Oil Prices

[HitandRun]

Can US shale producers withstand a price war with OPEC?
The most important fact is the cost of Saudi production is between $10 and $15 a barrel.
Many usa shale fracking operations have costs approaching $60 to 70 / barrel funded with borrowed money.

Let this half-assed analyst attempt to answer your questions.

1. Clearly all commercial players are cutting capex. I have not seen an industry player (both conventional or non conventional) who is claiming that it wants to maintain/increase capex.

2. In a typical shake-out, the smaller E&P players will shut down first. If the down turn lasts long enough, the bigger ones will be affected too. So the question is how long will the down turn last?

3. So far the sizeable shale oil players to have announce results is Hess Corporation and Conocophillips. Other players like Continental, Whiting, EOG, SM Energy, EOG, Oasis, Marathon etc have yet to announce their results.

Hess barely broke even at $75 oil. Conocophillips is shedding red ink for lower 48 (USA excluding Alaska) @ $77. If I am a lender, I will only dare to lend only if crude oil is selling comfortably above $80, probably mid to high 80s.

4. Saudi spends billions to build the Qurayyah Sea Water Plant whereby up to 14 million barrels of sea water is injected into their oil fields everyday. After the oil is produced, the water has to be separated out through the Gas Oil Separation Plants (GOSPs). The cost of performing this huge operation cannot be cheap although I have no idea how much it actually costs. I suspect that the $10 to $15 often quoted refers to just cash costs.

[yewkim]

We may see oil cross 55$ tonight, hope so.

[specuvestor]

The looming threat to American oil output

Tom DiChristopher
Thursday, 12 Feb 2015

http://www.cnbc.com/id/102419892

Boon san

Thanks for the link. However, I cannot understand what this analyst, Michael Cohen from Barclays is saying.... He said that rig count fell by 600 in 2008/2009 period in Texas but oil production only fell by 50,000.

I cannot believe how slip shod his analysis is!

Baker Hughes Rig Count

If one bothers to look closely at the data, the overall rig count dropped something like 1155 rigs from peak to trough in 2008/2009. BUT, most of the drop in rig count is due to gas rigs! If one looks only at oil rigs, the total drop in 2008/2009 period is a mere 263 rigs for the whole country, i.e. USA!

I wonder whether he understands anything about rig count in the first place.....

P.S. I'm not even a professional analyst. The only analysis I do is for my own portfolio...

Based on the link, the highest number of oil rig count during 08-09 was 429 in oct 2008, down mere 263 for the whole country of USA. Do you consider that as significant?

That said, the oil rig count rise from 09 is primarily from shale and this drop past 6 months will curb US production significantly. I continue to believe US oil production will peak/plateau/inflexion sometime next month or so. ie i think EIA estimate might be too optimistic for rising US production this year. Let's see.

PS EIA forecast is oil production will peak in 2Q15 at 9.41m until 2Q16, which I think is optimistic after cutting 1Q15 from 9.35m to 9.26m. I don't know about 2016.

[Life is a game]

The drop in oil prices will decrease the outflow of us dollars into the global economy and make us dollar scarce. Will QE4 come...

[Behappyalways]

Get Ready for $10 Oil
http://www.bloombergview.com/articles/20...mand-falls

[HitandRun]

Based on the link, the highest number of oil rig count during 08-09 was 429 in oct 2008, down mere 263 for the whole country of USA. Do you consider that as significant?

Due to "advances" in multi well pad drilling and multi stage fracking, I reckon that each land rig now should have a greater amount of "attributable" oil production as compared to 2008.

[Boon]

Why Oil Prices Must Go Up

By Nick Cunningham
Posted on Tue, 17 February 2015

http://oilprice.com/Energy/Oil-Prices/Wh...Go-Up.html

[BlueKelah]

Why Oil Prices Must Go Up

By Nick Cunningham
Posted on Tue, 17 February 2015

http://oilprice.com/Energy/Oil-Prices/Wh...Go-Up.html

Oil price must go up coz it has come down.

Would be more interesting if someone had opinion oil price will be trading sideways like sgx has done.

-- via Xperia Z1 with tapatalk

[yewkim]

Counting barrels and rigs shut down is not so accurate as to the law of demand and supply market perceive a few months down the road.

I see 65$/70$. , then we will see a low again of 35$/40$, either late quarter 4 or 2016. If 35$ break easily then we see 25$/20$. This is purely my personnal analysis, no sure thing.

I guess ( guess only) Ezion will be 1.8/2.0 if oil is 65$/70$. vested at 117.

yewkim wishes all Chinese a Happy and Prosperous Lunar New Year from Medan , Indonesia.

May you all be well and happy always. Thanks you for all the valuable analysis in this forum as to allow me to profit from them.

[Bluechipfan]

Oil price dropped? As far as I know, I didn't see much drop in pump price. 98 octane petrol back to $2/- territory already. The lowest it went down to after the so called oil price collapse was $1.8x something and I only managed to fill up my petrol tank ONCE with that price! Outrageous! I pump on average of once in 12 days! Now the pump price is back up to $2/- something and there is no indication that it will go down any time soon.

Since the price for most oil counters have come down, I think I am going to identify one oil counter and load it up. So far have shortlisted GSS and RH Petrolgas. Maybe I should also look at related counters such as Nam Cheong, Marco Polo and Faldcon.