Hi Mr. Stocks,
My major point, probably not proclaimed loudly enough for some, is that the rate of "on topic" posts about Frontline on this Yahoo board are at a rate probably some 20 times or more than that found on investor village.
Lots of links to interesting articles. Current state of spot rates. Quick responses to queries.
Some people just want pablum I guess.
Best of luck,
For well over a decade, the Klickitat (Washington) Public Utility District commissioner has promoted building a big pumped storage project off-stream from the Columbia River at the John Day Dam, 110 miles upriver from Portland, Oregon. Now, after years of holding a preliminary permit to study the possibility, the district is moving to obtain a license from the Federal Energy Regulatory Commission [PDF].
The idea, officially dubbed the JD Pool Pumped Storage Project, long earned Knowles sideways glances for a variety of reasons. How on earth was the small, rural Klickitat PUD, which serves around 11,000 customers with an average load of not even 50 megawatts, going to pull off a 1,200 MW project? Who would foot the $2 billion-plus bill? And hadn’t anybody told Knowles that pumped storage was dead in the U.S.?
But Knowles and Klickitat have persisted, and the energy terrain might be shifting in their favor. Plus, there’s one thing they know for sure: They have a site that’s picture-perfect for pumped storage.
“If this pumped storage project can’t get built, then none can,” Knowles said on a recent visit to the site.
Pumped Storage is a century-old technology based on a simple concept: When power is abundant, use it to pump water uphill; when power is scarce, release the water downhill, turning turbines to generate electricity. From the 1950s into the 1980s, pumped storage systems, like Ludington Pumped Storage in Michigan, were built as companions to many large baseload power plants in the U.S., helping utilities capture the full value of a high, steady stream of output even as demand ebbed and flowed from day to night and on weekends. Forty pumped storage plants now provide around 22 gigawatts of storage capacity in the U.S., according to the Energy Information Administration – but a big new system hasn’t gone into service in 20 years.
Hi Mr. Hoeh,
I think you are missing the opportunity here. If one wishes to have FRO related conversations only, they can go to investor village. The FRO board there has no off topic posts, and averages 1 to 2 posts per week.
Why only 1 or 2 posts pertaining to FRO or the sector per week? Because that is all that this pos deserves if everything off topic is left out.
Here, on the Yahoo FRO stock board, you will find perhaps as many as 50 posts related to Frontline and the tanker industry or more weekly. You will find quite a few more off topic posts, but that's the way it is.
What you want for Christmas, is a site where you get the 50 posts per week on topic, but without the off topic chatter. The problem is that this model simply does not exist. It is not stable to have a #$%$/ypparc company have a large number of people follow it, posting only about it, and leaving out their other issues.
For you to have the opportunity to see what happens when off topic conversations are not permitted, as demonstrated in investor village, but not like it because of the lack of conversations, then to come here on the Yahoo FRO board and insult those on the board because you do not like the off topic posts, indicates that you sir are the one that's nuts.
That's my take anyway.
Best of luck, and happy new year,
With global production exceeding demand the question soon will become where do we put this oil? Reuters is reporting that “Global oil traders are likely to store crude in tankers next year, as a widening contango makes large-scale storage at sea profitable for the first time since the financial crisis more than five years ago.”
Rising storage should keep prices low as supply in storage will undermine price. Overtime that will impact production as low prices will discourage more production and at the end of the day that is probably OPEC’s plan. Yet it is not coming without a cost for the cartel. The Energy Information Administration reports that OPEC revenue will hit the lowest level since 2010. The EIA says that OPEC, excluding Iran, will earn about $700 billion in revenue from net oil exports in 2014, a 14% decrease from 2013 earnings and the lowest earnings for the group since 2010. The EIA says that the reason OPEC earnings declined in 2014 were for two reasons: decreases in the amount of OPEC oil exports and lower oil prices, with the 2014 average for Brent crude oil projected to be 8% below the average 2013 price.
The EIA also reported that the national average of retail regular gasoline price decreased for the twelfth week in a row to $2.403 per gallon on December 22, $0.151 per gallon less than last week and $0.868 under a year ago. The national average retail diesel fuel price decreased for the sixth week in a row to $3.281 per gallon, $0.138 per gallon below last week and $0.592 under a year ago. Natural gas got smashed as warm weather and big production sent prices to the lowest level this year.
Transocean (NYSE: RIG ) has the largest offshore drilling rig fleet in the world, but it might not hold that title for too much longer. The company announced late last week that it would scrap another seven rigs, raising to 11 the number of lower-specification drilling rigs that are heading to forced retirement. This latest round of rig cuts, which likely won't be its last, will result in the company taking a $100 million-$140 million charge to its fourth-quarter earnings.
Where things stand right now
Transocean's fleet update last week to investors contained some good news to go with the bad news about additional rigs being scrapped. We'll start with the good news, which is that the company signed several rigs to new contracts, adding about $453 million to its contract backlog over the past month. Two of the contracted rigs were previously idle, meaning they will soon be generating revenue for the company. Meanwhile, current customers either exercised or awarded extensions on two more rigs. Unfortunately, both of those contract extensions were at lower dayrates than the previous contracts. However, at least these rigs will earn revenue instead of sitting idle.
Now on to the bad news. The seven additional idled rigs to be scrapped are lower-specification deepwater and midwater floaters that no longer have value to the company, or to the industry for that matter. Instead, the rigs will be dismantled and the parts sold off at scrap value. While this is the future of any rig after its useful life, these rigs likely would not have met this fate so soon if the offshore drilling industry wasn't in a tailspin that has only been exacerbated by falling oil prices. However, current market conditions are forcing the company to permanently retire its oldest rigs as it looks to reduce the overall age of its fleet.
Transoceans's lead is fleeting
As the following slide shows, Tr
There's no question that Seadrill (NYSE: SDRL ) stock has been pummeled by the recent downturn in oil. Shares have fallen nearly 70% from their 52-week high and management has been forced to cut a dividend that was one of the best reasons to own the stock.
But Seadrill has stable contracts with some of the word's largest oil producers. And they pose fewer risks than shale and Russian producers, who are under pressure because of falling oil prices.
Seadrill's customer base is rock solid
There are two risks Seadrill investors have to worry about in the future. First is that oil will stay low and rigs won't find work as they come off contract in the next few years. The other risk is counterparty risk with the company's current contracts.
With oil falling below $55 per barrel, there's very serious risk that small shale and offshore producers won't have enough cash flow to keep drilling, banks won't fund future exploration, and they'll be forced into bankruptcy. Many people think this is exactly what OPEC, particularly Saudi Arabia, is trying to do to squeeze weaker players out of the market.
If counterparty risk is high, the $24 billion in backlog Seadrill Group has on the books is worthless. The recent fleet status report (which can be seen in full here) shows that most of Seadrill's counterparty exposure is with large multinational oil companies and state-owned companies. This reduces at least one risk for Seadrill's operations.
Insulation from the decline in oil
If you think oil is going to fall to $40 and stay there for five years, Seadrill definitely isn't a good way to play the market and all oil stocks have further to fall. But if oil recovers, even slightly to $70 or $80 per barrel, offshore drilling will play a major role in the market.
As you can see below, since 1980 a growing percentage of new reserves are coming from offshore. Last year, half of the ne
Hi Mr. Cari,
From your post: regarding the low price of oil it-"Hurts solar and wind in the short future"
I don't think the collapse of oil prices will have much effect on solar or wind installations. A few islands use oil to produce electrical power, but it is not enough to be particularly significant. Uranium, coal, and natural gas are the main fuels used to produce electricity in the US. They aren't affected by the price of oil. So, I just don't see the pressure on wind and solar installations being applied by low oil prices.
Just my take.
Best of luck,
India looking to get around strict liability law
* Foreign nuclear suppliers wary of entering market
* Insurance pool "encouraging signal" - Areva
* Initiative comes ahead of Obama's January visit
By Tommy Wilkes and Sanjeev Miglani
NEW DELHI, Dec 19 (Reuters) - India is offering to set up an insurance pool to indemnify global nuclear suppliers against liability in the case of a nuclear accident, in a bid to unblock billions of dollars in trade held up by concerns over exposure to risk.
Prime Minister Narendra Modi's government is hoping the plan will be enough to convince major U.S. companies such as General Electric to enter the Indian market ahead of President Barack Obama's visit at the end of next month.
Under a 2010 nuclear liability law, nuclear equipment suppliers are liable for damages from an accident, which companies say is a sharp deviation from international norms that put the onus on the operator to maintain safety.
From the 1950s, when the United States was the only exporter of nuclear reactors, liability has been channeled to plant operators across the world.
India's national law grew out of the 1984 Bhopal gas disaster, the world's deadliest industrial accident, at a factory owned by U.S. multinational Union Carbide Corp which Indian families are still pursuing for compensation.
The law effectively shut out Western companies from a huge market, as energy-starved India seeks to ramp up nuclear power generation by 13 times, and also strained U.S.-Indian relations since they reached a deal on nuclear cooperation in 2008.
GE-Hitachi, an alliance between the U.S. and Japanese firms, Toshiba's Westinghouse Electric Company and France's Areva received a green light to build two reactors each. They have yet to begin construction several years later, according to India's Department of Atomic Energy.
Even Indian suppliers refused to sell equipment until the law is amended or they can be sure they are indemni
OPEC has decided against reducing output, so the plunge in oil prices is likely to continue. The market looks like it will be oversupplied by 1 million to 1.5 million barrels of oil per day next year, as long as OPEC refuses to budge. However, the supply and demand situation could shift the other way rather quickly, driving the price of oil back up before too long.
Demand has trended up
The world needs only meager demand growth for oil to eliminate the current supply glut. As the following slide from a recent Whiting Petroleum (WLL) investor presentation shows, just maintaining the current global demand growth trajectory would require 7 million additional barrels of oil per day of supply by the end of the decade.
It won't take long to sop up the oversupply in the market as long as demand maintains its historical growth rate of 1% per year. Should demand for oil increase to 2% we'd need an extra 14 million barrels of oil per day by the end of the decade. For perspective, North Dakota's Bakken shale play, where Whiting Petroleum operates, only produces about 1 million barrels of oil daily, so the world would need 14 more Bakken-sized plays to meet that increased demand.
The other thing to keep in mind is that U.S. oil demand has picked up in recent years -- up 4% (about 750,000 barrels per day) in less than two years ending in September, as shown in this slide.
Falling oil prices are driving down the cost of gas, That eases the strain on American drivers who are paying less at the pump. This could create even more demand for oil and gasoline, as drivers are less likely to let gas prices impact driving decisions. This is why it's quite possible that demand for oil will trend higher than its most recent historical growth rate.
The supply story is boom or bust
The other side of the oil story is supply, which has surged in the U.S. thanks to shale. From 2009 to 2014, the United States added a
Goldman Sachs analyst Henry Tarr and team are still worried about Seadrill (SDRL)–even after the beaten-up offshore driller cut its dividend last month. So worried, in fact, that they cut their rating on Seadrill to Sell from Neutral today. They explain why:
Although Seadrill has already cut its dividend, we believe there is still significant balance sheet risk due to high financing requirements for 2015/16 and beyond, as well as limited refinancing channels with the possibility of a higher cost of debt due to the challenging environment. We have also undertaken a scenario analysis at a US$70/bl Brent oil price in which Seadrill would be in breach of its debt covenant in 2016E, which could trigger an equity issue.
Shares of Seadrill have dropped 2.8% to $12.02 at 11:a.m. today even as other offshore drillers are rising. Atwood Oceanics (ATW), for instance, has gained 2.3% to $29.09, while Ensco (ESV) has jumped 5% to $31.45.
Another article about the citizens response:
After Governor Halts Universal Health Care, Vermonters Burn Medical Bills
Proponents of universal health care in Vermont aren’t pleased with their governor’s recent decision to abandon the state’s ambitious plans to build a single-payer system. In protest, more than 100 activists gathered at the statehouse on Thursday to burn their medical bills.
In 2011, the Vermont legislature approved Act 48, which requires the state to create the first single-payer system in the country by 2017. Under that model, all medically necessary services would be covered by the government, which could contract with private organizations to deliver the actual services. Supporters hoped that Vermont’s proposed health care reforms would serve as a model for the rest of the nation, potentially inspiring other states to work on their own government-funded systems.
But this week, Gov. Peter Shumlin (D) announced that “this is not the right time” to move forward with the state’s proposal, saying it will result in massive tax hikes that he doesn’t feel comfortable authorizing. A single-payer program will cost Vermont an estimated $3 billion per year by the end of the decade, and Shumlin said he simply doesn’t know how to cover those costs.
The Healthcare Is a Human Right Campaign, a grassroots coalition of activists that has been pushing to reframe health care as a public good, is criticizing Shumlin for failing to follow through on Act 48. In a statement released this week, they called the governor’s decision “a slap in the face of many thousands of Vermont residents who suffer from poor health and financial hardship,” and said he’s still obligated to move forward with single-payer unless that law is officially repealed.
On Thursday, demonstrators rallied at the statehouse to protest Shumlin’s decision. Local news outlets reported that “the tone of the event was angry.” Aft
To reduce the cost of electrical power by freeing up rail lines to carry coal.
Rail congestion from oil boom blamed for high electricity costs
Analysts are blaming railroads’ newfound congestion from the oil boom for difficulties in moving coal, leading to higher electricity costs.
Utilities that use coal say that railroads dealing with oil from places like North Dakota and Texas do not have the capacity to bring them coal, Bloomberg News said.
“There’s plenty of coal,” Jim Thompson, a director of coal for analytics company IHS, told Bloomberg. “The problem is the coal transportation system.”
United States utilities rely on coal for about 39 percent of their electricity generation, making it the most used fuel, ahead of natural gas.
Coal producer Peabody Energy Corp. said utilities got as much as 25 million tons less coal than they needed from Wyoming’s Powder River Basin this year.
Utilities are likely to close the year with 129.2 tons of coal inventories, 32 percent less than the record of 2009, Bloomberg said, citing the Energy Information Administration.
Power companies have been using natural gas in order to preserve their coal inventories, even though coal is significantly cheaper.
Meanwhile, rail congestion is growing at an historic pace. Rail speeds dropped 6.4 percent in the past year, while the rate of cars sitting in yards grew 8.7 percent.
All of this has led to coal imports in the United States rising 37 percent this year, led by Colombia, Bloomberg said.
Just for those of you that still don't get it.
Best of luck,
“The transportation constraints gave utilities a need to diversify supply,” Ted O’Brien, chief executive off
Japan’s trade ministry is setting stricter rules for production and sales of renewable energy in what it says is a drive to speed up development of projects and ensure stable power supply.
Japan introduced a renewable energy incentive program in July 2012 after the Fukushima nuclear disaster, offering some of the highest rates for solar-produced electricity in the world.
The rates attracted floods of solar applications, so much so that utilities who are required to buy the power for their transmission grids say they are being overwhelmed. Plus, the supply is unstable.
As many renewable energy projects haven’t started even years after winning approval, the new rules allow utilities to strip a renewable energy provider of grid access if they miss the start date.
The same can happen if they fail to pay for access within a month of signing a contract, according to a document released by the ministry today.
As wind and solar power is intermittent based on the weather, the ministry will also expand a rule that allows utilities to reduce or stop intake of renewable energy for up to 30 days a year without compensating the suppliers.
That rule, applicable for when supply exceeds demand, was for producers with capacity of 500 kilowatts or more.
Under new rules, it will apply to solar and wind projects of any size -- including residential rooftops -- according to a separate ministry document. In addition, the maximum period for no compensation will be calculated by hour not daily to better reflect demand and supply.
The measures come after at least five of the country’s utilities began restricting the access of new solar farms to their grids earlier this year and examined how much more clean energy their grids can add.
Another measure will formalize what is already happening in the industry; namely, a renewable energy provider will receive grid access fr
Good thing too. Now if only we can get them to avoid solar tower plants.
A new report by a leading bird research institute in the U.K. found that over 99 percent of seabirds were likely to alter their flight paths in order to avoid collision with offshore wind farms. While the analysis offers new estimates of which seabirds and what percentage change course to avoid wind turbines, it still leaves many questions about the overall impacts of wind turbines — on and offshore — on bird populations.
“It is important not to get lulled into a false sense of security by these figures,” said Aonghais Cook, a research ecologist at the British Trust for Ornithology. “Whilst 99 percent of birds may avoid turbines, collision may still be a significant risk at sites with large numbers of birds. Furthermore, there are still a number of key gaps in knowledge for some vulnerable species.”
The research was carried out on behalf of Scottish government by the British Trust for Ornithology and the University of the Highlands and Islands’ Environmental Research Institute.
While offshore wind is yet to establish itself in the U.S., in the U.K. it has been a major player for nearly a decade. Scotland is trying hard to harness this energy as part of its goal of generating 100 percent of its electricity demand from renewables by 2020. The wind-rich country is home to around a quarter of Europe’s total offshore wind capacity. In October, the Scottish Government approved four huge new offshore wind farms that could produce more than 2.2 gigawatts of power, enough to power 1.4 million homes.
According to The Telegraph, the government gave consent with “strict conditions to minimize the impact on birds and the environment.”
In response to the seabird analysis, Aedan Smith, head of planning and development at the Royal Society for the Protection of Birds in Scotland, said that even with this new evidenc
(Continued from Part 4)
Frontline’s cash and cash equivalents
As of September 30, 2014, Frontline Ltd.’s (FRO) cash and cash equivalents increased to $104.6 million from $79.3 million as of September 30, 2013. Restricted cash narrowed down to $16.1 million from $59.2 million from the year-ago quarter mainly due to the decline of $21 million in restricted cash in Independent Tankers Corporation Limited (ITCL) relating to deconsolidation of the Windsor entities. Restricted cash implies money a company puts aside for a specific purpose that isn’t available for immediate and general use by the company.
Assets and debt
Frontline’s vessels and equipment decreased by $211.9 million mainly as the consequence of the separation of the Windsor vessels, the transfer of Ulriken vessels held for sale, and impairment loss relating to Front Comanche, Front Commerce, Front Opalia, and Ulriken. Vessels held for sale stood at $26 million during the third quarter.
Long-term debt decreased by $153 million as a consequence of deconsolidation of Windsor and ordinary repayment of capital leases partly offset by a draw-down of $30 million in the third quarter. Equity decreased to $44.6 million from $123.3 million in the year-ago quarter mainly due to recorded loss in the quarter, which was partly offset by raising new equity.
Frontline recorded debt to assets of 104.0. Frontline’s peers such as Teekay Tanker Ltd. (TNK), Nordic American Tanker Ltd. (NAT), Tsakos Energy Navigation Ltd. (TNP), and Navios Maritime Acquisition Corporation (NNA) recorded debt to assets of 62.4, 21.1, 52.9, and 69.9, respectively, and a debt-to-equity ratio of 196.4, 27.7, 121.0, and 265.8, respectively. The Guggenheim Shipping exchange-traded fund (or ETF) (SEA) tracks the shipping companies.
(Continued from Part 6)
Frontline Ltd.’s (FRO) current tanker fleet level has reached its highest since 2009. Utilization of its tanker fleets in the past five years has been between 80% and 85%. During the five years prior to 2009, those levels were higher, ranging between 85% and 90%. Looking ahead, it’s likely that there could be higher utilization environments and thereby a stronger tanker market. This would benefit the crude tanker industry (SEA) and companies such as Frontline (FRO), Teekay Tanker Ltd. (TNK), Nordic American Tanker Ltd. (NAT), Tsakos Energy Navigation Ltd. (TNP), and Navios Maritime Acquisition Corporation (NNA).
Trading routes reversed
In the past 18 months, shipping trading routes have been reversed, thereby pushing the travel distance higher for tanker vessels. Because of this, the year 2014 has reflected high volatility and is expected to continue in the upcoming months.
Suezmax market spikes
Beginning January 1, 2015, new European Union regulations will be introduced, which explains some of the recent spike in the Suezmax market with high sulphur fuel leaving Europe and the United States. Since the futures price of the commodity is above the expected future spot price, the crude oil market is presently seeing strong contango, which encourages storageable oil, primarily land-based as of now.
However, with scarce availability, there might be storage from tankers, especially if the spot market loses track. Additionally, this may drive the market flow higher going forward.
In the past few weeks, a strong Suezmax market has boosted owner’s confidence, while very large crude carriers (or VLCCs) are also showing signs of improvements and the market sentiment is turning positive for the rest of 2014 and the first quarter of 2015.
Browse this series on Market Realist:
Part 1 - A review of Frontline and its fleet
Part 2 - Frontline’s revenue growth and
Hi Mr. Dakine,
My take is that in order to make single payer work, you must first get the costs in line. In the other countries you list, they have a cost basis much much less than ours.
To take our high cost system, and attempt to make it work single payer, simply costs too much.
This is the real failing of Obamacare. It does nothing of substance to cut care costs. All it really does is make some part of our high cost system available to low income folks. It is more fair, but actually more costly.
My read on Vermont is that they found that taking a system that was too expensive in the first place, and making it single payer made it even so much more expensive that it simply didn't make sense.
Fairness is fine. But, we really need to be working on the costs.
I still think that the governors that refused to expand medicaid for their citizens did them an injustice.
Just my take.
Best of luck,
Continuing to lead the transition from fossil fuels to renewables, California in October 2013 enacted AB2514, legislation that requires the state’s investor-owned utilities to acquire 1.325 gigawatts of energy storage capacity by 2020.
Earlier this month, Pacific Gas & Electric (PG&E), San Diego Gas & Electric and Southern California Edison issued their first request for proposals for energy storage assets that will help meet projected long-term local capacity requirements.
California grid and energy market regulators are joining with industry players and already taking the next step in the U.S. renewable energy-smart grid transition. They’re building and testing microgrids in which solar photovoltaic systems are integrated with a variety of advanced energy storage technologies and the latest in real-time energy management software platforms.
Energy storage and renewable grid integration
Advanced energy storage is seen as the key to accelerating deployment and grid-integration of solar and renewable energy generation capacity, reducing peak power demand, and enhancing the reliability and resiliency of the electricity grid. Commenting on what has been a landmark year for U.S. energy storage, Ravi Manghani, GTM senior energy storage analyst, stated:
“2014 will be viewed as the year in which utilities started to embrace energy storage for the versatile technology that it is to solve various problems along the grid
On Dec. 16, Eos Energy Storage announced that it had won a $2 million award from the California Energy Commission to build and demonstrate a “novel grid-scale battery system at PG&E’s Smart Grid Lab in San Ramon, California.”
Eos’s project came out on top following a review of 28 projects competing for a total $6.3 million in CEC grant funding. Its Aurora project proposal was the only advanced battery storage system awarded grant funding.
According to Eos, its Aurora b
Hi Mr. Bieber,
So, are you saying that you expect the high demand for tankers driving the high spot rates shall continue for an extended period of time? Perhaps a year or more? Maybe much more?
I am thinking it is very difficult to play the contango game by buying oil, storing in tankers, then selling 2-6 months in the future, with $90,000+/day VLCC tanker rates. You can do it for awhile while the contango is extreme, but then that calendar spread will shrink.
So, real demand will expand because the oil is so cheap, that they will need even more tankers? I am not thinking that the demand will increase that much.
We shall see.
I don't expect these high rates to last for that long. End of 2nd qtr 2015 I think we will be back down to earth.
Best of luck,