Author Topic: Future strategy to survive discovering 1 out of every 20 bbls of oil we now use.  (Read 144531 times)

Cardboard

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"Curious what people think of this move by Altura (ATU.V) to sell about half its production and reinvest the proceeds in its Leduc-Woodbend play?"

Surge Energy appears to be the buyer:

https://www.stockwatch.com/News/Item.aspx?bid=Z-C%3aSGY-2609806&symbol=SGY&region=C

You end up with a company that will exit 2018 with 1,900 boe/d, roughly no net debt (cash flow + sale proceeds will about cover capex). At $0.44/share that is roughly $25,000 per boe/d.

Not bad but, that is still a very small company or few barrels to spread costs over. For example, G&A of $4.05/boe makes me cringe. If you want to see a company that always seems to do more with less check out Yangarra.

Isn't the move also increasing their heavy oil percentage as the assets sold to SGY would be most or all their medium?

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tombgrt

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Sure Cardboard but they are going to put their cash position to good use growing Leduc. Expect strong growth beyond 2018 as well. Costs per boe should come down over time no?

4% position for me but looks more attractive now.
« Last Edit: May 16, 2018, 06:55:28 AM by tombgrt »

Cardboard

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It is now trading at $29,000 per flowing. Really good one day pop!

At that price, I would sell some and look at competition in heavy: GXE, ATH.
 
ATH is trading at $31,000 per flowing, has a nice mix of bitumen and light and if they go ahead with their infrastructure sale it will be incredibly cheap, again...

PPR is also much cheaper than all of these right now. However, I don't think it will do anything unless this arbitration is positive. That is the impact of a management team with a high G&A, multiple equity raises. Simply no trust.

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tombgrt

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I own way too much GXE and PPR already. As you said, PPR might be dead money for a little while.

SharperDingaan

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"However there's a lot of unfilled capacity in the pipe and the lighter grade of shale will also displace the heavier grades in the pipe, allowing rapid and high incremental supply to drive price down quite a bit."

Huh? Pipelines out of the Permian are already full and all light grade. They are now desperate and shipping excess via trucks. Truckers are hard to get by and freight costs are up 10-15%. Permian discount is now close to WCS-WTI!

Pipelines out of Canada full also and Gulf coast refineries need the heavier grades. A diesel crisis is starting to develop.

Cardboard

This is in the context of take-away capacity; so trucks, rail, and pipeline are part of the 'pipe'. Pipeline is just one component.
To increase trucking capacity either add more/bigger trucks (not realistic) or shorten distance traveled (to a rail yard). The truck does just the 'last mile', rail does the rest - no different to inter-modal transportation in a goods supply-chain.

The limiting factor is rail-cars, and the further you are from the refinery - the harder it is to get them.
Simply because in the time it takes to do a round-trip from Galveston to Alberta, 2 round-trips (or more) could have been made from the Permian. Grain vs oil railcar congestion in the Alberta yards is also a factor that the Permian doesn't have.

We are really relying on the best targets in the Permian having being drilled first, and high decline rates.
Successor wells producing lower initial spikes with higher declines, and there not being enough incremental drill capacity to compensate for the net production decline. In the short-term - drill-pigs and rail being added to the Permian as short-term (but expensive) fixes; how much - being dictated by the spot rate for crude.

SD





« Last Edit: May 16, 2018, 07:28:45 AM by SharperDingaan »

Cardboard

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"However there's a lot of unfilled capacity in the pipe and the lighter grade of shale will also displace the heavier grades in the pipe, allowing rapid and high incremental supply to drive price down quite a bit."

Your explanation still makes no sense. You have constraints everywhere in the shipment chain within NA. So how do you have rapid and high incremental supply to drive price down quite a bit?

Plus, the product that is being produced in mass quantity in the Permian (very light) is largely exported out: see today's EIA report.

"The limiting factor is rail-cars, and the further you are from the refinery - the harder it is to get them. "

On that one, you were wrong and keep repeating it. The issue is getting locomotives/drivers not railcars. That is what prevents right now crude-on-rail to ramp-up. Cenovus explained that pretty clearly.

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SafetyinNumbers

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It is now trading at $29,000 per flowing. Really good one day pop!

At that price, I would sell some and look at competition in heavy: GXE, ATH.
 
ATH is trading at $31,000 per flowing, has a nice mix of bitumen and light and if they go ahead with their infrastructure sale it will be incredibly cheap, again...

PPR is also much cheaper than all of these right now. However, I don't think it will do anything unless this arbitration is positive. That is the impact of a management team with a high G&A, multiple equity raises. Simply no trust.

Cardboard

On ATU, GMP has them at $0.20 CFPS on strip for 2019E with no debt,  at spot, I get them closer to $0.30 CFPS but Iím just doing it back of the envelope.

Hopefully PPR can put up a good Q2 although hedges will still hurt.
Top 5 positions: ELF IAM GCM.NT/GCM PIF ATU

sculpin

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Major moves in CDN oil pricing, medium oil finally getting it's due....

WCS closed at C$74.43
Compared to last year at C$52.65
and YTD average of C$53.26


https://www.investorvillage.com/groups.asp?mb=19168&mn=145953&pt=msg&mid=18295919

SharperDingaan

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See the responses in italics

Agreed that currently, all NA transport infrastructure is constained.
Agreed that today that is helping to raise the price of crude - by essentially shutting in any material incremental new total NA supply.
I simply point that that there is TOO MUCH light oil shale, shale production spikes are not constrained as the oil displaces heavier grades in the infrastrucure 'pipe', and it sets up downward pressure on crude prices.

When lobster becomes cheap I eat more of it.
To persuade me to keep eating the same amount of steak, lamb, or chicken - the price of those foods (heavier grades of oil) has to come down as well.

SD

"However there's a lot of unfilled capacity in the pipe and the lighter grade of shale will also displace the heavier grades in the pipe, allowing rapid and high incremental supply to drive price down quite a bit."

Your explanation still makes no sense. You have constraints everywhere in the shipment chain within NA. So how do you have rapid and high incremental supply to drive price down quite a bit?

The highest value product (light) gets shipped first. More light supply against the same demand lowers the price of light. To maintain sales - all other grades must decline in price as well.

Plus, the product that is being produced in mass quantity in the Permian (very light) is largely exported out: see today's EIA report.

To get to tidewater it still has to go through either pipeline, truck, or rail. Taking up room in the infrastructure 'pipe'

"The limiting factor is rail-cars, and the further you are from the refinery - the harder it is to get them. "

On that one, you were wrong and keep repeating it. The issue is getting locomotives/drivers not railcars. That is what prevents right now crude-on-rail to ramp-up. Cenovus explained that pretty clearly.

They are the same. No locomotive to pull the rail cars, equals no rail cars in the right place at the right time, equals same result.

Cardboard

Cardboard

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"I simply point that that there is TOO MUCH light oil shale, shale production spikes are not constrained as the oil displaces heavier grades in the infrastrucure 'pipe', and it sets up downward pressure on crude prices."

What goes in the pipe is what people want. And the only consumer of crude oil in the world are refineries.

So if they want heavy, they will price things accordingly and that is exactly what we are seing at the moment with WCS skyrocketing and Permian light going down.

"They are the same. No locomotive to pull the rail cars, equals no rail cars in the right place at the right time, equals same result."

No it is not the same. You were blaming Alberta for not owning a large fleet of rail cars to store oil. So far, it has not been the issue at all.

Pretty inefficient to have a massive amount of railcars sitting in various places while you have no locomotives nor operators to move them around.

Cardboard