Author Topic: Future strategy to survive discovering 1 out of every 20 bbls of oil we now use.  (Read 254127 times)

Cardboard

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It would be nice if you could check your information before stating all kinds of things online. Maybe that you don't mind misleading your nieces and nephews overseas but, I do care about my fellow CoBF investors.

For example, to have a look at shipments of Iranian oil pre-Iran deal in 2015 and after.

To understand that vessels who cannot be insured, do not carry such oil (U.S. and European insurance firms will not insure Iranian shipments due to sanctions).

To also make a distinction between different grades of oil: light, medium, heavy, sour, etc. and that refineries cannot alter significantly the mix of what they process.

To also understand that there was a meeting last week. That Iran is mad and that Russia and Saudi Arabia are not ramping up production just for the sake of it but, realizing that there will be less Iranian oil going to world markets.

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tombgrt

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Another lesson: don't diversify on lesser ideas. Was basically saying GXE was the far better deal here and yet I managed to shift some profits in the dogs. Stupid!

PPR now only 1/8th of my GXE position because of price action in last few months but still sucks. Same for IPO and ZAR (which are even smaller positions). When is market going to shift sentiment around on these? Volume so low it only takes one buyer to set the price. ATU at least did well.



SharperDingaan

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Iran was producing 4.47M boe/day Feb, 2018. The Iran Nuclear Deal Framework was based on the April 2015 framework, and announced July 14, 2015. March 2015, Iran was producing 3.3M boe/day. Iranian production has risen 35% since the deal was announced.
https://ycharts.com/indicators/iran_crude_oil_production
https://en.wikipedia.org/wiki/Iran_nuclear_deal_framework

The National Iranian Tanker Company is a subsidiary of the National Iranian Oil Company, and the biggest tanker company in both the Middle-East and the world. As at 2013, 74 tankers, of which 50 were VLCCís. A VLCC typically loads 2B boe.
https://en.wikipedia.org/wiki/National_Iranian_Tanker_Company
https://en.wikipedia.org/wiki/Oil_tanker#Chuan_Yeu_(VLCC_and_ULCC)

Self-insurance means that a business liable for some risk, chooses to "carry the risk" itself and not take out insurance through an insurance company. A common practice around the world including the US. https://en.wikipedia.org/wiki/Self-insurance

"China gets condensate from Iran. The light oil can be cracked in a processing plant called a splitter to make petroleum products and petrochemicals or blended with heavier crude for use in refineries. Showing the competition U.S. exports face, Iran exports about 55 percent of its roughly 250,000 bpd of South Pars condensate output to two Chinese buyers. Since U.S. and European Union sanctions were eased late last year in exchange for Iran curbing nuclear activities, Tehran's exports have risen about 30 percent to 1.25 million to 1.3 million bpd, much of this as South Pars shipments to China".
http://www.businessinsider.com/the-us-faces-an-awkward-rival-in-the-crude-oil-export-market-2014-7

Hence, we have a state-owned oil company (NIOC), a state-owned tanker fleet (NITC), and state ability to self-insure, easily capable of transporting 1.25M boe/d of condensate to a willing China; where the processing plants already exist. There are established business arrangements, and the condensate is a direct alternative to US production.

US sanctions would simply free up Iranian condensate production that could now be cut from US exports to China. The suggested 300,000 boe/d that China was buying from the US, now being bought from Iran instead, Iran exporting the same quantity that it was, and everybody happy except the US - where people are now out of a job. China gets to safely add oil to its US tarrifs, and this is called 'winning' in the White House.

I think Iíve made my case, now Iíll accept your gracious Mea culpa.

Thankyou

SD
« Last Edit: June 26, 2018, 01:17:40 PM by SharperDingaan »

Cardboard

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Mea culpa for what?

You stated yourself the climb since the deal and now we should not expect an ounce less!!!

"Iran was producing 4.47M boe/day Feb, 2018. The Iran Nuclear Deal Framework was based on the April 2015 framework, and announced July 14, 2015. March 2015, Iran was producing 3.3M boe/day. Iranian production has risen 35% since the deal was announced."

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Cardboard

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"When is market going to shift sentiment around on these? Volume so low it only takes one buyer to set the price. ATU at least did well. "

I know Tombgrt, it has been extremely frustrating. Even big dogs such as CPG and CVE are having a hard time moving up.

I believe it boils down to the market believing that $65 U.S. WTI is the floor vs the top. Then cash flow estimates will be considered more like reality, NPV at strip will mean something and valuation should follow.

It was only a few months ago that we were trading at $50 U.S. WTI and many were calling for the $40's. So it seems that it will take a while for people to digest. So many have been burned.

Just recently as some got into larger caps to allocate some money to the energy sector, they got burned with the move back down to $65 U.S. WTI. These newcomers are now trying to figure out if they were wrong and what to do next?

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Cardboard

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"API data reportedly show a more than 9 million-barrel drop in U.S. crude supply.

The American Petroleum Institute reported Tuesday that U.S. crude supplies dropped by 9.2 million barrels for the week ended June 22, according to sources. The API data, however, showed a rise of nearly 1.2 million barrels in gasoline stockpiles, while inventories of distillates rose by 1.8 million barrels, sources said. Supply data from the Energy Information Administration will be released Wednesday morning. Analysts polled by S&P Global Platts expect the EIA to report a fall of 2.3 million barrels in crude supplies. They also forecast supply increases of 160,000 barrels for gasoline, and 500,000 barrels for distillates. August crude was at $70.80 a barrel in electronic trading, up from the on the New York Mercantile Exchange."

Genscape apparently reported a pretty big draw from Cushing on Monday and this would seem to corroborate.

Moreover, with the large Syncrude outage, expect Canadian inventory of heavy to decline significantly through July.

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SharperDingaan

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Hard to be gracious huh?

We're all entitled to our own opinions, we collectively post to get better results, and the more diverse those opinions the better.
We simply have different views on both Trump, and Alberta's crude oil management, so be it.

However to quote Chinese President Xi Jinping, 'In our culture, we punch back'
https://www.cnbc.com/2018/06/25/xi-reportedly-answers-trumps-tariffs-we-punch-back.html

The world is such a great place!

SD




tombgrt

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I initially was of the opinion that Iran would be able to redirect most exports too but fwiw, even Amrita Sen sees Iran losing 1.5-1.7 mbd! She is no dummy and has been spot on for some time now. Always has some of the best laid out arguments.

SafetyinNumbers

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$ATU.V bull case on Hydra Capital blog

http://hydracapital.ca/hydra-blog.html
Top 5 positions: ELF GCM.NT/GCM.WT.B TII.V PIF AZP.PR.A

tombgrt

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Now I know why the stock jumped 18% two days ago.