Author Topic: Future strategy to survive discovering 1 out of every 20 bbls of oil we now use.  (Read 249811 times)

Joe689

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Almost the only way to seems to extract value.... Shareholders are getting impatient and the hostile ones know it.  My poor OBE is a good example.  What a scene....


tombgrt

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With WCS diff at $40 and even light oil pricing under pressure, you have to wonder what would happen if WTI tanked from this level.

At this point I'm happy if the companies I hold just announce long term rail contracts to get this over with.

Cardboard

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Very important statement from Mr. Putin today:

"President Trump has said he thinks the oil price is too high. Well, probably to some extend he's right, but we are absolutely OK with it at $65 to $75 per barrel to ensure the efficient operation of oil companies and ensure investment,"

https://www.cnbc.com/2018/10/03/putin-says-trump-is-right-about-high-oil-prices--but-hes-partly-to-blame.html

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Cardboard

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EIA 8 million barrels oil build was shocking at first at 10:30, then market realized the following:

1- Almost entirely dependent on a reduction in exports last week which will reverse next week.
2- U.S. production is not growing at all.
3- Demand for gasoline and distillates strong with inventories down.

As a result oil turned down sharply lower initially and is now up 0.75%.

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Joe689

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Wild moves

tombgrt

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... and weird days!


Bought some more ATU and GXE with CRC option profits. Apparently the deserve a down day because WCS issues are insurmountable. Taking a little break from watching the tickers as I have no shorter term options left (all at least 1 year out). Time for a break.

Cardboard

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IMO, Saudi Arabia has no real spare capacity or quickly available. Certainly not the 2 million bls/d originally claimed and recently they mentioned something along the lines of 1.2 million bls/d. Why the sudden difference? There has been some production increase since June and a lot came from their inventories which are now very low.

Their claim would be synonymous with Iraq or Iran saying that it has 1 million barrels/day of spare capacity: once developed. None of these countries has invested into oil development since the crash as budgetary constraints did not allow.

Latest events now give them the opportunity to walk back on their commitment to offset any miss by Iran:

https://www.cnbc.com/2018/10/14/saudi-stocks-plunge-on-khashoggi-fallout-biggest-drop--since-2014.html

Now, if you have invested like me into Canadian energy producers, we know that Brent is of little use. Canadian discount on all grades of oil has now gone through the roof with well known shipment issues and crucial refineries being on major maintenance. Only Cromer oil has shown some resilience which helps Saskatchewan producers and condensates which are used to dilute bitumen for shipment into pipelines. Thursday was really grim with just over $40 CAD/barrel discount on Edmonton light oil:

https://www.psac.ca/business/gmpfirstenergy/

At these discounts, it would make sense to truck oil down South or West. Clearly not sustainable. It is also a shame for Canada to be subsidizing the U.S. the way it is or at the tune of $40 to $50 billion/year. How much is lost in royalties/tax revenues? How long can Alberta keep sending billions of dollar/year at these prices to provide $7/day daycare to Quebecers?

Maybe that Canada will go back to horses and donkeys since Son of Castro seems too imbecile to push through more modern techniques such as a pipeline  ::)

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SafetyinNumbers

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I know everyone hates Trudeau but wasn’t his big mistake thinking that BC wouldn’t elect the NDP again.

But also, TMX wouldn’t be in operation by now anyway so wouldn’t the discounts still exist?

This year’s refinery maintenance schedule seems particularly to blame. There is ~300k bbl/d more offline now then 2017 and 500k bbl/d more offline than 2016. But the good news is that refinery capacity starts to come online in the next few weeks, Redwater starts taking 80k bbl/d and crude by rail continues to ramp. I think it works out to 1.1m bbl/d of capacity in total which should go a long way to close differentials a decent amount.
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Cigarbutt

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^Humble contribution.

The transmission problem has been known for a long time and opposing forces have been shaping up for even longer.
https://calgaryherald.com/business/energy/canadian-oil-production-growth-to-slow-by-2030-says-new-capp-report
https://thenarwhal.ca/what-s-fair-price-canada-s-oil-and-what-happens-if-we-get-it-0/

The procrastination has many causes and some are very obvious but IMO the CDN oil industry participants need to share some blame and have done a very poor job because the issue is multi-faceted. The economic argument is contentious but amenable to a fair solution. However, the main issues that the oil market participants failed to appreciate (if one wants to operate in Canada) are the growing importance of security and social acceptance. Whether one agrees or not with opposing views, environmental concerns are likely to grow. It just is what it is.

The transmission problem seems like it has reached a dead end but there may be hope. In the 90's, Canada's fiscal situation looked dire but, mostly because of the Finance Minister, Mr. Paul Martin (good plan, good tactics and good message), things turned around. And the recently elected Prime Minister in Québec has often said openly that he was ashamed about receiving equalization payments and one of his top priority is to close the gap. In early 2016, he didn't seem to stand a chance. Things change. It just may take longer than anticipated.
https://ipolitics.ca/2016/02/01/why-cant-francois-legault-get-any-respect/

« Last Edit: October 14, 2018, 08:11:28 AM by Cigarbutt »

SharperDingaan

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Agreed Alberta has real problems.

But however unpalatable it is, the only real solution is a temporary shut-in (or extended severe curtailment) of tar-sand production. Because the differentials are screaming that supply so exceeds export capacity, that the oil (and gas) has essentially become worthless. Ongoing continuous tar-sand expansion to lower the cost per unit has destroyed the market.

We don’t want to hear it, because politicians are trying to get re-elected, and nobody wants to hear about pending extended unemployment. The obvious solutions are massive increases in trans-national infrastructure, refining at home, and a very different overall approach. But even if construction started tomorrow, it would be YEARS before that new capacity became available.

Until the industry shuts-in, and uses the unemployment to feed construction demand as new infrastructure gets built; Alberta’s long-term prospects don’t look great. Get it done and it’s a great future, but a lot of the current attitudes have to go.

SD
« Last Edit: October 14, 2018, 09:21:00 AM by SharperDingaan »