Tacit collusion is the way the world works today, when firms agree to play a certain strategy without explicitly saying so. A trade association makes this possible. Every firm outlines their plans and then receive news of what their plans will create, done by the association's analysts and lawyers. They then submit new plans, get new predictions of outcomes, etc. The trade association can have its own legal consultants, and everything that is said is protected by attorney/client privilege and is inadmissible in court. This sort of thing is only done at the very top level, and it is not made public.
This was effectively done by the "seven sisters" in the past- Exxon, BP, Chevron, Mobil, Texaco, Gulf, and Shell. They got together to stabilize markets until the nationalization of the oil fields of the Middle East. After that, OPEC became the stabilizer, beginning with the embargo to raise prices after the US reneged on Roosevelt's promise to vote "No" at the UN on the creation of the state of Isreal.
The Bakken "sisters" are Continental, EOG, Whiting, Hess, and Kodiak. Check out their stock charts. Wouldn't you be willing to do a little backchannel legal work to get your wealth back? What better use of a trade organization than to advise clients on how to simultaneously maximize profits?
For example, most midsized American cities are dominated by 3-4 grocery store chains that sell 90% of the food. They rotate certain products on "sale" but generally do not price compete. They belong to the same trade association.
True, but don't forget that the shale fields deplete fast, not just individual wells, but the entire fields. And the wells are depleting faster. The sweet spots are wearing out, and there are no new large shale deposits to take their place. Despite what EOG and Continental are saying, Bakken, Eagle Ford, and Permian are playing out fast.
Miller tried to use horizontal and fracking technology in Tennessee, but found it not economical, and eventually sold the Tennessee assets. Despite the success in Bakken over the past 7 years, no other company has found a similar shale deposit in the USA, despite the fact that America is home to thousands of small, medium, majorminor, and supermajor oil companies. I am assuming there has been plenty of looking over the years.
When the Saudis call American shale producers "irresponsible", they mean it. The market is teaching shale producers a lesson here - lower production or else. Shale can still make a ton of money by simply limiting production, same as the Saudis. But to assume Saudi Arabia will play along and cut production just to make room for high cost production is wrong, because solar, wind, nuclear, hydroelectric, and natural gas are alternatives to petroleum, and at high cost, oil consumption will decrease. That is beginning to happen, an example is T. Boone Pickens' plan to run commercial trucks on natural gas, which would then move on to buses, trains, ships, etc. And one day battery technology will increase to the point that electric cars can go 500 miles or more. USA cafe standards will increase to 54.5 mpg in 10 years as a reaction to expensive oil. Which car company doesn't want to sell cars in the USA?
Saudi Arabia wants it's oil out of the ground and sold. They believe the $80 range will keep them in business longer than the $100+ range, and lead to the ultimate revenue recovery.
MILL will get past this. MILL works at $70 oil. MILL first started in Alaska when oil was $70-80.
I agree that the shale wildcatters will either sell out or fold, after they deplete their wells. The supermajors are cutting out drilling for the rest of 2015. Without prices of $80+, they can't justifiy the expense to shareholders in most of the large new oilfeilds. Tarsand oil is also going under, for the same reason.
The fly in the ointment here is shale. If the midsize operators, the larger shale players, don't actually get together and collude to slow production they will lose it all.
There is such a thing as the North Dakota Petroleum Council, and they have closed meetings.
This is one of those times when patience pays off, for companies and investors alike. It may take a couple of years before we see $100, but we can get back to $70 soon. Harold Hamm said he won't complete any new fracking wells until oil gets back to $70. Wells that are drilled in shale are only 50% done, the fracking crew costs just as much. Who wants to finish a well if the payback won't even pay for the fracking crew?
For the past five years, Apache has been doing the world's largest 3D seismic program ever, in the Cook Inlet, getting a complete map of the basin.
Something to think about.
That depends on your definition of "anytime soon". The same Petroleum News Alaska also publishes a Petroleum News Bakken, and the capex in Bakken is declining rapidly, with both EOG and Continental cutting spending 40-50%. Preffered financing is gone for oil companies, and bonds are going to be a tough sell for all but a few. On top of that BDC's are getting dinged for owning oil debt. Look at the capex reductions of Shell, BP, Marathon, Chevron. Those are just the seven sisters we can learn about. The rest of the world lacks money to maintain anything, and sooner or later the arabs are going to blow something up for God again.
Give it a year, maybe two. Marginal cost of production in Saudi Arabia and Oman my be $20, and the rest of the middle east may be slightly higher, but the other 70% of the world's oil reserves costs much more to produce. When that Saudi Prince spoke of $200 per barrel unless enough investment is made, he was serious.
As T. Boone said, "The world was running just fine on $100 oil". If shale producers use their heads and keep the resources in the ground until after this 3% oversupply is worked out of the market, then they can continue to be very rich people. If they don't, they will lose everything. Given this certainty, I'm sure a few phone calls have been made.
MILL, on the other hand, is too small to make a significant impact on pricing, hedged for another year and a half, has great natural gas propects and pricing, owns their own rigs, controls their own capex 100%. The new manager wants to clean up the balance sheet and delever, focus only on gas during the downturn. At the end of this year it will be a very different looking company.
Perhaps the price spread between D and C relates to the timing of the issues. C was offered first, and may have been purchased by company insiders and other long term holders. D was later, with the latest offering coming just before the price crash. Either way I am long on D. I sold some C to buy D recently.
Then MILL still has facility for repair and maintenance of line. Savant oil must also travel through line. Requiring stoppage and diversion procedures. This still gives MILL processing rights as oil would need to be warmed, perhaps. Difficult to see BP wanting to take back a line just to handle Pt Thomson without owning Badami as well.
Why less? They have an APOD for two wells at badami. Redoubt Production can also increase with ru3 and ru4. Frack Ru7. If they hit 5 gas wells at north fork, they double gas production. APOD includes north fork drilling. That is not a lot of cap ex. When oil goes up to $70, then they can look at bew production.
You thought CMS was a great idea at $8.00 a share. Now you write MILL off, while agreeing that oil is due to recover. Even though CMS got the new board and new CEO. And yes, the airplane is for sale.
There is so much evidence that oil will rebound in 6 months or one year- just on usa production alone. Everyone is focused on shale. Look at North Sea, look at the majors cutting capex. Look at even mill not drilling for oil. And there are a thousand mills.
Now whats bout the third world? Places like venezuala who nationalized the oil? They stole it. They have no expertise and cannot afford schlumperger or Halliburton because they have no cash. Angola. Nigeria. We have no way to see into the third world oil picture. Usa will hold steady or decline, but the rest of the world will decline. Think of how much it takes for miller to hold production at Badami. Now think about Norway.
When that Saudi prince spoke of $200 oil, he wasn't kidding. I was shocked at $90 WTI, then I took it for granted. Soon it will be back, and the shale patch will have learned its first ever lesson. So will investors who bought all the preferred that financed shale.
"...it is hard to make a case for investment in any small E and P company. Though many are good long term bets." - Any? Many? Investment? Long-term bets? You contradict yourself.
"The reserve boosting strategy was a bust." - acknowledged and corrected. Old news. But if repeating it makes you feel good, go ahead. BTW, 2 was a very good well and 8 has been coaxed into about 200 bpd.
Yes, there is still an airplane and it is for sale. You won. I agree it should be sold. They paid 200,000 shares for it, and it is costly to maintain.
Exxon is saying the condensate will begin to flow in May, 2016. BP only has option if hydrocarbons no longer flow through pipeline.
You got two thumbs up from Verado and his cubical buddy.
Nat gas, unlimited buyers with no-hub pricing, all sold on contracts, now going to be liquified and exported to Asia.
Pipeline to point thomson, tesoro pipeline being permitted. Oil hedged into 2016 at $90+, the balance sheet will clean up nicely over the rest of the year.
Sell if you want to.
Two biggest highlights, Conoco LNG plant is scheduled to reopen in fall. They will pay $6.25 for nat gas.
Press release on new gas well "very soon". Expected this month. Giesler apologizes for extra time. Latest Alaska credit is already in. Two more coming.
The fact that MILL operates its own facilities means they won't go the way of Pacific Energy during this downturn. Pacific was, in the words of Scott Boruff' "operated to death" by Chevron. Miller can cut cap ex and pivot to gas, while selling into hedges. When oil turns back up in a few years (months?) share price should reflect the staying power.
It looks like a buyer could be out there. The volume has been large today on no news or developments. $2-8 pop is better than what the preferreds can do.
I know you've been following this stock for a while.
Actually the litigation is all over with, Verado.
Off-topic, there is a buyer out there. Huge volume. Not to mention the large volume from the past few weeks.
MILL has added on a lot of good talent. Still adding talent.
Production will come. You bashed it at $1. At this point it seems like you aren't even talking about investing. You have a sad personal problem that clouds your judgement. Like your feelings have been hurt.
Why don't you just look at the trading pattern over the years and take advantage of it?
(WTI) USD/bbl. 52.97 +1.76 +3.44% Mar 15 13:00:01
(Brent) USD/bbl. 61.42 +2.14 +3.61% Apr 15 13:00:06
(Alaska Crude West Coast Delivery) USD/bbl. 52.58 -$2.1 02/10/2015
We'll get there.
When they say "we expect to be finished drilling by xxxx..." it is my opinion that they will indeed be finished drilling. But after the drilling there may be plenty of other things, completion contractors, wellhead gear like valves and gauges, pipes, clean up, inspection by state crews, waiting for instructions from inspectors, fixing things for inspectors, re-inspection, then final testing before we will hear about any production numbers or sales. Sure, they are finished drilling, but no numbers for the public.
I also don't think Geisler is going to release 8K's on every completion just to make the stock yo-yo for the benefit of internet traders. What good is an o&g stock if half the shareholders dump it after every dry hole?
Chance to buy in for the 10% gain. More like 400%. "Coldcon". The only con job is your stupid website. People have even sent complaints to SA. Every one knows the best information is in the comments.
Sooner or later they won't take your posts anymore, Yahoo dropped them. That means Apple's ap won't show your fakery. Wouldn't be surprised if CNBC quit listing it as "news" - no wait, CNBC, Cramer, Davis, Shell, you....
I think Streetsweeper will always be "news" on CNBC. Why don't you get on FBC, or will that hurt your "credibility"? LOL. Someone should start a hedge fund on Streetsweeper "reporting" - easy to show MILL profits over the years.
But of course, poor old MILL is doomed!!