Linn trades with oil and oil was flat. Could be a bottoming for oil and if it is, shorts better cover. When oil bounces, it will bounce hard.
They have made 15% in last 6 months just on the value of their Dollar investments. The Dollar index has increased 15% against other major currencies. If you sell oil and are paid in Dollars, you have not experienced a 50% reduction in price, its more like 35%.
OPEC has not increased their production in last 5 years. Oil production increases have come from US and Russia, @4 million barrels a day. Thats why OPEC is saying that any production cuts must come from US and Russia. The only way to cut US production is by crashing prices, as shale oil is expensive oil. And thats what is going to happen. As oil prices go lower, US production will drop.
The reason America works is because we all have the same religion, we all worship money. If you disagree with that, take a look at the car you parked in your driveway, the big screen TV on your wall, etc.
SA has a breakeven of $97 for their budget, not their cost to produce a barrel of oil. A 5% return on their national reserve covers the shortfall in oil revenues. SA can continue doing this for a decade or longer. until the US shale industry is just a memory.
If oil continues down and stays there, you're right. I doubt if oil will stay at the bottom. It will bounce once all the excess inventory is gone. Smarter people than you or me think the price of oil will bounce and AVERAGE $60 for the year. Oil will be at $70 by year end and heading back up. The differential between supply and demand is not that large. Very small moves in either can have a large impact on price. Oil at $40/barrel is not sustainable.
6 months from top to bottom, than 6 months to bounce and stabilize. Rule of thumb is oil will double off the bottom so if oil bottoms at $40 it will bounce to $80.
EPD has doubled in value since September. They increased the dividend but not as much as the market expected it to.
If oil goes to $20 and stays there for awhile, most of the oil companies will go under. Even companies like Exxon will have to restructure. Also, Russia, Iran, Venezuala, Mexico and several West African countries would be undergoing revolution or some form of severe political turmoil. In other words, its not going to happen. Differential between supply and demand worldwide is @ 1.2 million barrels per day. For every $10 drop in the price of a barrel of oil there is a 0.3% increase in demand, which shows up in 6-12 months. If oil has dropped $50 barrel X 0.3% = 1.5% increase in demand. Current worldwide demand is 91 million barrels X a 1.5% increase = 92.365 barrels a day of demand. This increase is165,000 barrels a day for than current production of oil worldwide. To put it in perspective, in 2009 the differential between supply and demand was over 4 million barrels per day. That was a whole different environment from today.
This from the Saudi King today:
"You cannot be blind to the tensions in the global oil markets ... these are not new developments and we have dealt with it in the past with a firm will and wisdom ... and we will deal with the new developments in the same vein," he said.
The way they dealt with it in the past was by cutting production. Could be in our future ?!?!
You left out the part where OPEC cut production by 4.2 million barrels a day in 2009. Probably not going to happen this time around.
Had to happen, Linn's market cap has gone done and they no longer quality to be in the index.
Oil prices went down on Friday but the entire oil complex went up. Investors see opportunities in oil companies at these levels. This is the first sign of oil stabilizing. Whether Linn goes up or down will depend on whats said at todays conference call. Mark Ellis has a way of grabbing defeat from the jaws of victory with his big mouth.