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Thread: Oil prices

  1. #1651

    Default Re: Oil prices

    The definition of spare capacity in OPEC is storage. US domestic does not have storage or ability to get stored oil to the global market. Even the SPR can't deliver because of a lack of export facility.

    US domestic relies on drilling or completing DUCs to increase production.

    And again, they cant control production as the Texas Railroad Commission last did in the 1960's and Texas was the world's swing producer.

    Right now, the Saudis are using storage to meet this crisis. OPEC has rules for each producer as to how much oil they must keep in storage.

    There is nothing like that in US domestic. US produces oil until price falls low enough to stack rigs. Trying to get all these companies to cut production would be like herding cats. I read Harold Hamm trying to preach financial discipline last week.

    i think Cramer is a TV talking personality.

  2. #1652

    Default Re: Oil prices

    BTW, even if domestic producers could work out an agreement to cut production in order to support a price level, it would be collusion and we have anti trust laws to protect against that.

    Its impossible for US to be global swing producer as Cramer said we were.

  3. #1653

    Default Re: Oil prices

    You've pretty much proven my point. The US production is dependent on how much can get produced at any particular price. Until recently, If it can be drilled, transported and consumed at a profit, US producers will do it. Now, the US has export facilities with new capacity coming online. Daily oil exports could nearly triple from 2017 to over 3 million barrels per day according to the American Petroleum Institute.

    CNBC reports CITIGROUP says US capacity - specifically making note of Permian basin and Gulf of Mexico export facilities coming online could boost exports to 5 million bpd late next year. Corpus Christi TX will become a major hub for both oil and gas.

    Reuters reported after the Saudi attack that if they had to greatly reduce or stop production at that facility, only the US, Iran and Venezuela have significant excess production capacity. Of course the US won't let eother of those countries export anything more right now.

    CNN reported the US briefly was the worlds leading exporter, more than SA or Russia, in June of this year. SA retook the lead in July but it shows we are now one of the biggest exporters and poised to become the biggest.

    So, put these together and despite what you seem to think about Mr. Cramer on this matter, he's clearly pretty much spot on and the US is comfortably positioned as the world's swing producer. Of course, one Cat 5 or a shock drone attack on Houston, Pt. Arthur Tx and this could all change.

    And we haven't even discussed LNG exports. Australia recently surpassed Qatar as the largest exporter with nearby superimporters India, China and Japan. However, without a major economic disruption, the US is expected to surpass Australia by 2024 with huge excess supplies.

  4. #1654

    Default Re: Oil prices

    And your definition of a swing producer , is what ?

    A swing producer is the producer who can keep the market balanced at a certain price point. Its not just being the worlds largest producer.

    The US can't do that, never will be able to do that, for many reasons.

    Texas was only able to do that in the 50's and 60's until ME production grew and OPEC was formed and global demand outgrew Texas. Texas did that by putting " allowables " on all Texas wells. Each well had a set amount of oil it could produce, based upon the wells potential. It was done to support a price level that would keep in the industry in business.

    There is no mechanism in place to control production levels in the USA.

    And while there's storage in Cushing and the Gulf Coast, all the oil there has multiple ownership and on a global level, its in relatively small quantities. Its not controlled by the government, as it is in where production is nationalized and state run.

    If Iran attacks Saudi again, US domestic is not going to make up the loss. Whoever reported that US had spare capacity, doesn't know what they're talking about. Must've come from some talking head on CNBC that only knows what they're told.

  5. #1655

    Default Re: Oil prices

    This is sort've ominous for Oklahoma's economy and for future tax revenues

    https://twitter.com/ericnuttall/stat...873111554?s=20

    Eric Nuttall
    @ericnuttall
    The beginning of the next oil bull market...Bernstein, Howard Weil, and now Goldman Sachs calling for aggregate multi-year non-OPEC supply declines beginning in 2021. Will investors be able to handle the apathy and volatility and stick with the trade until then??? #OOTT

  6. #1656

    Default Re: Oil prices

    Eia projects continued downtrend in the Anadarko

    https://www.eia.gov/petroleum/drilling/pdf/anadarko.pdf

    Also the rig count is nearly at levels we saw during $26/bbl.

    Full on bust, good news is production is still high and prices are ok enough there is room to maneuver.

    Bad news is it doesn’t seem like anyone is paying attention, or at least publicly saying they see what’s coming.

    That light at the end of the tunnel is a train.

  7. #1657

    Default Re: Oil prices

    State revenue fell 6% short in September.

    https://www.tulsaworld.com/news/down...2d31bd278.html

  8. #1658

    Default Re: Oil prices

    Might as well shut the state down, I guess. Who knew tying your future revenues to a commodity would not work out.

  9. #1659

    Default Re: Oil prices

    Definitely seems like the oil market is starting to move firmly against OKC proper. And this time around there isn’t a bunch of fun PE money from Houston or Dallas willing to bail us out.

    Will be interesting to see if the “diversification” protects the commercial real estate sector. I certainly hope so.

  10. #1660

    Default Re: Oil prices

    All of the O&G activity seems to have shifted firmly to the Permian where it’s the most profitable. I’m still a believer that we’ll see a large price increase sometime within the next year as we have before the past six recessions.

  11. Default Re: Oil prices

    Revolution Resources, a local group made up of former Chaparral employees, has entered into a merger agreement to acquire Jones Energy in a deal worth around $200 million. Jones has operations in OK and the TX Panhandle. They were based in Austin and likely were going to be acquired by someone soon after emerging from bankruptcy earlier this year. Glad to see a local group got their assets.

    https://www.globenewswire.com/news-r...Resources.html

  12. #1662

    Default Re: Oil prices

    ^

    Jones is based in Austin and run by a family of OU grads. I went to school with Johnny, who inherited the business from his father.

    They had always done well and then about 2 years ago went public and bought a bunch of American Energy Partners assets after Aubrey died. They had an OKC office for a while but before long the whole thing collapsed into bankruptcy and Jones was demoted and most the other leadership was fired.

    The new board helped to right the ship and bring it to this conclusion.

  13. #1663

    Default Re: Oil prices

    Good news for OKC even if it is small by O&G standards

  14. #1664

    Default Re: Oil prices

    http://www.rbcrichardsonbarr.com/Ind...16005348r1.xml

    WPX buying Felix. Great deal. The cash portion covers what Felix already produces, using equity for the growth portion. Good for WPX as they were quietly running out of acreage.

  15. #1665
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    Default Re: Oil prices

    An article in the NYT business section

    https://nyti.ms/2PzeDKB

    Many smaller companies have sought bankruptcy protection or indicated that they could go out of business. Shares of Chesapeake Energy, the Oklahoma-based champion of shale gas drilling, traded at more than $60 in 2008. Now they sell for less than a dollar. Chesapeake warned in a recent securities filing that if prices remained low and it was unable to comply with the conditions of its debt, “there is substantial doubt about our ability to continue as a going concern.”

  16. #1666

    Default Re: Oil prices

    The good news is that oil prices have been rising recently. WTI is at this moment near $61, which is generally considered a price at which most producers should be making some money if they are still in the game. Natural gas at 2.33 is definitely a cause for concern, especially at this time of year.

    CHK always felt too big to fail to me for some reason. Is there any reason to believe that rising prices will come in time to save them?

  17. #1667

    Default Re: Oil prices

    Seemed to me that the "going concern" warning was so common in the casino business following the "Great Recession" that I came to believe any company posting 2 quarters of losses were putting it out there. I think every casino company posting it back then is still around in some form.

  18. #1668

    Default Re: Oil prices

    Caesars went bankrupt.

    Chapter 11 is very different than 7, CHK would likely fall into 11. Doesn’t change whether or not to issue a going concern or not.

  19. #1669

    Default Re: Oil prices

    Couldn’t find the echo energy thread but they are now in foreclosure.

    https://www.hartenergy.com/news/mark...mpression=true

  20. #1670

    Default Re: Oil prices

    So um, natural gas prices are headed sub $1.

    Oklahoma corporation commission has the power to tell operators to shut in wells for the betterment of the state and its people. I hope they use it. Nobody wins with gas that cheap. Not tax revenues. Not minerals owners. It’s so cheap right now even consumers won’t see much more benefit and will likely be impacted by budget cuts at the state level.

  21. #1671

    Default Re: Oil prices

    https://www.bloomberg.com/amp/news/a...t-to-get-worse

    Keep in mind the gas in Oklahoma is priced by the dominion south hub not Henry hub. Currently dominion south is at $1.65/mcf

  22. #1672

    Default Re: Oil prices

    Its my understanding, that producers and utilities go into the winter 80% hedged , usually.

    Unless the producer goes into the winter unhedged, which is what McClendon did in the winter of 2011/12 and NG prices went below $2 that winter when it was a record warm winter.

    I've no idea how many producers sell only for the spot price.

  23. #1673

    Default Re: Oil prices

    Quote Originally Posted by RedDollar View Post
    Its my understanding, that producers and utilities go into the winter 80% hedged , usually.

    Unless the producer goes into the winter unhedged, which is what McClendon did in the winter of 2011/12 and NG prices went below $2 that winter when it was a record warm winter.

    I've no idea how many producers sell only for the spot price.
    This is wrong and missing the point on so many levels I don’t even know where to start.

  24. #1674

    Default Re: Oil prices

    Said it was my understanding. Did not state it as fact.

    But both producers and utilities use hedging.

  25. #1675

    Default Re: Oil prices

    And I really should not be posting as I've been battling the flu the past two days ............... but .............. the way I understand the price paid by consumers , is that these movements in the price of nat gas have no impact. The price we pay for nat gas is in the rate determined by the Corp Commission.

    Now, I could very well be wrong. Maybe there's an option for nat gas consumers to pay the current market price, but that would be a high risk move for a consumer.

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