Author Topic: Future strategy to survive discovering 1 out of every 20 bbls of oil we now use.  (Read 259590 times)

JayGatsby

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If Iran produces 4% of the world's oil, won't someone buy it? Even if Iran has to discount their product, if anyone buys it it has no impact on global supply/demand. I'd imagine someone would even try to arbitrage any price difference.


SharperDingaan

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Agreed Iran is in deep dung, and that it is likely to get a lot deeper. Sanctions are having an impact.
Agreed that the November oil sanctions are intended to accelerate the process.
Agreed that tensions are likely to escalate.

But ...

Recognize that we're currently seeing the low hanging fruit of the sanctions process, those for whom the choice was clear.
For a great many others this is a 'middle-man' opportunity to gouge through sanctions-breaking; selling product to Iran at inflated prices, and buying oil from Iran at discounted prices.

Recognize that to work, sanctions have to be enforced.
Were there no China/US trade war, would China be as publicly 'willling' to sanctions-break?
And if a Chinese flagged tanker is caught carrying Iranian crude, what's the blockader actually going to do?

The expected rise in regional tension suggests an escalating risk premium.
Chinas apparent willingness to sanction-break; suggests either a forthcoming US/China 'deal to desist', or a higher that expected ongoing 'illegal' supply of Iranian crude.

To most people, the logical approach is a long straddle on benchmark Iranian crude.

SD






 



 

Zorrofan

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"Were there no China/US trade war, would China be as publicly 'willling' to sanctions-break? "

Correct me if I'm wrong but China was quite happy to buy deeply discounted oil from Iran last go round so I doubt they will act differently this time. Iranian oil could be shipped across the Caspian to Russia for resale with more being sold via Iraq as Iraqi oil as well given Iran's increasing influence in that country.


Zorrofan

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https://www.wsj.com/articles/irans-oil-exports-dropping-faster-than-expected-before-u-s-sanctions-1535483145?ns=prod/accounts-wsj

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Thanks for the link.  I don't doubt exports will be reduced however I am still positive that there will be cheating and the reduction in supply won't be as large as feared. It may drop via official channels but its highly likely Iran will find ways to get some oil to market. But I could be wrong. What are your thoughts??

Cardboard

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I don't really have any thoughts on this other than seeing what happened historically and what is happening now.

There is absolutely no way that they will continue shipping what was shipped earlier this year no matter how much cheating or how much goes to countries not abiding by the sanctions.

Any company doing business via the U.S. banking system is getting the hell out of Iran's business. This has nothing to do with Trump, Pence or whomever but, all about maintaining access to this crucial link. Similar sanctions had a major impact under Bush, Obama and will likely be close under Trump due to that.

Plus, companies with know-how and capital such as Total are also getting out of there which means that production will get hit over time. The country is also already experiencing a financial crisis with high inflation which will reduce how much they can and will deploy into O&G capex.

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tombgrt

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One of those days again...

Uccmal

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One of those days again...

Its because the Federal Court of Appeals in Canada torpedoed the Trans Mountain Pipeline proposal today.  I have been doing okay trading in and out of a portion of my Whitecap Stock.  When it goes reasonably above my average pp I sell a few thousand shares.  When it goes well below I buy the same shares back.  Its the get rich slow plan. 

The Transmountain link has always been a longshot.  It has no real affect on whether or not Whitecap gets their light oil to market this year or next, or the year after.  So, the stock is trading down because of unrelated news. 

Who am I to argue with the environmentalists if they would rather ship oil by rail and blow up towns along the way.?  The greenies really need to focus their efforts where they would get the most return for their effort, perhaps Chinese coal fired power plants.  Of course, the Chinese government would toss them in jail for the rest of their lives. 
GARP tending toward value

Cardboard

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I bought some WCP recently which is something I thought I would never do due to relatively high valuation not long ago.

However, now at $65,000 CAD per flowing, amongst highest netbacks in Canada, a corporate decline rate of only 18% and with arguably the best management team with Mr. Fagerheim owning something like $25 million worth of stock, it became too good to pass up. They were buying back stock also but, now for some reason seem to have stopped.

And you are right Uccmal, TransMountain does little to WCP. They have only a little bit of production tracking WCS and this news may affect slightly the future curve of Canadian light oil in general. However, it is good to remember that WTI is at $70 U.S. right now and their hedge book is getting better by the day.

I tried to buy more this morning at a low bid but, failed by two pennies...

However, I bought some IPO which is extremely cheap and they have imminent news coming up on their first East Duvernay well. Their land at Duvernay is worth something like $40 million while it produces nothing at the moment. That is quite a hidden asset for an EV of $165 million.

I am also wondering if the Federal doesn't have any tool to bypass this decision. This is nuts! How much consultation is needed really?

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bizaro86

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How much consultation is needed really?


Q: How much consultation do we need?

A: Keep consulting until you agree with our position.