Author Topic: Future strategy to survive discovering 1 out of every 20 bbls of oil we now use.  (Read 182761 times)

SafetyinNumbers

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Prairie Provident Resources (PPR-T, Buy) – Analyst Kirk Wilson was on the horn this morning regarding PPR as the share price is up about 30% in the past month or so…

After falling about 30% in the prior month or so?

There was nothing priced in for Quebec but the stock got hammered for it. QEC and ATI certainly haven’t bounced back.

I would not expect an increase in the guidance. Whoever wrote that didn’t look at how weak Q1 was. It’s almost mathematically impossible to increase guidance unless production soars above 6000 boe/d.

That being said, I get cash flow around $10m for the quarter before the impact of hedges (commodity and F/X) and there should be improvements in the back half if commodity prices and production hold up. That annualized number looks big versus the EV.

Be warned, I am no expert on modeling oil companies!
Top 5 positions: ELF IAM GCM.NT/GCM PIF EFR.DB


Cardboard

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SharperDingaan

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Re the EIA, there are 4 choke points on ME oil. Bab el-Mandeb, Strait of Hormuz, Suez Canal, and the SUMED pipeline (2.43M boe/d). There are actually 5 if you include the Strait of Malacca. The largest tanker that can transit the Suez is a Suezmax, at 1,000,000 boe. Re comparatives: a single VLCC does 2,000,000 boe.
https://www.eia.gov/todayinenergy/detail.php?id=32352
http://alloiltank.com/oil-tanker-ship/

Choke both Bab el-Mandeb, & the Strait of Hormuz, and you will shut-in the bulk of ME production. Oil prices would spike, and the only player with any significant capacity left would be Iran ... who you are not supposed to buy from.

SD
 
« Last Edit: July 27, 2018, 08:08:54 AM by SharperDingaan »

Joe689

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Regarding this topic:

http://images.financial-risk-solutions.thomsonreuters.info/Web/ThomsonReutersFinancialRisk/%7Bd7aebd7b-3094-4e69-a9c3-42a675a52853%7D_Strait_of_Hormuz_-The_aorta_of_global_oil_flows.pdf

Good read. 

If Iran tries to close, it give US the go ahead to punch them hard.   Trump would love a reason to punch them. 

Uccmal

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Regarding this topic:

http://images.financial-risk-solutions.thomsonreuters.info/Web/ThomsonReutersFinancialRisk/%7Bd7aebd7b-3094-4e69-a9c3-42a675a52853%7D_Strait_of_Hormuz_-The_aorta_of_global_oil_flows.pdf

Good read. 

If Iran tries to close, it give US the go ahead to punch them hard.   Trump would love a reason to punch them.

And what would the US do exactly? 

Attack Iran? With 82 million people, diverse economy, likely support of Russia.  Unlimited internal energy supply.  An outright war with Iran would make Iraq, Afganistan, and Vietnam look like walks in the park.  Not to mention the speed with which they would acquire Nuclear capability, of they dont already have it. 
GARP tending toward value

SharperDingaan

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SA exports through Yanbu would be choked off at Bab El-Mandeb, and why yesterdays attack was more strategic than normal. Iran has also mined the Strait of Hormuz on more than one occassion, without starting a shooting war.

Go at them and all you do is drive up oil prices, with nice pictures of smoking wells accompaning the daily risk premium. To keep the lights open Europe just takes Iranian oil instead, creating incentive not to hit the oil infrastructure. If Trump loses it we all do very well, should cooler heads prevail we still do well.

It's also hard to start a shooting match without congressional approval.
Therefore he either needs to start early, or be sure of a win in the upcoming mid-terms. Risk premium.

SD

Joe689

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Maybe take offensive  to open the port back up is better than attack Iran.  After all, it sounds like UN law so all our allies would be in support to uphold the law?  Russia would have to go against the UN.  Not a first for them obviously. 

SharperDingaan

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Just to point out the realities of todays technology.
There are many versions of the ATACMS, they are made by many nations, and they all work very well at sinking ships from great distances. They have been used in the Gulf before, and are effective at enforcing  'blockades'; hence it's not hard to temporarily stop tanker flow.
https://www.wired.com/2017/03/army-converting-missiles-ship-killers-china/

"Army Tactical Missile System (ATACMS), a weapon typically fired from a truck-mounted rocket launcher, that can strike targets at distances of about 186 miles." "The weapon already has a proven combat record from the 1991 Gulf War and the post-9/11 wars in Iraq and Afghanistan."

"The shoot-and-scoot mobility of rocket trucks is just one advantage of the land-based missile systems. Land-based weapons (also) have "deep magazines," with no serious physical limitation on the number of missiles available." "A 2013 RAND report sponsored by the US Army suggested that "the strategic placement of anti-ship missile systems" could "be used to form a full blockade of critical waterways in times of war."

SD


Gamecock-YT

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SharperDingaan

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China's big arrow.
"China and the U.S. seem to be going tit-for-tat with each other, but as Dan Flynn of the PRICE Futures Group explains, China has a disadvantage: "The Chinese are running out of U.S. imports to put a tariff on." The one big arrow left in their quiver, of course, is oil. The U.S. exports more than 300,000 barrels a day to China — about $1 billion US worth a month. http://www.cbc.ca/news/business/china-opec-oil-tariffs-1.4713944

The gist is that China puts a 25% tariff on US oil, & buys direct from Iran instead. Everybody gets to shaft Trump, & the US suffers a 300,000 boe/d reduction in oil exports. Protest and China simply pulls back from the US bond window, forcing up US interest rates.

SD

And that arrow is now being used  https://ca.reuters.com/article/businessNews/idCAKBN1KO27S-OCABS

"China included LNG for the first time in its list of proposed tariffs on Friday, the same day that its biggest U.S. crude oil buyer, Sinopec, suspended U.S. crude oil imports due to the dispute, according to three sources familiar with the situation."

“The U.S. gas industry will be much harder hit by this as China imports only a small volume whereas U.S. suppliers see China as a major future market,” said Lin Boqiang, professor on energy studies at Xiamen University in China. "With LNG demand expected to skyrocket over the next 12 to 18 months, there are still some two dozen firms seeking to build new LNG export terminals in the United States and tariffs may limit their ability to secure sufficient buyers to finance their proposed projects."

"Meanwhile, according to Kpler, crude exports to China dropped to an estimated 226,000 barrels per day (bpd) in July, after reaching a record 445,000 bpd in March. Sinopec, through its Unipec trading arm, is the largest buyer of U.S. crude. China would likely hike purchases from Saudi Arabia, Russia, the United Arab Emirates and Iraq if the tariffs slowed U.S. flows, said Neil Atkinson, head of the oil industry and markets division at the International Energy Agency. There will be “others who will be offering barrels to China, so it could find itself able to replace lost volumes from the U.S.,” Atkinson said."

...

Supposedly the US sells the 226K bpd to Saudi Arabia, Russia, the United Arab Emirates and Iraq - who just sells it on to China.
OR, China just's FU's the chump and buys it direct from Iran - who needs friends against the US instigated unrest.
Your enemy is my enemy, etc.

SD