Anybody quoting numbers on PBR has to understand that they really don't matter. This is a company where the leader is a communist/socialist who is going to use PBR much like Chavez used PVDSA... as a cash cow for whatever socialist projects she intends to pursue.
Venezuela has a law where public corporations have to pay out 50% of their projects in the form of dividends. I think in Brazil it is 25%, but manipulating profits down is one of the easiest things business wise to accomplish, and that will continue to happen. My corollary to Harry Truman's damned lies and statistics take is: NUMBERS DON'T MATTER IF THE PERSON TELLING YOU THE NUMBERS IS AN UNETHICAL LIAR!!
To top it off, PBR's crown jewel, the presalt oil fields, is more like the crown sewer. The shale drilling techniques that have lead to an explosion in U.S. production are being copied around the world now, and they can produce oil much cheaper than the presalt fields. Maybe technology grows such that these fields become economically viable in the future, but they aren't now. Those producing oil coming from tar sands in Canada are going to squeezed as well.
I talked to a driller in West Texas. He sits in a trailer these days collecting six figures watching a $20 million rig. If you have been to West Texas, that is not an enviable life. What has surprised me is that at today's oil prices, he has not been busy. Truth is the landlocked part of the central USA is in an oil glut.
To me, though, the second most interesting thing was that he said that technology has come so far that there are no dry holes anymore. The only surprising thing is how much oil and gas you get.
I have been pretty much dead on with regards to the oil supply-demand situation. The problem with my forecast has been the enormous pressure the fed has placed on the market to get people out of cash, and that has greatly distorted the price of oil. If you believe in the staying power of QEternity (and I don't) then the plays here are the pipeline makers and refiners. The WTI-Brent spread will come down as the U.S. looks to export crude, and yes the U.S. will begin exporting crude in the next ten years and natural gas in the next five. There is simply too much money in it.
As for PBR, I suspected this Brazilian political fiasco to come later than corrections to the oil market, U.S. Dollar, and Real, but it has been the other way around. Given that the dollar is way undervalued, the Real way overvalued, and oil supremely overvalued, PBR should and will be in single digits in the next few years. That PBR is at this price given what the fed is doing speaks volumes about how poorly run and unshareholder friendly this company truly is. It is amazing that this company is getting so slaughtered in a bull market where oil is going for $100+ a barrel.
Will have predictable results for the economy--just like Obamacare for the people. lol
Amazing that so many people still buy into this IEA nonsense about continuing growth in US oil production.
2013 is going to show a dramatic decline in growth rate vs 2012, this I'm pretty sure of..
No way do we see anything close to the ~800 kbd growth we saw in 2012.
$60/bbl won't do it, $70/bbl won't do it, $80/bbl won't do it--that's history.
(I'm still waiting for a sustained return to 35, Doc, how much longer I gotta wait?)
And unless pipelines get built to reduce shipping costs out of some bottle- necked regions, growth in output at $90/bbl will be a challenge this year .....and an even bigger challenge in the years that follow as new well productivity falls and expenses go up as the industry moves away from the sweet spots.
The reason is the E&P's can't afford to fund the capex to grow output unless prices are high and it seems to take something close to 90/bbl (now ) to grease the skids just to keep the E&P's from falling off the treadmill.
Of course, the Bakken will peak within the next couple of years or so but the exact timing is subject to oil prices and the ability of E&P's to fund new development so a bit of a moving target as to when peak will occur.
Anyone expecting oil output growth of more than 5-6% this year given current oil prices and differentials? Stand up and be counted-- I'm taking names. lol
That said, consider the IEA's ridiculous assertion that the US will overtake the Saudis in oil output given this backdrop.
---Saudi Dakota in your dreams!
5% compound output growth growth (never mind double digits) in the US with oil at 90/bbl simply not sustainable and the proof will become all too apparent in 2013.
So maybe an early sunset in the Bakken (this year?) and you have to know what that means for the Eagleford.
Bottom line, the US will need something close to current Brent pricing just to keep production from falling at some point between now and 2015, never mind reaching self sufficiency.
Finally, US refiners are making out like bandits now because of regional differentials but that puts them in the EPA spotlight.
So unless the pipelines are built and and export permits for oil are granted , certain regional bottlenecks will likely remain thereby keeping a lid on domestic pricing ...and E&P activities.
Of course if this all means sub-80 WTI, US oil production could easily fall within the next couple of years and a higher regulatory burden on refineries won't help on the demand side to create products so less support for oil prices and new production.
socialist type driven ideology and central planning policies based on redistribution to support a greenie economy in the US will be a nail in the coffin for growth and standards of living; on this there can be no doubt.
Question is, how does Obama hope to fund ObamaCare or any other plans for redistribution when the economy is swirling and tax receipts keep falling because of his ideology?
more Bernanke bucks?
"(I'm still waiting for a sustained return to 35, Doc, how much longer I gotta wait?)"
Wins, we have seen about $15 trillion in stimulus dollars from the various governments doing all they can to devalue currencies. Why do you think oil has gone up? It sure hasn't been because of demand, and there is no lack of supply.
Then you have Iran being forced by the U.S. to take 1.2 mbpd of production off line.
"Amazing that so many people still buy into this IEA nonsense about continuing growth in US oil production."
And who should people listen to you, you and your vivid imagination? The Oil Drum (Dumb)?
So how much oil is being produced in the U.S., Wins, and what is the source, those voices in your head again?
"So maybe an early sunset in the Bakken (this year?) and you have to know what that means for the Eagleford."
And here we go ago with you and your dumb depletion rates again. Where has production in the world really gone down? There has been quite bit with the North Sea, and a little with Mexico. That is it. Big deal.
"5% compound output growth growth (never mind double digits) in the US with oil at 90/bbl simply not sustainable and the proof will become all too apparent in 2013."
5%??? U.S. oil production is up 22% year over year. 22%!!!!
So you tell me Wins, why is the prediction of $35 oil so far fetched given this growth rate?
"$60/bbl won't do it, $70/bbl won't do it, $80/bbl won't do it--that's history"
What a crock! Anyone drilling for oil in the future can lock in prices today. If you project to produce a barrel of crude in 2020, you can contract to sell it for $85 today.
In the absence of citations, this is just so much opinion.
In the case of federal tax receipts ( "...how does Obama hope to fund ObamaCare or any other plans for redistribution when the economy is swirling and tax receipts keep falling because of his ideology?" ), in fact, they (receipts) have been RISING since 2009. You are just plain wrong... Google it.
"...socialist type driven ideology and central planning policies based on redistribution to support a greenie economy in the US will be a nail in the coffin for growth and standards of living..." This is laughable, considering the worst of recent economic duress has ocurred under republican leadership, a laissez fair philosophy, and an active policy of de-regulation... with the result that the very rich have gotten richer and everyone else has suffered. Bwahhahahaha! Wins, you have been reamed and you don´t even know by who!
lair or stupid person.
Shale Oil has an fast decline rate and is very expensive.
It will never independent the US from Oil import.
After one year a shale oil well is empty and they need to drilling another well etc.
Brasil has real oil and can produce a lot of oil for the next 30 years.
what are you talking about? Look at the oil production numbers from N Dakota, that will tell you something. By 2020, USA will stop importing oil (in net terms). It may be expensive to produce and producers need at least 90 dollars to keep the production up, but the oil is there and the production is there. All peak oil believers are losers.
Typical European. Blaming the US because he wanted to live off his rents (buying with his inherited money subprime housing paper) while enjoying 2 month vacation and early retirement .
I have news for you Dutch. Nothing is guaranteed. Not housing, not living off your rents. You need to get up and work. Stop blaming the US just because your Euro currency will not make the cut to replace the almighty dollar as a reserve currency.
If you don't like the greenback , go and buy gold or reals ...of course you won't, you'll keep buying US debt because as Jack Nicholson said "you want us on that wall! you need us on that wall!"
btw. Before you rate -1 doc posts you need to at least reach 10% of his neuronal stimulative posts. My IQ is dropping fast when I read you.