Post: #26

(12-05-2015 08:51 PM)redbeard Wrote:  

(12-05-2015 08:32 PM)Lateapex Wrote:  Drilling is about to pick up a good bit from a couple reliable sources I spoke to here in Texas.

Why?

What has changed?

What part of Texas?

Doubt much has changed. I can find out however.

Post: #27

(12-05-2015 08:32 PM)Lateapex Wrote:  Drilling is about to pick up a good bit from a couple reliable sources I spoke to here in Texas.

No it's not. I have a customer that is lead head of training for oil rigs for H&P and their shutting down there site. They already got a lot of rigs but with prices so low they only have a quarter of them running and there no jobs to train anyone. They even dropped their weekly order for food at my business . Their relocating everyone out of Texas basically. who knows when they'll be back.

Post: #28

Looks like oil stocks were hammered pretty bad today. Start of bankruptcies for the highly leveraged frackers?

Post: #29

Anyone looking at potential oil shares to watch out for that can survive the depressed oil market and come back swinging when prices rise ?

Post: #30

Think actual wells.

Ignore stocks - even the basket ETFs may "close down" due to lack of interest. A physical well gives you the option to produce, set aside resources, and wait out the bust.

Post: #31

(12-08-2015 05:54 PM)SunW Wrote:  Think actual wells.

Ignore stocks - even the basket ETFs may "close down" due to lack of interest. A physical well gives you the option to produce, set aside resources, and wait out the bust.

Gotta be careful with wells though. Depending what type of situation you get into, it could be a huge black hole for capital.

If you want to play the upside of oil recovery, I would suggest looking into buying royalties or overrides. You get a gross percent off the top and the crude buyer/marketer sends you the check for your royalty. You don't count on the operator to cut you your check.

When a land owner leases mineral rights (i.e. oil) they get an override along with some cash. These overrides/roylaties vary by % depending on where they are in the country depending on the oil play. Later, these royalties sometimes get sold off for whatever reasons.

When looking at these, you need to do a few things.
1) Understand where the oil is being drawn from, what zone. Some zones fall off quite quickly in terms of production and others are just nice and steady
2) Need to know how it has performed historically over time
3) If you can find the well info, you can go to the state websites and pull up data by that well
4) An old timer told me one time he never pays more than 24 times the monthly check, he wants to recover his investment in 2 years or less.

Be careful, there are a lot of fuckers in the oil business.

Post: #32

Some thoughts on the price of oil from an investment level viewpoint: http://theconservativeincomeinvestor.com...nd-yields/

If you have a decent amount of time, some money laying around and are OK with some volatility, this could potentially be one of the best times to invest in the energy sector. Shell (RDS.B) is currently yielding 8.1% at its price today which is just mind-blowing to me, especially with the way that dividend income is tax advantaged just like long term capital gains. All of the other supermajors are at low prices too.

Post: #33

Agreed with booshala. Buy the majors if you need stock exposure. Think Exxon, Chevron etc.

Post: #34

(12-08-2015 05:58 PM)samsamsam Wrote:  

(12-08-2015 05:54 PM)SunW Wrote:  Think actual wells.

Ignore stocks - even the basket ETFs may "close down" due to lack of interest. A physical well gives you the option to produce, set aside resources, and wait out the bust.

Gotta be careful with wells though. Depending what type of situation you get into, it could be a huge black hole for capital.

If you want to play the upside of oil recovery, I would suggest looking into buying royalties or overrides. You get a gross percent off the top and the crude buyer/marketer sends you the check for your royalty. You don't count on the operator to cut you your check.

When a land owner leases mineral rights (i.e. oil) they get an override along with some cash. These overrides/roylaties vary by % depending on where they are in the country depending on the oil play. Later, these royalties sometimes get sold off for whatever reasons.

When looking at these, you need to do a few things.
1) Understand where the oil is being drawn from, what zone. Some zones fall off quite quickly in terms of production and others are just nice and steady
2) Need to know how it has performed historically over time
3) If you can find the well info, you can go to the state websites and pull up data by that well
4) An old timer told me one time he never pays more than 24 times the monthly check, he wants to recover his investment in 2 years or less.

Be careful, there are a lot of fuckers in the oil business.

This is a disaster waiting to happen.

Stick it in USO or oil stock if you aren't in the oil industry.

Post: #35

Oil took a huge dive this week, down to $35/barrel.

This is going to be a big year for refinery shutdowns and refits in North America if it stays low by the first quarter of 2016.

Something has to give sooner or later, oil isn't profitable for anyone at this price.

Post: #36

(12-09-2015 05:47 PM)jake1720 Wrote:  This is a disaster waiting to happen.

Stick it in USO or oil stock if you aren't in the oil industry.

No, it's not. It's called barrier to entry and it means doing something that most people won't do that's a more profitable play. People who are wise saw what happened over the weekend in Paris and that will have significant consequences for many energy companies. That's why I found people who claim energy bottomed at $42 a barrel laughably stupid - with what happened in Paris, we may see an even deeper bottom, in addition to severe restrictions to how oil companies can be profitable.

Do you idiots know what happened to coal thanks to Obama? He has absolutely crushed the industry. Obama and Hillary want to do the same to oil. Some of you may be catching falling daggers that could go even lower and be like coal.

Buying physical means you have the physical means to either do nothing while the socialists own the political landscape (Obama and Hillary), or sell like crazy when the fascists win again (not sure which Republican will run in 2020). Hillary will win for president next year; I promise all of you that. She has already made it clear that ExxonMobil and other companies are her enemy. Like Obama with coal, she doesn't care how many of you become unemployed. But a person who owns oil and does nothing with it can't be targeted; the government doesn't know how much oil I have stored - it's not on their balance sheets.

Post: #37

(12-13-2015 10:49 AM)SunW Wrote:  

(12-09-2015 05:47 PM)jake1720 Wrote:  This is a disaster waiting to happen.

Stick it in USO or oil stock if you aren't in the oil industry.

Do you idiots know what happened to coal thanks to Obama? He has absolutely crushed the industry. Obama and Hillary want to do the same to oil. Some of you may be catching falling daggers that could go even lower and be like coal.

No, it's not. It's called barrier to entry and it means doing something that most people won't do that's a more profitable play. People who are wise saw what happened over the weekend in Paris and that will have significant consequences for many energy companies. That's why I found people who claim energy bottomed at $42 a barrel laughably stupid - with what happened in Paris, we may see an even deeper bottom, in addition to severe restrictions to how oil companies can be profitable.

Buying physical means you have the physical means to either do nothing while the socialists own the political landscape (Obama and Hillary), or sell like crazy when the fascists win again (not sure which Republican will run in 2020). Hillary will win for president next year; I promise all of you that. She has already made it clear that ExxonMobil and other companies are her enemy. Like Obama with coal, she doesn't care how many of you become unemployed. But a person who owns oil and does nothing with it can't be targeted; the government doesn't know how much oil I have stored - it's not on their balance sheets.

I know. Petroleum engineer speaking here. You'd be surprised the shit the fuckers in the oil industry are willing to pull.

Sure, if you have someone you trust to buy through. But from what I've seen (my old boss for example would make up decline curves to get more investment money). And other shit fuckers that are willing to make up data to sell you an "oil investment".

Sure, if you are smart look into it. But for the average person who isn't too bright. I would stay away from getting too deep into the oil game.

My point is not to not buy, just that you're getting into dangerous territory of getting scammed when you start to buy physical assets. Next thing you know you're on the bill for halliburton to plug a well for 25k because the well is not actually profitable.

I'm assuming you are referring to produced oil sticking in a tank, I was referring to buying physical well royalties or producing wells.

Post: #38

jake1720 thanks; I understand where you're coming from on that point. I've seen the same in the financial industry: advisors telling their clients to buy certain funds while taking out short positions against them. I despise people like that, but I also know that every industry comes with fraud. There is a difference between fraud and urgency if you know how to catch it. Most people may not know this, but the reason to avoid this isn't because of fraud - that's just as ubiquitous in the financial industry - but avoid it because a person can't sense an urgent seller from a fraudulent seller.

I hope I'm wrong, but I fully expect Hillary to win and to make it very difficult on oil for at least four years, if she's a one term president. If you own oil, you will not want to sell; you'll want an idle a well and oil in storage and wait it out. Oil will have its day again. My proof of this is that Saudi Arabia is in financial trouble right now (too much debt) and is producing tons of oil to pay its bills, but it's running lower on oil. Most people don't realize how much debt SA has acquired over the last few years, but it explains why they can't afford to cut back on oil production. When it runs out - and it will - there's going to be a massive bear trap waiting for oil bears.

Quote:I'm assuming you are referring to produced oil sticking in a tank, I was referring to buying physical well royalties or producing wells.

I'm doing both, though on the latter has a few options including owning land where oil can be produced when I find an owner who's facing a liquidity squeeze.

Post: #39

(12-13-2015 02:25 PM)SunW Wrote:  jake1720 thanks; I understand where you're coming from on that point. I've seen the same in the financial industry: advisors telling their clients to buy certain funds while taking out short positions against them. I despise people like that, but I also know that every industry comes with fraud. There is a difference between fraud and urgency if you know how to catch it. Most people may not know this, but the reason to avoid this isn't because of fraud - that's just as ubiquitous in the financial industry - but avoid it because a person can't sense an urgent seller from a fraudulent seller.

I hope I'm wrong, but I fully expect Hillary to win and to make it very difficult on oil for at least four years, if she's a one term president. If you own oil, you will not want to sell; you'll want an idle a well and oil in storage and wait it out. Oil will have its day again. My proof of this is that Saudi Arabia is in financial trouble right now (too much debt) and is producing tons of oil to pay its bills, but it's running lower on oil. Most people don't realize how much debt SA has acquired over the last few years, but it explains why they can't afford to cut back on oil production. When it runs out - and it will - there's going to be a massive bear trap waiting for oil bears.

Quote:I'm assuming you are referring to produced oil sticking in a tank, I was referring to buying physical well royalties or producing wells.

I'm doing both, though on the latter has a few options including owning land where oil can be produced when I find an owner who's facing a liquidity squeeze.

Can't disagree with any of that.

Post: #40

Im long oil and PBR coal.

Its been a nasty wait for me.

I also long industrial distributors whose prices are in the shitter lately. MRO will not fall off precipitiously unlike jack-up GOM rigs.

Post: #41

What makes you guys think that oil will recover in the next couple years?



This is the price of Crude oil adjusted to inflation. As technology progresses, the price to extract oil should get cheaper (please correct me if I'm on the wrong here).

It looks like the price was usually between 20 and 40 USD for most of the history. It went up in 1970, and the 2000s.

And currently, all I see is bullish signs: Iran will get in. Libya, Iraq and Syria are not producing, so if you add these guys (if their countries stabilises), price will even go lower.

Add to that what could happen in renewable energies: electric cars, solar power, etc...

Post: #42

The above post is what happens when people forget that up until 1971, the US Dollar was backed by gold at $35 an ounce. That's why oil looked more stable. The same is true for many commodities; a currency that can't be printed, doesn't have as much debt in the system as we see, and thus doesn't have massive booms and busts.

The entire boom and bust cycle could be called a debt-boom and debt-bust cycle, because almost all of it is driven by too much debt on both ends.

Post: #43

thisisright, some good points. I think those will be tailwinds to oil price appreciation in the near term (5-10 years). The biggest driver of the current low oil price seems to be a lack of demand, not advances in productivity. Economic growth is predicated on energy. It costs energy to run factories, produce goods, keep storefronts lit and ship merchandise around the globe. Perhaps the low oil prices signal that China is facing a lack of demand from North America and Europe, and leaving much of their factories idle.

While productivity in oil production has increased, the cost of extraction is also increasing. It's very likely that most of the readily accessible oil has been extracted, creating demand for more expensive oil extraction methods (tar sands, offshore rigs, fracking, now talks of arctic expansion). These extraction methods are more complex and expensive, and the fact that they're being explored signals that the low hanging fruit has already been plucked. They're only economically viable when oil is at a higher price point. I think we're already there, and the current low prices are a temporary lull created by low interest rates and weak demand.

There will still be some obstacles to the stabilization of the countries you mentioned as well. Saudi Arabia has a difficult time financing their massive welfare state without oil profits, and will seek to make sure other oil producers remain unstable to keep their capacity offline.

I think electric cars are overhyped. Batteries don't have near the energy density of hydrocarbons, and the power transfer rate of the pump vs. a charger is much different. Besides, you are just shifting your energy source from oil to natural gas/coal. In a bind though, they might gain in popularity. If battery or capacitor technology becomes significantly cheaper, it could work, though I have my doubts.

The problem with solar power is it doesn't serve base load capacity. Solar power would peak in output during the day, drop in output during cloud cover, and be offline at night when electrical demand is highest. Nuclear power would work though, and I expect it to gain in popularity as petroleum becomes more expensive.

Post: #44

Here's an interactive map of planned oil fields in Norway showing cost per barrel relative to the current oil price, many are quite deep in the red at this point. Only a couple of fields are barely in the green with the current price of $36 per barrel. The big investments in the massive Johan Sverdrup field is what will keep our economy afloat, it has a fairly low cost level at $37 per barrel.

http://e24.no/spesial/2014/feltutbygginger/

I worked in offshore seismic surveys myself, one of the industries that takes the hardest hit - it's a bloodbath now. But some companies were already scaling down operations while the price was still high, and bankruptcies are starting to happen. As long as the capacity will be sufficiently reduced, this will also be one of the industries that will bounce back first and strongest when the companies want to explore again.

Our hugely oil dependant economy is going into a recession, yet in the communal election this fall all the talk was about "the green shift" as they call it, and how much we welcome the hordes of muslim immigrants. Go figure.

Post: #45

This is the gayest nerd shit ever. I thought perhaps I was looking at some dorks talking about the latest stats for a motherboard for an Intel processor.

I work in the offshore oil industry and I can tell you all this:

It sucks right now.

You're welcome.

Post: #46

(12-21-2015 11:08 PM)BrewDog Wrote:  This is the gayest nerd shit ever. I thought perhaps I was looking at some dorks talking about the latest stats for a motherboard for an Intel processor.

I work in the offshore oil industry and I can tell you all this:

It sucks right now.

You're welcome.

I for one, enjoy talking about motherboards.

Is this beta?

Post: #47

(12-21-2015 11:08 PM)BrewDog Wrote:  This is the gayest nerd shit ever. I thought perhaps I was looking at some dorks talking about the latest stats for a motherboard for an Intel processor.

I work in the offshore oil industry and I can tell you all this:

It sucks right now.

You're welcome.

Tell that to your nerd overlords in Houston.

Post: #48

update from op?
how much has been accurate?