Wellhead Oil Prices from RMOJ.
Gas & Crude Oil Prices11/28
West Texas Intermediate 62.77
Central Montana 52.57
Northwest Montana Sour 52.25
Williston Basin Sweet 49.69
Williston Basin Sour 40.58
Wyoming General Sour 44.75
Wyoming Sweet (Powder Rv Bsn) 54.40
Colorado D-J Basin 53.80
Four Corners 61.77
Southeastern Colorado 53.00
Western Colorado 49.88
Kansas Sweet NW 54.25
Kansas Sweet SW 54.50
Think I did better than hedge.. Sold my entire position on friday(1150 shs.), and threw it all into CELG. Good luck to all of you. Feel oil is going much lower.
Citi ? The same citi that bet the farm on sub-prime party continuing and is still on life support ? The Citi that is prime broker to many hedge funds who may be leveraged upto their eyeballs with long energy position and now are underwater ? Or the Citi doesn't sleep because it is very fragile ? Or is there a Citi that cares for Joe six pack and gratuitously wants lead him through the mine field of valuations?
Decide and bat accordingly.
And that's probably what they will do. I think production from around $40 plus locations will slow and sub $40 wells will ramp up in an effort to maintain margins. But overall earnings will take a hit if prices stay low for a prolonged period. Obviously , since they are a pure play E&P ,some exploration will come to a halt until prices rise again. But oil companies must replace reserves constantly so they will be drilling somewhere in the world at any given time.
LOL, rascal , sounds like you might have stubbed your toe on citi in the past. I lost a little on the bankers myself when they took their pre planned dip. Those 8% divys were nice until reality slapped the #$%$ out of me ! Aaawww, live and try to learn, huh. Jack and coke is good for that ! haha.
Michelle Caboosa Cabrera (CNBC) did a graffic on this and Canadian Sands were highest at 70-100 p/b, Bakken at 50-70 p/b, Permian basin & Eagleford at 50-70 and a few others. The most striking was Saudi Arabia produces at $10 a barrel. Easy to see the reason for the plunge but why so sudden, this is not new info.
From many articles, it appears most E & P's will cut CapEx to deal with oil price drops and pressures on their margins. Keeping their best existing wells going for the forseeable future, sacrificing the Exploration side of business.
Will spend some time this week end on getting a handle on the mechanics of recognizing resource and reserve estimates (or whatever they are called in this industry ). I do recall there is a also a conversion factor that comes into play for gas and oil equivalent conversion for estimating recoverable reserves. I would think long term realizable price would have the most impact on reserves moving up & down. Anyone know what that may be for the various majors ?
At what point will impairments start having to be recognized ? While it would be a non cash charge in the short run - in long run it definitely has an impact on sustainability of cash flows.
I suspect some of the overseas majors like Statoil and/or Total may need to be totaled (pardon the pun) before this is done.
While in the very long run the well capitalized majors will benefit this in the interim has quickly become a game of last man standing. The price of entry point needs to be adequately modulated to compensate for the risk of this.
I think there will be good opportunities when the write down drama begins and the stock prices over compensate. Wait for cheap entry points. No need to ride a yo-yo till then unless you are nimble footed trader.
Good luck to all.
These figures are incredibly skewed, and therefore incorrect. Most oil recovery has a high initial cost (exploration and drilling) and then minimal costs after that (pumping and maintenance), therefore, fields that have been pumping longer, appear to be pumping cheaper. (Example) So, If I spend $1M to enter an oil field (and yearly expenses average at say $100,000) and I pump 10,000 bbl per year , then my cost per bbl at the end of year 1, is $110 per bbl (how can I stay in business?). But, by year 5 my average price per bbl = $30, and by year 10, $20.
The initial entry costs have already been spent, so each "NEW" bbl of oil coming out of Canadian Sands does not cost anywhere near 70 -110.
Oil coming out of the Canadian Sands requires significantly more processing and thus is higher cost per barrel. Should oil continue to decline, it will be one of the first to stop production.