[jamest]

Good post, Rockman. Thanks

[rockdoc123]

$this->bbcode_second_pass_quote('', 'B')ut, to be sure, the drop in oil prices will definitely slow up progress. But not right now. If a company has truly proven reserves (what the independent bank auditors say...not the company talking heads) then the banks will throw a certain amount of $'s at them based upon today's price. Some rig builders might not be able to finance new construction but exploration and development hasn't taken a hit...YET. The time lines for these projects are years long so they can't be modified much in the short term (6+ months). Now if oil stays low for a year+ then we should start seeing some strategic changes.

[ROCKMAN]

Thanks James. China has been sneaking its nose under a lot of different tents for more then 10 years. The first time I noticed their plan was back in the mid 90's when they paid the Venezuelan gov't over $200 million for an old field making less than 300 bopd. But that was after watching a US operator take another field making 100 bopd and ramping it up to 40,000 bopd in just a few years (used horizontal well bores). I doubt there's a single major oil play in the world they haven't gotten a finger in by buying interest out right or financing development. The quickly jumped into offshore Angola and now have the biggest chair at the table. I'd bet the BZ deal, if it doesn't end up providing direct ownership, has a right of first refusal on oil sales. For along time the Chinese have been focused as much on access to oil as the price they pay for it. I think they believe the day will come when just having the money to pay for the oil won’t guarantee your ability to get your hands on it. This was a common angle played with natural gas in the US back in the late 70’s. It wasn’t uncommon for the right of first refusal to be worth more then the NG itself. I knew a fellow that got a check for $35,000 a month for almost 10 years because he took a ROFR from one company and traded it to another company. Nice pay day for only having to sign your name twice.

The Chinese might cut a fat deal with Petrobras. As strong as Petrobras might be, the BZ still depends heavily on it's oil income. They may not be in as bad a shape as Mexico but they also have a huge mass to keep sedate with gov't support.

[ROCKMAN]

May well be doc. I start loosing my confort zone when we get beyond 9 digits. We cut our 2009 unconventional NG budget from $1.4 billion to less then $700 million. Spend from cash flow only even though we have the credit line to write the full check. Don't want to combine the pricing uncertainty with the interest costs.

This will almost certainly prevent 100% reserve replacement of our NG but my guess is that mangement doesn't think the shareholders will revolt. Just my WAG but I think they figure the stock has already taken an overshoot on the downside so they might as well take advantage of the negativity. With rig rates coming down as well as steel prices, wells drilled the 2nd half of '09 might produce a considerably better return then we've seen for a while.

[Ache]

http://online.wsj.com/article/BT-CO-200 ... 08418.html

$this->bbcode_second_pass_quote('', 'T')he event marked Brazil's official emergence as a nascent global oil power. In November 2007, Petrobras caused a stir in the international oil industry with the announcement of the Tupi discovery, estimated to hold recoverable reserves of between 5 billion and 8 billion barrels of oil equivalent
......

In December 2010, Petrobras plans to start a pilot production program at Tupi. Tupi is expected to produce 100,000 barrels of crude daily and 4 million cubic meters of natural gas.

[copious.abundance]

http://peakoil.com/current-events/anoth ... 2-240.html

[Leutnant]

Up to 8 billion barrels of recoverable oil,
yet only a production rate of a 100.000 barrels per day?

$this->bbcode_second_pass_quote('Leutnant', 'U')p to 8 billion barrels of recoverable oil,
yet only a production rate of a 100.000 barrels per day?

[TheDude]

MarketWatch

$this->bbcode_second_pass_quote('', 'J')un 10, 2009, 6:41 p.m. EST

LOS ANGELES (MarketWatch) -- Standard & Poor's Ratings Services late Wednesday cut its corporate credit rating on Brazilian state-run oil giant Petroleo Brasileiro SA /quotes/comstock/13*!pbr/quotes/nls/pbr (PBR 43.43, +0.23, +0.53%) to BBB- from BBB. The downgrade was triggered "by the tighter credit measures we are forecasting for the next five years as Petrobras implements its sizable investment plan," said S&P credit analyst Marcelo Costa in a prepared statement. The outlook for the ratings is stable. The agency said the company's $174.4 billion capital expediture plan amid expectations of lower domestic and international oil prices may result in negative free operating cash flow, which would require "significant financing efforts." S&P said at the same time, it sees Petrobras' business prospects as favorable, largely because of its current portfolio and oilfield discoveries.

[copious.abundance]

$this->bbcode_second_pass_quote('', 'T')he agency said the company's $174.4 billion capital expediture plan amid expectations of lower domestic and international oil prices may result in negative free operating cash flow

[kiwichick]

yeah ; like we can trust the rating agencies; YEAH RIGHT!!!!

[TheAntiDoomer]

Yeah unfornate poster the dude has become. He use to be pretty rational, but has fallen off the doom deep end in the recent past.

[TheAntiDoomer]

Brazil develops fossil-fuel fever

http://www.theglobeandmail.com/report-o ... le1261581/

$this->bbcode_second_pass_quote('', 'B')ut since the national oil company Petroleo Brasileiro SA, or Petrobras, discovered the massive Tupi field off the coast of Rio de Janeiro two years ago — estimated to hold 5 to 8 billion barrels — it is the development of oil fields that has gone into overdrive.

[AirlinePilot]

Good article by ace over at TOD today. highly recommended.

http://www.theoildrum.com/node/6169#more

"Mr. Gabrielli, the CEO of Petrobras, gave a presentation in December 2009 in which he shows world oil capacity, including biofuels, peaking in 2010 due to oil capacity additions from new projects being unable to offset world oil decline rates."

[TheDude]

Doesn't he know about all that oil they've discovered in the Brazilian offshore ?

[eastbay]

He knows. That's why this is an incredible announcement.

[copious.abundance]

I knew I smelled a rat.

Absolutely nowhere in that Petrobras PDF does Gabrielli state that 2010 will be the peak of production.

In fact, the chart ace used to claim that Gabrielli was stating 2010 was the peak, actually shows Petrobras forecasting three scenarios in which production increases!



All the chart does is show that large amounts of additional supply will be needed. It does not say anywhere that 2010 is forecast to be the peak, or that adding the additional supply will be impossible.

But having seen other posts by ace in TOD, I've come to expect such dishonesty from him.

[davep]

$this->bbcode_second_pass_quote('OilFinder2', 'A')ll the chart does is show that large amounts of additional supply will be needed. It does not say anywhere that 2010 is forecast to be the peak, or that adding the additional supply will be impossible.

[eastbay]

The chart seems clear and easy to understand. I hope I have this right:

The lines on the chart heading up into the upper right indicate differing Petrobras estimates of worldwide demand. The cliff colored yellow/orange shows what the world can expect from supply.

Is there something else to read from this chart?

[copious.abundance]

Beneath the chart it says:

"Although less challenging, Divided Attention and Sustainable Development shall also require considerable investment effort."

Note the, "Although less challenging." That means he believes those two scenarios are do-able, given sufficient investment.

I repeat: Nowhere in this document does he say 2010 is forecast to be the peak. That is ace's interpretation - and it is an incorrect one.