Strong indications that oil demand > supply!
+++Oilprice will go >100$/b +++
=> Fuel riots and later food riots =>civil unrest and revolutions / war coming very soon.
The Peak Oil "hurricane center" ring the ALARM BELL
https://www.youtube.com/watch?v=Ie9XSiFJ_e0
PEAK OIL!
Background:
https://seekingalpha.com/article/420920 ... ces-rising
https://www.reuters.com/article/us-opec ... SKCN1LL0Z8
https://www.reuters.com/article/us-glob ... SKCN1MC058
PeakOil is You
+++OIL/ GAS supply/demand WARNING+++
+++OIL/ GAS supply/demand WARNING+++
by M_B_S » Tue 02 Oct 2018, 03:47:53
I have nothing to offer but blood, toil, tears and sweat.
M_B_S
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Re: +++OIL/ GAS supply/demand WARNING+++
by Tanada » Tue 02 Oct 2018, 09:52:54
I think the key factor is the near total lack of investment for the three years 2015-2017 during the worst of the glut when world prices were down. Its not like those projects that take a decade to mature will still mature in a decade with a three year pause in the work needed. I am especially thinking of things like the Arctic drilling plan that was started in the North Slope Alaska, then put on hold because it was expensive and money was not pouring in hand over fist. The big Oil-Co's were all using funds to pay dividends and keep stockholders happy rather than paying the exploration and development budgets.
$this->bbcode_second_pass_quote('Alfred Tennyson', 'W')e are not now that strength which in old days
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
Moved earth and heaven, that which we are, we are;
One equal temper of heroic hearts,
Made weak by time and fate, but strong in will
To strive, to seek, to find, and not to yield.
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Re: +++OIL/ GAS supply/demand WARNING+++
by GHung » Tue 02 Oct 2018, 10:10:03
$this->bbcode_second_pass_quote('Tanada', 'I') think the key factor is the near total lack of investment for the three years 2015-2017 during the worst of the glut when world prices were down. Its not like those projects that take a decade to mature will still mature in a decade with a three year pause in the work needed. I am especially thinking of things like the Arctic drilling plan that was started in the North Slope Alaska, then put on hold because it was expensive and money was not pouring in hand over fist. The big Oil-Co's were all using funds to pay dividends and keep stockholders happy rather than paying the exploration and development budgets.
.... or maybe there aren't enough good prospects left to invest in, at least while futures remain under $100, and I'm betting many companies are pretty sure the economy is due to take a downturn well before they could cover the costs of exploration and development. Rising interest rates have to make them nervous if that's their thinking.
Blessed are the Meek, for they shall inherit nothing but their Souls. - Anonymous Ghung Person
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Re: +++OIL/ GAS supply/demand WARNING+++
by ROCKMAN » Tue 02 Oct 2018, 10:54:19
Ghung – “.... or maybe there aren't enough good prospects left to invest in” Exactly. If I had a REASONABLE 1 million bbl onshore conventional exploration project back when oil dropped to $30/bbl I would easily gotten the funds to drill it. A 100 million bbl target or even 10 million bbl…just 1 million bbl. And by reasonable I don’t mean a 100% chance of success but just a 25% chance. Using 250,000 bbls risked reserves (1 million bbls X 0.25) and a dry cost of $2 million that would be a 3.75 to 1 RISKED RETURN going in and a 15 to 1 actual return had it worked as mapped. And if it hit as mapped my owner probably would have tossed me a $100k bonus. Maybe more…he was a generous guy. LOL.
Think what that same prospect look like today with $65/bbl oil...not $100/bbl. And an 8% interest rate on a $2 million bond don't mean shit on a prospect making a 15 to 1 return. LOL.
Think what that same prospect look like today with $65/bbl oil...not $100/bbl. And an 8% interest rate on a $2 million bond don't mean shit on a prospect making a 15 to 1 return. LOL.
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Re: +++OIL/ GAS supply/demand WARNING+++
by rockdoc123 » Tue 02 Oct 2018, 11:53:30
$this->bbcode_second_pass_quote('', '.')... or maybe there aren't enough good prospects left to invest in, at least while futures remain under $100, and I'm betting many companies are pretty sure the economy is due to take a downturn well before they could cover the costs of exploration and development. Rising interest rates have to make them nervous if that's their thinking.
Having been there to partake in the discussions that oil company execs have when these decsions are made there are a few things to keep in mind.
1. If you are a publicly traded company as exec you work for the shareholders and every decision you make is in light of what is most beneficial to them. This is constantly discussed and shapes the decisions.
2. The oil and gas business runs on an average Return on Investment of around 6%. Some companies do better some do worse but what the average tells you is that there isn't a lot of room for waste
3. Opex is generally fixed to your production. It lowers somewhat a few months after oil prices lower due to service charge reductions but generally, it only moves through changes to efficiencies. As a consequence, the areas where oil companies can cut expenditures to counter a significant drop in price is either Capex or G&A.
4. One of the first responses by larger oil companies during extended periods of low commodity price is to reduce G&A. This isn't as effective as reducing Capex but it is expected by the investors and it is a very obvious metric that can drive share price. As an example if at $90/bbl a company is spending X percentage of cash flow on G&A, when that price drops to $45/bbl they almost certainly will be spending 2X percentage of cash flow on G&A, hence layoffs.
5. The biggest impact on spending that can be made is to decrease Capex. Some of that Capex has to be spent because it either is already contracted (eg. a long term commissioning contract for an offshore platform) and/or it results in immediate increased production (and hence cashflow) such as building a pipeline or plant. As a consequence, the most reasonable place to reduce Capex is non-discretional spending which is Exploration spending. If the low price environment is significantly protracted then that will impact future production (as Tanada points out) given existing fields are continuing on whatever decline they might have been on and no new production is coming on stream for a number of years due to an absence of exploration. This is particularly felt for deepwater offshore where delays can be as long as a decade from original discovery to first production.
6. Also as a response to shareholder concerns about share price, if a company has some budget left after cutting as much as possible from Capex the next issue is share buy backs. Contrary to what you read in some of the rabid "gold bug" blogs, the buy backs are not to payoff exec but rather to increase overall share price. All shareholders benefit equally. In all companies I have been involved with exec held a small portion of the total shares given financing was always conducted through various investment banks who end up with the majority of initial shares offered. After a few years of trading it was almost always the case that the majority of shares were widely held by investors.
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Re: +++OIL/ GAS supply/demand WARNING+++
by M_B_S » Tue 02 Oct 2018, 16:45:10
$this->bbcode_second_pass_quote('Tanada', 'I') think the key factor is the near total lack of investment for the three years 2015-2017 during the worst of the glut when world prices were down. Its not like those projects that take a decade to mature will still mature in a decade with a three year pause in the work needed. I am especially thinking of things like the Arctic drilling plan that was started in the North Slope Alaska, then put on hold because it was expensive and money was not pouring in hand over fist. The big Oil-Co's were all using funds to pay dividends and keep stockholders happy rather than paying the exploration and development budgets.
********
Yeah Tanada
The storm is coming:
****************************
https://oilprice.com/Energy/Crude-Oil/T ... -Soon.html
The Oil Industry Needs Large New Discoveries, Very Soon
By Tsvetana Paraskova - Oct 01, 2018, 6:00 PM CDT
Market participants and analysts are all focused on the imminent oil supply gap that is opening with the U.S. sanctions on Iran just five weeks away.
But beyond the shortest term, a larger and more alarming gap in global oil supply is looming—experts forecast that unless large oil discoveries are made soon, the world could be short of oil as early as in the mid-2020s....
The industry basically needs to replace one North Sea each year, as the world needs to replace 3 million bpd of supply decline from mature fields, while global oil demand continues to grow at a robust pace, the International Energy Agency (IEA) said in its Oil 2018 report in March.
Archiv 2017
https://www.scotsman.com/news/north-sea ... -1-4564402
I have nothing to offer but blood, toil, tears and sweat.
M_B_S
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