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936horn

By 936horn
in Business and Markets

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Pescado_Rojo
Pescado_Rojo

I bet you could score a Lafayette 10 for a mani/pedi gift card and a pound of boudin right now.  I was sitting in a Starbucks by the med center in Laffy once, and a brand new white Escalade, lift

Rimbo
Rimbo

If you're Trump right now, you're watching Fox News, eating a cheeseburger, and getting mad about the lyin' media and preparing your next tweet about how some lupus treatment should be given to your s

fattyflattie
fattyflattie

My time finally came last Friday AM. I have survived around a dozen, give or take 1-2, since ‘08.  I was consulting for a project set to go in ‘22, but with all the uncertainty, it sounds like they’ve

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Planet Houston

Planet Houston 4923

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Fundamentally, I don’t know how shalecos ever are successful again, given the real decline rates on these wells (not the ones you read in various K’s and Q’s). The amount of capex required to maintain today’s production flat is incredibly high. And the alternative of shutting down new completions to weather the storm is available only to a very select few - the debt service obligations of most shalecos out there means that they have no choice but to keep up production. 

Catch-22. For those of you on #EFT, this should come as no surprise...
 

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bluto

bluto 4883

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Am I an idiot (yes) for throwing a buncha moneys at energy and oilfield stocks with them trading at early 2000s levels? I have all the patience for riding out a few months of shit show, but these big dogs like Apache or oxy aren’t going under entirely right?

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Wally Fairway

Wally Fairway 5521

Posted
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20 hours ago, Trey3216 said:

OXY cut it's dividend from $.79 to $.11 this morning, slashed capex as well.  

 

14 hours ago, Trey3216 said:

Yep.  Will put a huge dent in the title loan they owe Warren Buffett 

 

14 hours ago, WBT said:

Good thing they paid whatever it took to get Anadarko

Yeah, taking on $40 billion in long-term debt less than a year ago to acquire Anadarko was bad timing. I don't see anyway that it works out with oil below $40, let alone barely treading $30; IMO there will be desperation moves - like selling or spinning off OxyChem and their Midstream businesses, but that won't be enough to fix this problem. 

Looked it up - October 2018 OXY was above $80/share, I expect it to get to >$10 any day now, I'd buy some puts if I wasn't overly invested in SPY puts right now. Glancing at their put strikes, I may pick up some 6-19 (100 day) expiry $2.50 strike is about $.25, $5.00 strike is $.50 and $7.50 is under $1 - but those are pre open prices.....maybemaybemaybe, what could go wrong? YOLO

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bernorange

bernorange 8348

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Quote

Saudi Arabia said on Tuesday it would boost its oil supplies to a record high in April, raising the stakes in a standoff with Russia and effectively rebuffing Moscow’s suggestion for new talks.
...
Moscow said Russian oil companies might boost output by up to 300,000 bpd and could increase it by as much as 500,000 bpd, sending the Russian rouble and stocks plunging.
...
Saudi Arabia needs an oil price of around $80 to balance its budget, but has cash reserves and the ability to borrow to deal with a price plunge for now. Russia needs about $42 to balance its books and also has hefty cash reserves it can draw on.

Iraq and some other OPEC nations, with more meager financial resources to cope with a dramatic drop in oil revenues, called for action to shore up prices.

Ratings agency Fitch said a sustained sharp drop in oil prices would hit the sovereign ratings of those exporting countries with weaker finances, particularly those with exchange rates pegged to the dollar.

But even Saudi Arabia, with its hefty financial reserves and sovereign wealth fund, did not have “infinite leeway” to support its A (stable) rating, Fitch analyst Jan Friederich said.
...

https://www.reuters.com/article/us-oil-opec-saudi-idUSKBN20X13Q

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bernorange

bernorange 8348

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Just now, Trey3216 said:

I say we let them do it ...

You think they need our permission?  Short of military invasion of Saudi Arabia, I don't think they are listening to us.  MbS got away with murder (assassination, dismemberment, etc.) while essentially caught red handed.

Apparently POTUS called MbS on Monday to talk about the price war ( https://www.msn.com/en-us/money/markets/putin-and-mbs-draw-trump-into-grudge-match-for-oil-supremacy/ar-BB10ZAMN ).  Doesn't look like the Saudi's have changed their mind on the path forward.  I can only imagine how that conversation went.

POTUS:  I can haz price stability?

MbS:  lol, no.

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Trey3216

Trey3216 15325

Posted
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Just now, bernorange said:

You think they need our permission?  Short of military invasion of Saudi Arabia, I don't think they are listening to us.  MbS got away with murder (assassination, dismemberment, etc.) while essentially caught red handed.

Apparently POTUS called MbS on Monday to talk about the price war ( https://www.msn.com/en-us/money/markets/putin-and-mbs-draw-trump-into-grudge-match-for-oil-supremacy/ar-BB10ZAMN ).  Doesn't look like the Saudi's have changed their mind on the path forward.  I can only imagine how that conversation went.

POTUS:  I can haz price stability?

MbS:  lol, no.

Not what I'm saying at all.  But their pretense of "Hey, we can just do this and then borrow money to make it all happen" will end up in a scenario similar to what we're seeing in our own patch right now.  

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Trey3216

Trey3216 15325

Posted
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3 minutes ago, bernorange said:

Ah, I get you.  As I understand it, they are drawing down on reserves instead of relying on new borrowing.  Who knows how long that can last though.

If they need $80/b to balance their budget, and they're good on running oil into the 20's for an extended period of time, I'd bet it would take less than 2 years, maybe 3, before they completely deplete their cash reserves.  And that's barring any further economic/political/sociological shocks.   Obviously, China would step up to the plate if it meant hurting the US, but for how much/long?  Very complicated case.  Lotta ins, lotta outs, lotta what have yous.   

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bernorange

bernorange 8348

Posted
Posted
11 minutes ago, Trey3216 said:

If they need $80/b to balance their budget, ...

BTW, the second article I linked (msn.com) states they need $70/b.  That's a fairly wide gap (like South Austin's Mom).  Time will tell.  Can they outlast US Shale or Russia is the big question I suppose.

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Trey3216

Trey3216 15325

Posted
Posted
3 minutes ago, bernorange said:

BTW, the second article I linked (msn.com) states they need $70/b.  That's a fairly wide gap (like South Austin's Mom).  Time will tell.  Can they outlast US Shale or Russia is the big question I suppose.

Yeah, I've seen both numbers.  I assume it's somewhere in the middle, as most things usually are, but wouldn't be surprised by either being correct.  

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WBT

WBT 20415

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Posted
1 hour ago, Parliament said:

...and then come back when SA runs out of money, correct?

Yep, which is why I don't really get this play for Saudi or Russia.  They're driving down price to build market share, but then what?  As soon as they try to cut off the spigot and drive prices back up, US shale will start right back up.  Plenty of companies will be driven into bankruptcy for sure, but there will be new capital to replace the old when the time comes.

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WBT

WBT 20415

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5 hours ago, Johnny Chimpo said:

Saw a Bloomberg article that said after the Oxy dividend cut they are paying common shareholders a $98 million dividend quarterly and Warren Buffett $200 million quarterly. 

Someone should write a history of Buffet's preferred stock deals.  I know he had a sweet thing going from Dow Chemical awhile back.  He's good at finding companies that have over-leveraged themselves and essentially loan sharking them until they can get back on their feet.

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Trey3216

Trey3216 15325

Posted
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9 minutes ago, WBT said:

Someone should write a history of Buffet's preferred stock deals.  I know he had a sweet thing going from Dow Chemical awhile back.  He's good at finding companies that have over-leveraged themselves and essentially loan sharking them until they can get back on their feet.

One of his best was loan sharking Goldman Sachs during the financial crisis.   It was beautiful 

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jimmyjazz

jimmyjazz 45546

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Posted

I posted on the markets thread about a gasoline ETF nearing its all-time lows, but there's obviously no guarantee it won't pierce that low at some point.

Is there some sort of price floor on gasoline at the pump?  I mean, I guess it starts with all the taxes, etc., but I'm looking for a little deeper dig than that.  I would assume there is a minimum $/gal baked into the price just based on transportation and refining costs, regardless of what the original raw material is selling for.  Is that true?  If so, any idea where that base is?

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Horns99

Horns99 155

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Shorts doing everything they can right now to keep natty below 2.  If it breaks above, watch out.  Up 25% from the overnight low on Sunday.  

 

So much for that ...Natty crushed starting after lunch today, down another .13 since the reopen tonight.

 

Near term, demand is going to suck it’s looking like

 

 

Sent from my iPad using Tapatalk

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LurkingHorn

LurkingHorn 1044

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1 hour ago, Dr. Beeper said:

In the immediate aftermath of them blowing shit up, crude actually went down in the out years. No bullish news for price sticks. 

I’m actually looking to buy PDP at a really good valuation (today’s strip, PV20 or maybe higher). I have no idea how to hedge this thing. Think I might buy puts. 

If you buy it at today's strip doesn't hedging PDP not make much sense? Unless you see this dropping into the teens. You're already buying it at bottom barrel prices. 

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BLKNSTY

BLKNSTY 289

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I posted on the markets thread about a gasoline ETF nearing its all-time lows, but there's obviously no guarantee it won't pierce that low at some point.
Is there some sort of price floor on gasoline at the pump?  I mean, I guess it starts with all the taxes, etc., but I'm looking for a little deeper dig than that.  I would assume there is a minimum $/gal baked into the price just based on transportation and refining costs, regardless of what the original raw material is selling for.  Is that true?  If so, any idea where that base is?

Not an expert but $0.50 to $0.80 depending on the state/locality I’d guess.
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bernorange

bernorange 8348

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Abu Dhabi National Oil Co. will boost crude supply to more than 4 million barrels a day next month as the United Arab Emirates joins a battle for market share triggered by Saudi Arabia and Russia.

To pump this amount, Adnoc would need to add more than 1 million barrels a day to the quantity that the U.A.E. produced in February, according to data compiled by Bloomberg. While the target for April is higher than what the International Energy Agency estimates the country has the capacity to produce, Energy Minister Suhail Al Mazrouei said his country can achieve it.
...
Abu Dhabi holds most of the oil deposits in the U.A.E., which ranks as the third-largest producer in the Organization of Petroleum Exporting Countries after Saudi Arabia and Iraq.

Government-runAdnoc can also draw on reserves it stores in the emirates of Abu Dhabi and Fujairah as well as outside the U.A.E. It has around 8.2 million barrels of oil storage capacity at Kiire in Japan and 5.9 million barrels of capacity in Mangalore, India.
...

https://www.msn.com/en-us/money/news/abu-dhabi-plans-big-oil-output-boost-to-join-the-price-war/ar-BB112clb

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bernorange

bernorange 8348

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Posted
Just now, Dr. Beeper said:

Why are these idiots doing this in the midst of the biggest demand destruction event since at least the Great Recession?  Why!?!

I was pondering this last night.  The narrative says Russia wouldn't play ball so Saudi Arabia goes scorched earth to force them to the table.  Reports are Russia wanted to hurt/destroy the US Shale oil industry.  Saudi Arabia is playing right into that.  Almost as if they agreed with the goal, but couldn't afford (politically) to overtly be working against the USA.  Some 5D chess being played, somewhere.

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Chewbacca

Chewbacca 7729

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I was pondering this last night.  The narrative says Russia wouldn't play ball so Saudi Arabia goes scorched earth to force them to the table.  Reports are Russia wanted to hurt/destroy the US Shale oil industry.  Saudi Arabia is playing right into that.  Almost as if they agreed with the goal, but couldn't afford (politically) to overtly be working against the USA.  Some 5D chess being played, somewhere.
I have had the same thoughts. Saudis are not our friends and never have been.
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Neonmoon

Neonmoon 38127

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Just now, Chewbacca said:
2 minutes ago, bernorange said:
I was pondering this last night.  The narrative says Russia wouldn't play ball so Saudi Arabia goes scorched earth to force them to the table.  Reports are Russia wanted to hurt/destroy the US Shale oil industry.  Saudi Arabia is playing right into that.  Almost as if they agreed with the goal, but couldn't afford (politically) to overtly be working against the USA.  Some 5D chess being played, somewhere.

I have had the same thoughts. Saudis are not our friends and never have been.

Absolutley agree. They've been playing us like a fiddle for years. I hope I'm alive to see them fall

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Armybrat

Armybrat 40725

Posted
Posted
3 minutes ago, Chewbacca said:
5 minutes ago, bernorange said:
I was pondering this last night.  The narrative says Russia wouldn't play ball so Saudi Arabia goes scorched earth to force them to the table.  Reports are Russia wanted to hurt/destroy the US Shale oil industry.  Saudi Arabia is playing right into that.  Almost as if they agreed with the goal, but couldn't afford (politically) to overtly be working against the USA.  Some 5D chess being played, somewhere.

I have had the same thoughts. Saudis are not our friends and never have been.

I never thought they were. They’re not friends with anybody except themselves, and even that is highly suspect.
Shit, their ruling family has been cutting each others’ throats for generations.

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Trey3216

Trey3216 15325

Posted
Posted
39 minutes ago, Dr. Beeper said:

Why are these idiots doing this in the midst of the biggest demand destruction event since at least the Great Recession?  Why!?!

In theory, they're attempting to massively distort demand by increasing production to unsightly levels.  Their hope is that gas will be so cheap that demand picks up by a large multiple, which will drive prices higher in a more efficient and market based manner than artificial supply limitations. 

 

If I'm the US, there is a two-fold way to handle this situation.  

1) Invest in new refineries at the the governmental level.  Much of the problem with the oil we produce here in the US is that we have to export almost all of it.  Our refineries are setup to refine crude from Venezuela and KSA, etc.  Get some refineries online that refine the crude we are pumping domestically.  Completely shutoff the importation of crude from KSA.  Offer incentives in the meantime for consumers to buy new vehicles (sounds ridiculous, but having bunch of better fuel mileage vehicles on the road will both help environmentally and destroy KSA/Mother Russia's hopes of large scale demand multiple increase)  

 

2) Truly invest and build a mass transit system and extend incentives for purchasing EV's in the long term for personal use.  We've needed to do it for years, but if there were ever a time to use market forces to solve market problems, now would be it.  Domestic oil partner up/invest in mass transit projects.  Use out of work pipeline guys to help build and make HSR lines through the mass transit corridors.  Use the other oil field workers that will be in oversupply to begin work on smart hydro-electric/wind/small scale power generation projects.  We could build smaller scale power generation plants that would serve on more of a local basis than a regional basis.  Generate power via natural gas and wind/hydro combination.  Cut coal out of the picture.  

 

I'm no government interventionist at all, but we could feasibly do this with a combo of Corporate America investment and partial government subsidy/regulation.  Put our people to work, put KSA and Russia out of business.  Do it the old fashioned way, be the better businessman.  Kill them without shedding a drop of blood, just crush them via business.  

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