is used to drill a well. Typically less then 10% of the total well cost...sometimes as little as 5%. Thus the economics of a prospect will kill a project before EROEI gets below 5 or 6. Maybe that's the statement you're misinterpreting.

BTW the minimum EROEI that can be justified economically greatly increased when oil prices crashed. Today it's probably around 10...or more. Think about it: the Btu's used the drill a well today are the same needed to drill the SAME WELL 3+ years ago. And the Btu's of oil produced by the two identical wells is the same. And while the cost to drill the current well has declined it hasn't dropped as much as the revenue from the new well.

IOW for the new well to generate the same rate of return it has to produce MORE OIL then the older well. And more oil produced by consuming the same amount of Btu's = a higher EROEI.

Despite what folks think the EROEI of projects undertaken today are HIGHER then those started several years ago. If oil were to fall to $10/bbl and stayed there for a couple of years new oil reserves would still be produced profitably. And that production would have a very high EROEI...maybe 50 or greater. But, of course, there would be very few projects undertaken and very little new reserves produced.