Really they should eliminate the slave point drilling, the Cardium is not that expensive to drill, Salve point from their slides costs about 7 million per well.
They don't have to make decision until feb also the CAPEX is backend loaded so they may not make a move until the second quarter and wait and see what oil prices do. Most are not expecting a recovery until the end of this year or early next year. I am sure they would like to keep their CAPEX budget in place so they keep their growth in place for the next spike up in oil. They are in better financial shape
Own several 1000 shares of company for income, looking at buying more, but oil may go down to 50 #$%$ before stabilizing. So I will wait before buying. It appears traders are driving the market. It will take about 6 months to year for production levels in the North America to level off and start going down because of lack of investment. OPEC members production will also go down because investment issues and depletion. Also demand will go up oil is not entirely inelastic. I look for a boomerang reaction to these low prices in the later part o9f next year or early 2016 where oil will spike up to level higher than they were than the recent highs.
This is totally a geopolitical issue. I believe the US and Saudi Arabia are using the oil weapon to pressure Iran and Russia. Saudi Arabia has historically produce about 8.5 million bbl per day, they have ramped up to 9.5 mml bbl to put excess oil on the market. The US shale producers also have increase production more than expected. I do not believe that we will see a drop in US production until the second half of this year, as existing CAPEX budgets have already been spent for oil production in the first half, but if prices stay this low in first 6 months it will have effect US production for the next 3 years. It will be harder for US small and mid size oil companies to get loans to fund their development programs and it will add caution on any new development that is high in cost for fear of this event happening again, My only concern is I hope the US and Saudi Arabia did not push to much as it would only take a few well places bombs in Saudi Arabia to drive the whole world into chaos. What would you do if you were Russia or Iran facing hyperinflation with a collapsing currency.
Really there price is 87 in Canadian dollars which is bout 78 US. Oil will drop to 60-65 in short term, high debt US producers will go under Forest oil etc. It will take about 9-12 months for the market to shake out. But several things will happen together:
1. Demand will go up because of low prices I bet about 500000 bbl minimum world wide
2. Supply will go down I bet about 1 million bbl minimum in year probably more. The world needs about 7 million now bbl a day to offset depletion. I would be surprised at these prices it developed 4 million bbl let alone 7 million bbl.
3, The US shale industry when prices comeback and they will be unable to get low cost financing as several banks will get burned over this
4. Could be some bank failures of small banks with large energy loans in US.
5. PWE will go down to below 4 in the short term, but will thrive in 2016, could be the buy of life time.
been doing some research on PWT property there. There may be some value to it, The property borders ECA and Conco properties to the east in Wildsay Green area (there are three area),. ECA has been doing some some drilling in the area with great success, The area in the Duvernay they are drilling in is rich in condensate in oil. This may be worth far more than the 5000 an acre that has been mentioned. Drill results on the well they sunk will be available in mid December. hope they are as successful as ECA
I agree, although if prices stay where they are which is the budgeted price by the way, I see a significant improvement in stock price anyway. The Candain prodcuers have a significant advantage over the US producers because their cost are much lower due to the Canadian dollar.
I agree with you. I do not think OPEC will cut. American producers will be hirting in a few months. Most small and medium producers CAPEX budgets exceed their cash flows ans will be forced to cut back. Some may not be able to get financing. You are starting to see it in the headlines now. The Canadian producers are somewhat insulated as the higher dollar lowers their production costs putting them in far more competitve position than the US producers. This will take about a 6 months to a year to correct itself, but it will. I am curious how long this bull market in the dollar can survive. We are exporting inflation to every country but our own could be a lot a push back eventually.
It would not last for long. the depletion rate for our production is about 40% if that happens production comes to a stands still and within a year over 3 million bbl of US oil supply would be removed. I read the same article, other things that would happen is export would be reduced substantially becase of the ultra high dollar, empolyment would go down, the fed would be forced into massive qautative easing like Japan, to weaken the dollar. I do believe 65 dollatr oil in short run is possible, but that would be an overcorrection to the down side, which will cause supplies to be reduced in the and US and demand to increase (oil is not inelastic) and which could cause a substantial price spike.
The only asset sale announcement will be the Duvernay sale and that will not occur until mid December at the earliest as the results of their drilling efforts will not be available until then. As far as WTI I would not look for a major turn around for at least another 6 months to a year, it could trend up to 85 because of cold weather in the US this winter. I think we will be stuck a the 75-85 level for several months because of several reasons,
There is a lot of tax loss selling, and the stock will probably not move at all until some time in December unless the Duvernay sale is announced before then. Because of the accounting issues a lot people staying away thinking another shoe may fall also.
I have read that nstead of selling the Duvernay they are seeking a partner. I f that is the case and they get 400-500 million for the 50% interest, rather than pay down the they should keep in cash to improve their current ratio. As you said their current debt is long term, but pay down the high interest loan .
I believe it is the premium to WTI, they have dropped it by a dollar since the started these cuts. What they are doing is having an affect on US producers ,the majors at least have indicated they will cut budgets next year, and would suspect the small producers because of their heavy debt load will have trouble getting financing. Would suspect that next years US production will be flat at best. and maybe even delcine a little. Thre is not that much oil over cpacity 1 million bll it will take about 6months to work this off and Saudi will have accomplished what they set out to slow US production and hirt Iran .
I don't expect a dividend cut this quarter, they will see how this oil price war plays out in this quarter before cutting the dividend. If this goes on for a year, their will be several frcking producers with high debt that will be affected. I would not be surprised to see oil drop to 65 -70 in this oil war. Saudi Arabia can hold out about year or two, before their reserves start to get pressured. Iran and the USSR will be in big trouble. Fortunately PWE has tackled their debt unlike the small US producers, and really have only one for land sale to make (Duvernay), in this environment they may wait to make the sale. As pointed out the lower Canadian dollar offsets some the pain from the lower oil prices.
There is only one million bbl of excess capacity if youy count Libya at 1 million bbl and not their 1.4 million bbl of potential production and Saudi Arabia at 10 million and not the advertized 12 million which they have never produced. . Remember a few months ago Libya was producing at 400,000 rate because of the ongoing war, and will likley fall back to that level at some point because things are getting worse over there.
I also agree. Really distributions should be in 1.30 to 1.40 range next year and that is essentially tax free. Stock should be around 20 at these levels. I few things I noted from conference call that was interesting:
1. Because of the heavy realiance on rail transportation from crude foeign suppliers are having issues bring their prodcuct to market, that is putting upward pressure on fertilizer products. This is an advantage for UAn as they are located right in the middle of the corn belt.
2. they feel corn producton will be slightly lower this year, but levels are supported by ethanol prodcution and because of the it should not het below 88 million bushels ( at 91 this year)
#. the third and forth quarter are the low points for UAN pricing, pricing improves in winter and spring with planting season.
I own this stock for distributions and ignor the price, although I don't understand Zacks all out effort to trash the stock. It is for income investors not for trading and a firm 1.30 distribution at the low end of fertilixer prices is not a bad return for a stock like this.