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(07-10-2015, 08:52 AM)HitandRun Wrote: [ -> ]

(06-10-2015, 10:36 PM)GFG Wrote: [ -> ]whoa. These are big accusations.

I went to check, here's for just 1 of the companies, chesapeake:
http://www.chk.com/media/news/press-rele...s+8+5+2015+

On that same site there're several other presentations for previous quarters as well.
On the contrary from what you said, for (A), they give ONLY average productivity numbers for each site, as well as a total average. There are no numbers for any 1 or 2 "top" wells. As far as i am aware of, nobody states gas or oil produced PER WELL. It's always an average, which makes sense. I am sure for these well followed large O&G producers, which have to give a public conference call every quarter for their results (the conference call can be listened via podcast by anyone via their websites, and is a 2 way call, that is, analysts can ask questions and expect answers), the management will be called out if they start talking about only a few wells, which is unheard of.
For (B), I am not sure if they understate or how they'd "fudge" the projected capex to keep running the well. I wont be able to tell just by looking at the financials. 
Please do tell if you know any examples or evidence of how this is done

I just checked my North American E&Ps and I have almost 40 companies there. I listen to almost 70% of their earnings webcast.

If you are keen to debate, I suggest that you look at companies like PXD, WLL, CLR, SM, QEP, EOG, HESS, COP etc.

As for my second comment on maintenance capex, if you are able to answer this question: "How much is the capex required to keep year on year production steady?", it will go a long way to understand their presentations and why I think claims that they can make money on $50 or lower oil price is just hogwash (among many other things)

No, I am not keen to debate at all. I am keen to make good investments and for that I need information that is not easily available or understood.
I took up your suggestion to look at just the 1st company in this list that you wrote: PXD.
Just simply going to the website, finding the latest released financial statement which is the 2Q released on the 4th august 2015:

Second quarter and other recent highlights included:

• producing 197 thousand barrels oil equivalent per day (MBOEPD) in the second quarter, of which 51% was oil; second quarter production reflected strong Spraberry/Wolfcamp production growth driven by Pioneer’s successful horizontal drilling program partially offset by lower-than-expected production in the Eagle Ford Shale and the West Panhandle field;
  
• maintaining a production growth forecast for 2015 of 10%+, reflecting an increase in forecasted Spraberry/Wolfcamp production growth from 20%+ to 22% to 24% offset by a reduction in the full-year growth rate for the Eagle Ford Shale;
  
• placing 28 horizontal wells on production during the second quarter in the northern Spraberry/Wolfcamp; early production results from 16 wells in the Wolfcamp B interval are on average tracking estimated ultimate recoveries (EURs) of more than 1 million barrels oil equivalent (MMBOE), with average 24-hour peak production rates of approximately 1,900 barrels oil equivalent per day (BOEPD) and 79% oil content; early production results from five wells placed on production (POP) in the Lower Spraberry Shale interval are on average tracking EURs of 1 MMBOE, with average 24-hour peak production rates of approximately 1,100 BOEPD and 81% oil content; seven of the horizontal wells (six Wolfcamp B interval and one Lower Spraberry Shale interval) benefited from completion optimization testing;
  
• delivering an average EUR of 1 MMBOE from all Wolfcamp B and Wolfcamp A interval wells drilled in the northern Spraberry/Wolfcamp since 2013;
  
• exporting 20 thousand barrels oil per day (MBOPD) gross (7 MBOPD net) of Eagle Ford Shale processed condensate in the second quarter under term contracts that significantly improved pricing compared to domestic condensate sales; also exported 6 MBOPD gross on a spot basis in June; and
  
  

This is just cut and paste wholesale from the results, not in its entirety because its so long.
As I read, there are again no production figures PER WELL. It is all about averages per shale site etc.

"As for my second comment on maintenance capex, if you are able to answer this question: "How much is the capex required to keep year on year production steady?", it will go a long way to understand their presentations and why I think claims that they can make money on $50 or lower oil price is just hogwash (among many other things)"

My answer is simply that I accept what is the projected maintenance capex figures given. It sounds like you think the companies are giving false/inaccurate capex figures, in which case the next obvious qn is how you'd derive your projected figures and how you'd know that theirs is wrong.

The view from an insider on offshore rig market. The day rate gives the current market player position, pessimistic in short-term, but optimistic in a longer term...  

Offshore rig driller Seadrill hopes to see market turn in 2017
09 Oct 2015 07:06
[OSLO] Offshore rig driller Seadrill is facing another two years in the doldrums but hopes the international rig market could turn around in 2017.

Rig rates have more than halved since the peak two to three years ago and in several cases are now below breakeven costs. "2015 is gone, 2016 is ugly but what we see is that some oil companies are asking for extensions in 2017," Chief Executive Per Wullf told the DNB investor conference in Oslo on Thursday. "The oil price is decisive," Wullf said.

But for the time being, the market remains depressed and Wullf said he was willing accept contracts at sharply lower rates than previously to secure them. "It's a fight for every contract", Wullf said.

He said he could accept day rates down to US$160,000-$180,000 on shorter contracts for drillships in the deepwater market which peaked around US$600,000-$700,000 two to three years ago.

On longer contracts he said he could not accept a rate below US$350,000-$400,000 per day.

Seadrill has a backlog of orders of around US$14 billion and cash of US$1.2 billion and expects to build up its cashpile to US$1.6 billion next year.

In addition, the company has US$2 billion of debt maturing in 2017.

REUTERS

Source: Business Times Breaking News

Ok, let's have a look at CHK.

Production for past 1H2015 are close to 700 (mboepd - thousand barrels of oil equivalent per day) with management forecasting an annual average of 660. This would imply a production decline to around 600 per year end. Let's be generous and assume that CHK can maintain a flat production rate at current capex spending of 2.5B per half year or 5.0B per year.

The 1H15 results shows a net loss of 10.5 B after impairment of approx 10.0B. Does that mean that without any impairments, CHK is operating at almost breakeven level and if prices just firm that little bit, it would well be on it's way to profitability? Let's examine the cash flow statement. Even operating at a flat production (very generous assumption), CHK had to spend 2.8B (2.5B capex and 0.3B financing) vs 0.8B that it obtained from operations. In other words, in order to achieve cashflow breakeven, the price per boe that it has to achieve is something like 15 bucks higher. Another way of looking at things is that at current crude/gas prices, CHK needs an additional 4.0B on a full year basis just to breakeven on its cashflow and maintaining a steady production output =>That's the maintenance capex that I am referring to. And we have not even taken into consideration that its hedges at significantly higher prices are coming off.

Does CHK management realise this? Of course, that's why the recent layoff of 20% of CHK's staff does not come at a surprise to me.

Opec's view on the oil price recovery. Well, I will not put too much weight on it, since it is an interested party view...

Opec chief confident of a balanced oil market in 2016
12 Oct 2015 06:25
[KUWAIT CITY] Opec is confident thaOpec chief confident of a balanced oil market in 2016
12 Oct 2015 06:25
[KUWAIT CITY] Opec is confident that the oil market will be "more balanced" next year as non-Opec production has contracted and global demand is increasing, the cartel's secretary general Abdullah el-Badri said Sunday.

"Opec is confident that it will see a more balanced market in 2016," Mr Badri told an oil and gas conference in Kuwait City.t the oil market will be "more balanced" next year as non-Opec production has contracted and global demand is increasing, the cartel's secretary general Abdullah el-Badri said Sunday.

"Opec is confident that it will see a more balanced market in 2016," Mr Badri told an oil and gas conference in Kuwait City.
...
AFP

Source: Business Times Breaking News

I am focusing on the "jam", rather than global shipping rates. China import, has no doubt supported the current oil price...

China's supertanker traffic jam propels global shipping rates

LONDON (Oct 12): Supertankers hauling crude to China are contending with increased waiting times to unload as some on- land storage depots reach capacity amid an oil-buying binge by the world's most populous nation.

At least 19 two-million-barrel-capacity ships - known as VLCCs - were stationed off China's coast for two weeks or more, according to vessel-tracking data compiled by Bloomberg on Oct 9. In normal market conditions, most would normally arrive at a port and depart within a day, according to George Los, a New York-based analyst at shipbroker Charles R. Weber Co. As delays have increased, benchmark daily earnings for the tankers jumped above US$100,000 this month for the first time since the global recession.

This tanker traffic jam shows just how much crude the world's second biggest importer is buying at a time when economic growth is forecast to slow to the lowest level in 25 years. China's purchases have jumped almost 10% this year from 2014, and could help keep prices from crashing to levels envisioned by banks such as Goldman Sachs Group Inc., which has said US$20 a barrel oil is possible.
...
http://www.theedgemarkets.com/sg/article...ping-rates

Price slump puts squeeze on oil exporters

• IAN TALLEY
  
• THE WALL STREET JOURNAL
  
• OCTOBER 13, 2015 12:00AM
  

[Image: 599396-4dd5ed36-70a7-11e5-9eda-7a08ca7db548.jpg]
Commodity downturn Source: TheAustralian

[b]The plunge in commodity prices is thumping oil exporters around the globe. The scale of the beating rests largely on whether governments heeded the lessons from previous boom-bust cycles.[/b]
Norway and Saudi Arabia built up sizeable rainy-day funds and managed their windfalls from high prices conservatively. Now they’ve got considerable buffers against a downturn.
Nigeria and Venezuela splurged and made few economic overhauls as prices surged, and they’re now suffering as growth skids.
The commodity bust is weighing heavily on resource-rich countries that represent 20 per cent of the world’s economic output. The oil price decline is supporting some of the largest consumers, such as the US and Europe, that are key to keeping the global economy out of recession. But it is providing less of an overall global boost than thought, while forcing more vulnerable economies to scramble in an uncertain environment.
“The oil price drop came as a surprise,” said Angolan Finance Minister Armando Manuel. “It captured my country in a state in which we were not sufficiently diversified.”
The commodity collapse and its effect on emerging economies drew wide attention in Lima, where the world’s finance ministers and central bankers gathered for the International Monetary Fund’s annual meeting, which ended on Sunday, against a backdrop of dimming global growth.
The problem isn’t isolated to oil, fuelling a much broader slump in major emerging markets from Brazil to South Africa. Metal prices are in a long-term funk, hitting exporters of iron ore, copper and other industrial commodities.
Oil exporters are showing what may be in store for other major commodity exporters. Nigeria, which got nearly 65 per cent of its government revenue from crude exports before the price plunge, has seen its projected 2015 growth slashed to less than 4 per cent from more than 6 per cent a year ago, according to the IMF. Kazakhstan’s growth rate has tumbled to 1.5 per cent this year from 6 per cent before the petroleum collapse. In Venezuela, where the state gets half its revenue from oil sales, the economy is shrivelling by 10 per cent.
The oil price shock isn’t expected to dissipate quickly, casting a shadow for those countries reliant on oil income. Demand has eased, particularly with a slowdown in China, the world’s second-largest economy and a voracious energy consumer.
Despite a small rebound last week, many traders expect oil prices to remain under pressure due to a global supply glut. “We’re not at the bottom now,” said Ed Morse, global head of commodities research at Citibank.
The struggling countries had plenty of warning ahead of time. The idea of a “resource curse” has haunted commodity exporters for decades.
Many nations started building rainy-day funds, “but they were looted by successive governments”, said Nancy Birdsall, president of the Centre for Global Development, a think-tank.
Even though resource-rich countries have cut spending, the IMF estimates the average budget deficit in those nations has ballooned by almost 7 per cent of gross domestic product, a financing hole they aren’t likely to climb out of quickly. For some countries in the Middle East and North Africa, the revenue loss can be worth a quarter of the country’s GDP, the IMF says.
The state oil companies that fill national coffers guzzled up cheap debt to fund expensive production projects. The US Federal Reserve’s plan to raise interest rates is ramping up borrowing costs just as growth prospects dim. That is making taxpayers liable for the debt of state oil companies such as Petroleos de Venezuela, whose obligations are more than 20 per cent of the country’s GDP, or Petroleos Mexicanos, whose debt is nearly 15 per cent of GDP.
To make matters worse, investors are pulling out of those countries. The Institute of International Finance, an industry group, estimates investors will pull half a trillion dollars from emerging market economies this year, marking the first exodus of capital from developing countries in nearly three decades. That accelerates the rise in borrowing costs, exacerbating their problems. And since many of the countries are now in much deeper financial holes, they’ll have to borrow at costly levels to cover their expenses.
“Financial conditions tend to worsen significantly precisely at times when commodity exporters need financing,” said Vítor Gaspar, head of the IMF’s fiscal affairs department.
Some countries are now making tough decisions. Angola, which drew 90 per cent of government revenue from oil sales, has slashed the oil price it assumed for its budget from $US98 a barrel last year to $US40 this year. It has cut government spending by as much as 50 per cent.
A year ago, the government spent $US550m a month subsidising fuel for its population. It has cut that cost down to $US140m. In the state capital Luanda, the government is delaying some planned infrastructure investment, Mr Manuel said.
“The crisis is for us an opportunity to move towards a more efficient public expenditure,” he added.

Part of the market supply-demand re-balancing exercises...

More than US$200 billion worth of oil and natural gas assets for sale

TOKYO (Oct 14):  More than US$200 billion ($278.6 billion) worth of oil and natural gas assets are for sale globally as companies come under renewed financial pressure from the prolonged commodity price rout, according to IHS Inc.

There are about 400 buying opportunities as of September, IHS Chief Upstream Strategist Bob Fryklund said in an interview. Deals will accelerate later this year and into 2016 as companies sell assets to meet debt requirements, he said. West Texas Intermediate crude has averaged about US$51 a barrel this year, more than 40 per cent below the five-year mean.

Low prices have slashed profits and as of the second quarter about one-sixth of North American major independent crude and gas producers faced debt payments that are more than 20 per cent of their revenue. Companies have announced US$181.1 billion of oil and gas acquisitions this year, the most in more than a decade, compared with $167.1 billion the same period in 2014.
...
http://www.theedgemarkets.com/sg/article...ssets-sale

I reckon there is a time-lag on the reduction of supply, upon lower oil price...

Norway turns on production tap as crude collapse erodes revenue
15 Oct 2015 06:50
[OSLO] Norwegian oil companies are turning on the spigots to counter plunging crude prices.

That may be a welcome news for the government of western Europe's biggest oil producer, which next year is planning to dip into its massive wealth fund for the first time to cover budget shortfalls and stimulate the slowing economy.

Production is running ahead of forecasts from the Norwegian Petroleum Directorate, beating August and September estimates by 13 per cent and 12 per cent, respectively. The NPD, which had predicted oil output would fall this year, now says it will likely instead rise for a second year, following more than a decade of decline. That's adding production into an oversupplied market where Opec and Russia are also increasing output.?? "To arrest that decline is really a remarkable thing," said Malcolm Dickson, an analyst at??Edinburgh-based consultant Wood Mackenzie Ltd.
...
BLOOMBERG

Source: Business Times Breaking News

Fund manager takes plunge into oil sector

• THE AUSTRALIAN
  
• OCTOBER 19, 2015 12:00AM
  

Barry FitzGerald
[Image: barry_fitzgerald.png]
Resources Editor
Melbourne

[b]Contrarian fund manager Allan Gray made a killing by wading into gold stocks when they were down and out 18 months ago. Now the $3.4 billion fund suspects that beaten-up oil stocks could offer the same upside potential.[/b]
Allan Gray took up big positions in gold stocks Newcrest (it still holds 5.7 per cent of the register) and Evolution before the industry’s fortunes improved dramatically in response to a combination of costs-out and the fall in the US exchange rate, with the stocks doubling and trebling respectively.
While oil stocks are also picking up the benefit of the lower dollar, they are still coming to grips with the need to cut costs and rein in capital expenditure in response to the collapse in oil prices from $US95 a barrel last year to $US47.
And because global oil consumption is not as dependent on China as the rest of the minerals complex, Allan Gray managing director and chief investment officer Simon Mawhinney believes dipping into oil stocks could be rewarding.
“A lot things out there resemble where gold was 18 months ago, where you have large parts of the cost curve generating losses,’’ Mr Mawhinney told The Australian.
“It is generally those industries that present real investment opportunities if investors are happy to look five or so years forward, and if they are not obsessed with trying to pick the bottom.
“They are really the ones that pay off in spades. Many of them are difficult to play, and some of them have structural challenges, like coal. The most obvious candidate I think is energy.
“We are at a point of reasonably extreme pain with energy prices where something has to give.
“But it is certainly one area where you can find producers with high-quality assets low on the cost curve. They will become great investments provided they can be acquired at reasonable prices today,’’ he added.
Mr Mawhinney said it was the area on which Allan Gray was focusing on the most.
Woodside has an 8 per cent weighting in the fund, and a position is being built in Origin to the point where it represents 6 per cent of the funds invested. Origin recently announced a $2.5bn rights issue.
“We find companies that recapitalise and then significantly curtail their capex spend, and focus on cash generation, make for a very good time to be investing, providing they have quality assets,’’ Mr Mawhinney said.
He added that Origin’s utility business should help it navigate the storm. “Other oil and gas companies don’t have that. It makes Origin a safer bet.’’
Allan Gray has also been buyer of engineering group WorleyParsons.

Saudi Crude Stockpiles at Record High Amid Quest to Keep Share
http://www.bloomberg.com/news/articles/2...ports-fell