Leases not being renewed, idled rigs all over Caribbean costing $70k daily etc... The worst news imho is that in a depressed oil market the most expensive oil projects get shelved first and deep-water drilling is one of the most expensive. RIG won't recover until oil is above $70 and shows that it can stay there for some good time. That said, if RIG drops below $10pps (like I think will happen) you really have to think someone would try a takeover. My god, it might be cheaper to buy the company than to rent its rigs for a couple years LOL.
Gold mine- hole in the ground with a liar standing at the top
Fiat- central bank manipulated worthless paper backed by the power of the military
Gold- yellow metal dug up, melted and buried again (in vault). Inherently inflationary due to cost to store, protect and insure.
Bitcoin- global decentralized blockchain based payment system. Unsiezable and manipulation proof without any gov't or gold backing which eliminates counterparty risk.
Nonsense, with refineries running round the clock at maximum capacity and Oil's fall only in the last few weeks I see them beating estimates.
If I didn't know any better I would say I was on a pennystock board. Well, after oil slips below $40 this might just be a pennystock so maybe I'm not too far off. When I start to see inexorable proclamations of rocketing PPS's, buyouts and Ichan conspiracies I know there is no better time to be short. $5 will be my cover target.
I live 4 blocks from Wrigley Field so ya, I'm aware of the curse. At least we have the Blackhawks.
I think oil will go lower, but it will be very transient. The US and CAD refiners are all running at near maximum capacity and the Saudis need to slowly unwind their derivative positions against oil. This gloom and doom is just like march of 2009 and even then these integrated major never cut a dividend and I see this so called oil bear ending as quickly as it started. It took a year to get to $45 and we will walk back to $90 in the same period of time. DO NOT believe a word of this supply BS. This is all a paper oil derivative game with OPEC and the west trying to ut option one another. It will end this summer.
I believe oil will rebound to $75 this fall but am not sure exactly how that will help ChK much. This company is in very real trouble. Cutting the dividend killed off the intelligent big money and has made this a wasteland for shorts, day traders and gambling junkies masquerading as investors. The losses are unsustainable. I wouldn't buy above $5
I said sub $50 oil hurts OPEC terrorists more than it does the shalers because their countries budgets are contingent upon oil and their aristocratic\theocratic\communist governments essentially run the means of production. A US shaler can cap a well, lay off workers, call in a hedge to the investment banks that hold their money\debt and have this all completed in less than 30 days.
The reaction times and gameness of US shalers has been remarkable.
1 barrel = 42 gallons. Per gallon, retail water is more expensive than wit oil.
Saudi\OPEC strategy has NOT hurt the shalers. The Indies assets eventually end up under the umbrella of the majors which ultimately drives ppb down and bpd up. Shale industry will return even stronger.
Saudi\Kuwait hold massive derivative positions against oil. Yes, they are shorting their own product according to the paper Brent priced in London. This has offered major protection from the situation they wanted to avoid, that being..
..that being that the original strategy's goal was to drown the shalers in a bloody pool of red ink, have US production peak (which it did in April) and then maintain\increase market share as oil slowly rebounded to a balanced ceiling (around $75 Brent $65 WTI). This did not happen and other OPEC producers have been forced into maximum capacity, capex be damned.
Unfortunately for the terrorist Saudis (nobody seems to care that the 9/11 pilots were Saudi nationals) the US shalers also took a play outta Goldman's book and hedged themselves against oil which buys them more and more time. The ones that didn't hedge will have their assets end up under a major's umbrella at some point.
The paper oil derivative positions by both the US shalers and OPEC brass have to be unwound, delicately. Delicately because a geopolitical event could catch everyone off guard and push oil above $100 in a matter of weeks trying to unwind the ramparts of short paper.
The unwinding will probably be finished before the 2015 OPEC meeting in December and the original OPEC strategy will be abandoned, likely before that meeting. Oil below $50 is very damaging to OPEC and hurts their organization more than it does the shalers and sanders. Hedged, sub $50 is sustainable for a few weeks or at most for OPEC. We will see a move to $65-$75 before December 2015.
The dividend yields are astronomical on most integrated majors. Gas\Oil divergence should help most beat their earnings estimate
All the significant money is laying in wait right here folks. Right here in the Fortune 10 oil companies like cvx, xom etc... that have (whats now) ridiculous dividend yields. Buying these stocks is like buying stocks during March of 2009. I see cvx at $115 by years end. Do NOT buy the doom and gloom. My opinions don't even take into consideration a geopolitical or weather event.
...immense pressure from within OPEC to end the strategy. Many members are in dire straits and abject with unbalanced budgets causing social unrest within their countries. Oil below $65 does more damage to OPEC than it does to the US shale. The strategy has failed miserably and cost them half a trillion dollars all the while US shale is in a cocoon prepared to make an even bigger comeback.
Conclusion- OPEC will abandon the strategy before December 2015. Oil will rebound to $75 by December 2015. Oil majors will be considerably stronger moving forward. OPEC’S strategy will be voted to the obverse of revenue preservation opposed to market share preservation.
-Oil prices are not behaving according to the Saudi plan.
-U.S. production was supposed to get crushed by lower prices, and then OPEC was supposed to gain market share by way of growing demand.
-But U.S. output remains stubbornly high and prices are dropping beyond OPEC's control.
-Their strategy is backfiring. Saudi Arabia is drawing down foreign reserves and borrowing to meet its budget.
-Headwinds are rising and if prices remain below $50 for long, we may see a change in strategy, but probably not before OPEC sustains a $500 billion opportunity loss.
Bankrupting or pushing out shale oil companies esp the indies and small folks WILL NOT WORK. Why? Because the first thing they did was to turn to the Wall Street investment bankers that keep their money and debt. A simple hedging plan was put in place consisting of complex option spreads against the price of oil. This strategy alone has allowed them to stay afloat and will allow them to stay afloat for a long time. That’s not the biggest problem for OPEC. The biggest problem is that this “experiment” of theirs is making US shale stronger through consolidation. The abandoned projects picked up by the majors and the consolidation of the assets ultimately end up in the hands of the majors. This ultimately brings down the price of shale oil and increases the output.
OPEC did not anticipate that US production would peak (which it did in April) and then oil would continue retreating. The plan was to have US oil production peak and then gain/preserve market share on the slow rebound with many of the small players drowning in a bloody pool of red ink. Then came another wild card in the Iran sanction deal with the Iranians proclaiming they will ramp to 2.2B bpd. Too, there is a worry of the implications of the US repealing the export ban on oil because it has broad bipartisan support.
The current OPEC strategy will be abandoned before their December 2015 meeting. Saudi Arabia is under... continued below
Repeal of oil export ban would be a huge boon for large US oil companies and it seems that it has bipartisan support.
Iran oil is low quality bitumen, so until they get major upgrades to their oil infrastructure they didn't have access to because of sanctions they are not a threat to oil price. Maybe in 2 years.
Auto sales are historically high esp in Asia.
A geopolitical event can happen anytime.
Capped wells and low global rig count coupled with exploration moratoriums.
Oil will be in the $100 range next year.
Petrobras? Seriously? Anyone here ever been to Brazil? The place is a wasteland of uneducated violent trash... and actual trash. I have also never been to a more racist country in my life- worse even than India's villages. You think a government let alone a corrupt government can properly run a major transnational? These people couldn't build a world cup stadium without a dozen arrests and foiled murder plots before they broke ground.
People like to run around and call a country like India a first world country because they have a nuclear bomb and a makeshift space program all the while half the country's water is unusable, children starve to death on the streets and a middle class is non existent. Same goes for Brazil- 3rd world sans nuke or space program. We have a situation where greed, corruption, violence, racism, poverty and lack of education are the norm. A shame because Brazil's resources are enormous. Their resources are plentiful enough to masque the incompetence of the government and its people. Its like giving a drug loving high school drop out $2 trillion dollars.
This is the same country where Eike Batista, Brazil's richest man worth $34 Billion and considered the smartest man in South America lost all of his money and got himself arrested. If that's not pathetic enough then take into consideration that the judge presiding over his case, the prosecutor and the mayor of the city were found driving around in his seized Ferrari's and McLaren's. Too, Millions in jewelry was pawned by officers who served the warrant on his home.
This country is full of idiots from the favelas to the military protected gated "light skinned" communities. Leave Petrobas to the gambling junkies masquerading as investors. In a market where one can buy any of the high dividend yielding PPS beaten down majors like cvx, xom, mar etc... you guys are going to choose Petrobas? Where did you learn to invest? Bagholder U?
Sentiment: Strong Sell
Reminds me of the sanctions we put on Japan before they bombed is in WW2. At least they ain't on our border.
Talking about the majors in terms of a dividend. High water raises all ships though so what you might not get in a divi in e&p you would get in PPS appreciation. A oil move to $60 Wold probably put chk closer to $11 PPS. That's a huge 30% gain from where we are.
Bashforcapital is right. With taxes and permits on land in the middle of nowhere their land assets are completely worthless without oil above $60. Hell, the bep for shale is $75 with current tech although they might get it to $65-$70 by 2017. Alot like cveo imho. Try to think of it like coal mines.
$40 a drum? My god, they get 60% of tax rev from o&g. Sanctions cutoff necessary equipment and cooperative projects. Forget about growth, they can't even maintain their bpd output.
Until that dividend is reinstated I think chk will underperform in PPS terms though.
Then BANG. Everyone with the big significant money is just laying in wait. These oil companies dominate the fortune 50 list and the dividend yields are becoming massive and quite frankly ridiculous. I don't care if oil breaks $40 because it will be short lived and we are close anyway. I also like the fact that the energy sector does very well in the late stages of bull markets (going back 45 years). Hell, sometimes these things become self fulfilling prophecies.
Now, chk is a bit of an outlier when it comes to oil companies. Their business model, well, I wish this company knew what they wanted to be. The good news is the oil sector and especially chk went down far too quick for a protracted bear market. The behavior is more like a V shaped recovery with an equal crash and rise.
Something as simple as demand, weather or a geopolitical event could cause a huge upmove.