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Definitive Oil & Gas Discussion

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2 years 4 months ago #91 by tankumo
Replied by tankumo on topic Definitive Oil & Gas Discussion
Yeah, I saw that article, oil will rebound for sure, but oil will not reign forever, one day electric car will take over, say decades from now.

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2 years 3 months ago #92 by tankumo
Replied by tankumo on topic Definitive Oil & Gas Discussion
Oil bear trap? I am not convinced oil bear market is over, but I may be wrong.

www.cnbc.com/2016/08/10/oil-markets-are-...ay-overdone-rbc.html

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2 years 3 months ago #93 by tankumo
Replied by tankumo on topic Definitive Oil & Gas Discussion
Remember peak oil?

This is a long and good article.

ourfiniteworld.com/2016/08/08/an-updated...-the-peak-oil-story/

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2 years 3 months ago #94 by Pepe le Moko
Replied by Pepe le Moko on topic Definitive Oil & Gas Discussion
You guys seen this?

srsroccoreport.com/the-coming-breakdown-...ost-analysts-missed/

I read a book about Peak Oil by Robert Hirsch. He doesn't care for the concept of Energy Returned on Energy Invested.

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2 years 3 months ago #95 by tankumo
Replied by tankumo on topic Definitive Oil & Gas Discussion
OMG, is this for real? I was hoping for another leg down in oil stocks.

www.resourceinvestor.com/2016/08/22/buy-signal-oil

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2 years 3 months ago #96 by Pepe le Moko
Replied by Pepe le Moko on topic Definitive Oil & Gas Discussion
Revealed: ECB Secretly Hands Cash to Select Corporations
Many of the companies receiving the cash are European subsidiaries of US energy companies.

www.nakedcapitalism.com/2016/08/revealed...ct-corporations.html

World Governments are colluding to keep US oil and gas companies producing at uneconomic levels.

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2 years 2 months ago #97 by tankumo
Replied by tankumo on topic Definitive Oil & Gas Discussion
Erik, do you do any studies of Bakken production? Looks like oil may surge long term.

peakoil.com/production/the-death-of-the-...-trouble-for-the-u-s

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2 years 2 months ago - 2 years 2 months ago #98 by MrToad
Replied by MrToad on topic Definitive Oil & Gas Discussion
What do you see as impacts on oil and other commodities of the new Fed rules on banks holding commodities?
www.bloomberg.com/news/articles/2016-09-...ty-holdings-itfye706
The oil and commodities took a dump right after the announcement. Liquidity may be an issue for some commodity futures.
Last edit: 2 years 2 months ago by MrToad. Reason: better link

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2 years 2 months ago - 2 years 2 months ago #99 by Pepe le Moko
Replied by Pepe le Moko on topic Definitive Oil & Gas Discussion
macrochart.blogspot.fr/2016/08/the-real-...panies-have.html?m=1

The Real Reason Energy Companies Have Been Going Bankrupt
The reason oil companies have gone bankrupt over the past few years is not due to "historically low oil and natural gas prices" as stated in this article.

Here is a long term inflation adjusted price chart:

MacroTrends

Does the current price look historically low on an inflation adjusted basis?

Here is the chart not adjusted for inflation.

St. Louis Fed
Natural Gas prices are closer to the lower end of the price range. Below is the inflation adjusted long term natural gas price.

Inflation Adjusted Natural Gas
However, for as far back as the above data goes the price of natural gas is regularly between $2-4/mcf. This is the natural range. The higher prices have all been "spikes" due to hurricanes, La Nina events or other short term phenomenon.

Here is the non-adjusted price chart. As you can see these are not historically low prices.


St. Louis Fed
It appears the 2006-2011 period for oil and natural gas were HISTORICALLY HIGH prices. The opposite of what the article states.

The real reason energy companies are going bankrupt is more technical.

Reserve base lending for unconventional reservoir projects became a ponzi scheme. This is how it works.

Step 1) An oil company borrows money or issues equity to drill a well.
Step 2) The well "discovers" oil. The reason I put discover in quotations is that the resource (not reserve, there is a difference) potential of shale source rocks has been known for decades.
Step 3) Estimate the resource and reserve potential.
NB: Resource is properly defined as uneconomic at the current price.
Reserve is properly defined as economic at the current price.
Step 4) Book the reserve as an asset on the balance sheet as per SEC legislation.
Step 5) Borrow money against the reserve.
Step 6) Drill more wells and book more reserves and borrow more money.
Step 7) Repeat until you cannot repeat again.

This process was not always a ponzi scheme. Before the mantra of peak oil and the fear the world as running out of oil this practice was done conservatively. But when the idea that world was short of crude supply the thinking became that oil was a one way trade. This gave Wall Street the confidence that lending money against high cost reserves to develop more high cost reserves was a sound practice. On the other side of the transaction little thought by producers was given to the scenarios that would cause these reserves revert to resources and be treated differently on their balance sheet.

Furthering the Ponzi scheme was Central Bank policies of zero percent interest rates. This cheap source of funds decreased the discount rates for cash flow streams, increasing the net present value and distorting the time value of money calculation for these type of projects.

Under this strategy developing more reserves meant more debt. When prices reverted to the mean, reserves became resources and these companies became insolvent as resources are not the same quality asset as reserves and are treated differently under SEC legislation.

Exacerbating the problem was now these producers have to maximize cash flow to cover the interest cost which creates more excess supply and more downward pressure on prices turning more reserves back into resources impairing more balance sheets and strengthening the negative feedback loop.

The bankruptcies happening today are the result of historically high oil prices, a this time is different type thinking and central bank distortions, but not low prices.
Free Trader at 7:52 PM

I found this from ZH/oilprice/Pierce Point. Both ZH and oilprice dropped the credit. Go look at the guy's site . His name is Brad Parkes and he is a sharp thinker.
Last edit: 2 years 2 months ago by Pepe le Moko.

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2 years 2 months ago #100 by Pepe le Moko
Replied by Pepe le Moko on topic Definitive Oil & Gas Discussion
www.zerohedge.com/news/2016-09-27/crude-...eal-hopeful-november
Crude Chaos Strikes: Saudis Admit "No Deal" But "Hopeful" For November

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1 year 8 months ago #101 by cmyers27
Replied by cmyers27 on topic Definitive Oil & Gas Discussion
We definitely need an Oil&Gas thread here.
In these tough times for the industry maybe we need a job too? Here are some by categories:

Drilling Jobs
Engineering Jobs

And others you may want to check in that website. I avoid putting more links here not to be flagged as spam :P

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1 year 7 months ago #102 by kglg1111
Replied by kglg1111 on topic Definitive Oil & Gas Discussion
Yes, I agree. And The Podcast features a short tale of Crude by our Great Hosts! I trade CL for a living and use Measured Moves to Spot Reversal points. One of my charts was Enclosed Here this week (SNAP - -Buy/SELL/Hold - - and it is in a pattern short setup from the last week alone).

Crude (WTI or CL) is in a Short setup, but, the oil Majors/Interests and so on, with the backdrop of Oil being connected to the Petrodollar phenomenon, is being bid back up into a tighter and tighter range. If anyone is interested, I can post a chart here or refer you to a series, showing the $50.50 midline (short or 50% line) of the range I am watching very carefully: $74.95 drawn down to $26.05. This entire structure is being challenged and it breaks at $56.27.

IF that happens, then bidders must continue to bid it back up into the larger range from all times highs to that low point, $26.05. THAT will be a challenge.

Anyway, there are LONGS below this that are indeed holding up price.

DJ

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