Hey Oil Barons.......

[Neonmoon 38,130]

4 hours ago, Trey3216 said:

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.  

Agree. We have enough natural gas reserves to transition to electric sooner rather than later. If we start moving that direction, we could kneecap KSA on our long march towards wind/solar

[Neonmoon 38,130]

2 hours ago, Dr. Beeper said:

How quickly do we get back to $50?  Let’s presume for the purposes of this discussion that coronavirus peaks worldwide by 4/15, and is a non-factor by 6/30. 

Assuming your timeline, which is pretty much miracle level best case, stability would increase the price, maybe even overshoot from everyone traveling again, but it’s going to be hard to sustain $50 with Russia/KSA pumping record levels. 
 

Now, it’s hard to gauge how much and how long Rigs might be shut down due to any CV safety from companies. Some Operators will care , some won’t give a shit. And then how that affects the price 

[Message Board User 12,405]

Gonna be a bunch of oil execs praying for a handful of Cat 3s and higher in the Gulf this year.

[Neonmoon 38,130]

I meant coronavirus being a being a non factor by 6/30 is miracle level best case (in my opinion) 
 

[bluto 4,997]

Shoutout to my main man Icahn for helping me dump oxy for a small profit today! Now if he could get to work on a couple others, I’d appreciate it.

[bernorange 8,385]

Quote

The March 18 meeting of the OPEC+ panel monitoring the oil market and producers’ compliance with quotas has been canceled, a source in one delegation told Russia’s news agency TASS on Thursday, as Saudi Arabia and its OPEC allies face off with Russia in an escalating oil price war after the OPEC+ group failed to agree on joint actions last Friday.

The meeting of the Joint Technical Committee (JTC) of OPEC and non-OPEC countries, scheduled for next week, is unlikely to take place, three sources familiar with the plans told Reuters, with one source saying that the meeting would be postponed.
...

https://oilprice.com/Latest-Energy-News/World-News/OPEC-Panel-Cancels-Next-Weeks-Meeting.html

USCcheerleader.gif

[Fudge Nuggets 19,455]

1 hour ago, Neonmoon said:

Assuming your timeline, which is pretty much miracle level best case, stability would increase the price, maybe even overshoot from everyone traveling again, but it’s going to be hard to sustain $50 with Russia/KSA pumping record levels. 
 

Now, it’s hard to gauge how much and how long Rigs might be shut down due to any CV safety from companies. Some Operators will care , some won’t give a shit. And then how that affects the price 

Are oil and gas companies shutting down anything due to CV?  I know mine isn’t and it’s considered one of the more “progressive” of the bunch.  The only thing that’s going to cause any of them to start shutting down is running out of cash.

[Fudge Nuggets 19,455]

Hopefully Icahn slaps Vickie on the ass as he slides into the chair at the head of the boardroom table and tells her to fetch him a sandwich and get some coffees for the rest of the boys before she leaves.

[Johnny Chimpo 489]

9 minutes ago, Fudge Nuggets said:

Are oil and gas companies shutting down anything due to CV?  I know mine isn’t and it’s considered one of the more “progressive” of the bunch.  The only thing that’s going to cause any of them to start shutting down is running out of cash.

I work international rotational for a major, and they haven’t told us to shut down rotator travel yet. I’ve got coworkers from China including Wuhan, Italy, South Korea, and many other countries. The national government has banned entry from the major hotspots and the company has slowly been cracking down on travel from all over, but hasn’t pulled the plug on the USA yet. I’m curious to see how long it takes them to pull the plug on rotator travel, if they do. 

[Neonmoon 38,130]

13 minutes ago, Fudge Nuggets said:

Are oil and gas companies shutting down anything due to CV?  I know mine isn’t and it’s considered one of the more “progressive” of the bunch.  The only thing that’s going to cause any of them to start shutting down is running out of cash.

I guess it depends on your definition of “shutting down”, but contingencies a being talked about in critical vs non critical personal for a rig. Not to mention if crews test positive onshore or offshore. Not to mention people who might not show up due to CV concerns or their kids not having schools for a month. Everything is on the table 

[RPM 26,628]

WTI @ $31.40 . I just filled up at $1.78 at Murphy.

[tx 3 putt 78,682]

1 hour ago, RPM said:

WTI @ $31.40 . I just filled up at $1.78 at Murphy.

 

1.45 at costco, if i read it right

Edited March 13, 2020 by tx 3 putt

[tx 3 putt 78,682]

1 hour ago, Fudge Nuggets said:

Are oil and gas companies shutting down anything due to CV?  I know mine isn’t and it’s considered one of the more “progressive” of the bunch.  The only thing that’s going to cause any of them to start shutting down is running out of cash.

Devon Energy cuts capital spending by $500 million after oil crash

The Oklahoma City-based oil and gas producer on Thursday reduced its 2020 capital budget to $1.3 billion, down nearly 30 percent from its previously announced plans. The cuts will be focused on the company’s less productive STACK and Powder River Basin rigs in Oklahoma and Wyoming, respectively.

[RPM 26,628]

Devon sold their North Texas property a couple years ago to a bunch of small operators. 

[FartingMonk 3,619]

They are beginning to limit access to our plant and depending on how severe it gets.  They may just keep a Rideout crew here.  14 operators on a 24/7 basis until this mess is over with.

[Fudge Nuggets 19,455]

4 hours ago, tx 3 putt said:

Devon Energy cuts capital spending by $500 million after oil crash

The Oklahoma City-based oil and gas producer on Thursday reduced its 2020 capital budget to $1.3 billion, down nearly 30 percent from its previously announced plans. The cuts will be focused on the company’s less productive STACK and Powder River Basin rigs in Oklahoma and Wyoming, respectively.

That has more to do with the oil price collapse. I meant are any companies shutting down over fears of workers catching and spreading the Boomer AIDS.

[Lobwedgephil 1,146]

Saudi is currently leasing every tanker they can find and filling them with crude, soon we are going to have pretty much every tanker in the world sitting offshore full of oil. The price is going to suck for a while. 

[Neonmoon 38,130]

1 hour ago, Lobwedgephil said:

Saudi is currently leasing every tanker they can find and filling them with crude, soon we are going to have pretty much every tanker in the world sitting offshore full of oil. The price is going to suck for a while. 

KSA are a bunch of cunts

Edited March 13, 2020 by Neonmoon

[Blotto 24,021]

1 hour ago, Lobwedgephil said:

Saudi is currently leasing every tanker they can find and filling them with crude, soon we are going to have pretty much every tanker in the world sitting offshore full of oil. The price is going to suck for a while. 

These tanker stocks have already come back some, but still have a long way to go before they hit their levels from just a couple of months ago. Anybody here know enough about the dynamics of the tanker market to opine on this article?
https://seekingalpha.com/article/4331589-biggest-oil-price-war-winner-crude-tankers

[Fudge Nuggets 19,455]

13 hours ago, Lobwedgephil said:

Saudi is currently leasing every tanker they can find and filling them with crude, soon we are going to have pretty much every tanker in the world sitting offshore full of oil. The price is going to suck for a while. 

XOM, CVX etc should hire Erik Prince to put together a freelance submarine force and torpedo the shit out of those tankers.

[Parliament 14,598]

Don't give them ideas.

[Rip76 5,022]

https://www.texasmonthly.com/news/houston-not-prepared-oil-bust/?utm_source=Texas+Monthly&utm_campaign=d065c4b4d0-This+Week+in+Texas+3-14-20&utm_medium=email&utm_term=0_92f99d7313-d065c4b4d0-53266927

[TonyTexas 10,772]

Gasoline futures have gone down about $0.85 in the last month yet prices at the pump are only down about $0.20. Please explain. 

[Neonmoon 38,130]

2 hours ago, TonyTexas said:

Gasoline futures have gone down about $0.85 in the last month yet prices at the pump are only down about $0.20. Please explain. 

The guy buying gasoline has to write a report saying we're not spending as much to get gasoline. That report has to be talked about, lots of meetings then a decision is made to reduce the price at the pump. Someone has to type up a decision memo. That memo is then sent out to the certain departments who have do their daily checks and such. Eventually the regional seller has to let all of his store owners that they need to lower their price. Then the store owners have to get their ass outside and physically change the price on the sign. 

That shit takes time. 

[Rusty Shackelford 414]

Anyone follow the DRIP etf?  Holy shit that etf is broken, this should be updated shortly to report today's price, but on Friday, DRIP closed at $426 vs. the NAV of $213

http://www.direxion.com/products/daily-sp-oil-gas-exp-prod-bull-3x-shares#

Looks like they may have narrowed that massive gap today, but WTF causing this?

[jimmyjazz 47,203]

UGA at $12.51 . . . I'm not sure it can go much lower (he foolishly opined).

[Trey3216 15,452]

14 hours ago, Rusty Shackelford said:

Anyone follow the DRIP etf?  Holy shit that etf is broken, this should be updated shortly to report today's price, but on Friday, DRIP closed at $426 vs. the NAV of $213

http://www.direxion.com/products/daily-sp-oil-gas-exp-prod-bull-3x-shares#

Looks like they may have narrowed that massive gap today, but WTF causing this?

On the 3x ETN’s, there’s such thing as negative decay as well as decay.  
 

these things are not long term investments, primarily due to decay factors. (Daily re-pricing, etc).   If there are a consecutive number of days with directional volatility, negative decay can start occurring to benefit one side of the trade.  
 

Oil companies have been routed for 3 weeks straight now, thus, this thing has built in a ton of negative decay.   If we had a week of straight rocket ship in oil companies, a lot of that negative decay would disappear. 

[Rusty Shackelford 414]

I understand all that about decay on the NAV, but what happened on Friday was DRIP market price trading at an obviously extreme premium over NAV. It’s normal to be off a few %, but the bids and asks drive the market price, and they went full retard on Friday. Do you think it’s the algos or humans that couldn’t set a fair price during the session?

[BTW 370]

Typing this as I sit at my dining room table on a Tuesday morning in Midland.  XTO, Concho, Apache (to name a few) have all closed down their offices to non-essential employees while the rest WFH at least for the next few weeks.

I'm repeating what many have already said, but there is about to be a whole lot of really cheap office space available downtown if anyone is considering opening up an independent O&G company in the Permian. 

Looking at the strip, we're in for a 12-24 month stretch with $30-something oil.  If this shutdown continues longer than people think, it's won't be just Saudi with a bunch of crude in storage.  Everyone is going to have barrels stashed everywhere they can cram them, which means it'll take even longer to unwind all of that excess inventory (don't even get me started on DUCs).

I know people believe that Russia is the best positioned to wait this out, but I'm not convinced.  Can Saudi not outlast them?  I am pretty sure that the US shale players are going to feel the brunt of this, but if Russia starts to feel the pinch, won't they just start a war to get prices to spike?

Sorry for rambling

[Eastwood 4,394]

1 hour ago, BTW said:

I know people believe that Russia is the best positioned to wait this out, but I'm not convinced.  Can Saudi not outlast them?  I am pretty sure that the US shale players are going to feel the brunt of this, but if Russia starts to feel the pinch, won't they just start a war to get prices to spike?

Sorry for rambling

The Saudis have more people to get under control and a more expensive welfare state, as far as spending goes. Putin's handful of oligarchs to keep happy is smaller in number than the Saudi Royal Family. Also, SA is more likely to go to war. They are an oil economy surrounded by other oil economies who all hate each other. Specifically, Iran. It's not a matter of if, but when, at this point. Russia's only skin in the game is their market share and being able to squeeze the EU on their natural gas supply, which the US is very slowly trickling into with the new transportation methods.

Never get into a war of attrition with Russia. That shit is damn near a third their national identity with the other two thirds being how they handle winter and vodka.

[Trey3216 15,452]

1 hour ago, Rusty Shackelford said:

I understand all that about decay on the NAV, but what happened on Friday was DRIP market price trading at an obviously extreme premium over NAV. It’s normal to be off a few %, but the bids and asks drive the market price, and they went full retard on Friday. Do you think it’s the algos or humans that couldn’t set a fair price during the session?

A little bit of both.  You had massive increases in Implied Volatility, which drive the options prices sky high (3x levered ETN's have lots of options involved).  Both algo and human panic buying/selling will cause the mechanism to overshoot.  

[Trey3216 15,452]

13 minutes ago, Eastwood said:

The Saudis have more people to get under control and a more expensive welfare state, as far as spending goes. Putin's handful of oligarchs to keep happy is smaller in number than the Saudi Royal Family. Also, SA is more likely to go to war. They are an oil economy surrounded by other oil economies who all hate each other. Specifically, Iran. It's not a matter of if, but when, at this point. Russia's only skin in the game is their market share and being able to squeeze the EU on their natural gas supply, which the US is very slowly trickling into with the new transportation methods.

Never get into a war of attrition with Russia. That shit is damn near a third their national identity with the other two thirds being how they handle winter and vodka.

Yep.  Saudi will always be in the more precarious situation than both the US and Russia.  I mean, where do you think they buy all their food from?  

[Neonmoon 38,130]

This is not a fun article 

https://www.forbes.com/sites/daneberhart/2020/03/09/there-are-no-winners-in-oil-markets-price-war/#3cce35795676

Quote

Russia can balance its budget at a Brent crude price of $42 a barrel, but Brent was trading around and below $35 on Monday. At prices in the $30s, there is no growth to Russia’s National Welfare Fund, which threatens many social programs that Putin seeks to advance at home. It will force Moscow to draw down its foreign exchange reserves or cut spending. 

Russia’s Finance Ministry on Monday said its reserves would allow the country to withstand prices of $25-$30 a barrel for a period of six to 10 years.

Quote

The kingdom also relies, however, on oil revenues more than Russia and the United States, and it needs a Brent price of $83 a barrel to balance its budget, according to the International Monetary Fund. 

But I think what is lost in all of this is Venezuela. They are proper fucked

Quote

While Colombia, Ecuador, Brazil, Mexico and other oil producers will be affected by the collapse of oil prices, no other country in the region will be as hard hit as Venezuela, which relies on oil sales for 85 percent of its government spending, compared with Colombia’s 8 percent and Ecuador’s 35 percent.

 

[Parliament 14,598]

4 minutes ago, Neonmoon said:

But I think what is lost in all of this is Venezuela. They are proper fucked

So what are they now?  IMproperly fucked?

[Message Board User 12,405]

Any word on layoffs?

A co-worker of mine said her son in Odessa already got a pink slip.

[Eastwood 4,394]

9 minutes ago, Dr. Beeper said:

I’d like to hear y’all’s opinion on a) when and where we will make a low on crude and b) more importantly, what the fundamentals suggest when the Coronavirus destruction is done. I know the big X factor there will be what is happening with supply. But I’d like to hear everyone’s best guess. 

I’m evaluating whether or not to buy some properties and trying to figure out the best time to do so. 

I think the fundamentals are showing, and some articles (including CNBC) are indicating, that we aren't going to break out above $40 for the foreseeable future. IF Russia and SA truly do flood the market next month, we're going to probably see 30 year lows in price that might linger just long enough (5 years or more) for electric vehicles to get significant market penetration and other renewables to get a lot of steam before the economy recovers from all of this. There is some simmering fear that we may have hit peak demand. But if one thing is absolutely certain, it's that people are shitty at predicting what the oil market will do.

Iran and SA could start tearing each other apart in a hot war and send prices spiking to $100 in 2022 for all we know.

[Fudge Nuggets 19,455]

3 minutes ago, Eastwood said:

I think the fundamentals are showing, and some articles (including CNBC) are indicating, that we aren't going to break out above $40 for the foreseeable future. IF Russia and SA truly do flood the market next month, we're going to probably see 30 year lows in price that might linger just long enough (5 years or more) for electric vehicles to get significant market penetration and other renewables to get a lot of steam before the economy recovers from all of this. There is some simmering fear that we may have hit peak demand. But if one thing is absolutely certain, it's that people are shitty at predicting what the oil market will do.

Iran and SA could start tearing each other apart in a hot war and send prices spiking to $100 in 2022 for all we know.

Why would EVs gain traction if gas if cheap AF?

[Mighty fine 175]

How do electric vehicles penetrate the market during record low oil prices?

[Rusty Shackelford 414]

Nearly all auto manufacturers have committed to going all electric by the end of the decade.  I suppose we could see some startup (the anti-Tesla) try to resurrect the ICE, but good luck getting funding for it.

[Eastwood 4,394]

21 minutes ago, Fudge Nuggets said:

Why would EVs gain traction if gas if cheap AF?

 

20 minutes ago, Mighty fine said:

How do electric vehicles penetrate the market during record low oil prices?

 

12 minutes ago, Rusty Shackelford said:

Nearly all auto manufacturers have committed to going all electric by the end of the decade.  I suppose we could see some startup (the anti-Tesla) try to resurrect the ICE, but good luck getting funding for it.

Almost all major manufacturers are coming out with an EV model this year or next. They aren't going to just dump all the marketing and R&D because of it. Hell, even Hummer is releasing an electric model. EVs are no longer priced as luxury vehicles, especially the models on the horizon. The days of the Tesla Roadster, Model S, and whatever letter they gave their SUV are over. A popular product at an affordable price compared to ICE models that are slowly becoming unpopular. I think a lot of people in the industry are seriously underestimating how bad a large chunk of millenials and nearly all generation Y and zoomers are wanting an electric vehicle over an ICE vehicle. Generation Y and Zoomers are within 5 years of having the purchasing power to do it, too.

[ryskey 449]

3 hours ago, Neonmoon said:

This is not a fun article 

https://www.forbes.com/sites/daneberhart/2020/03/09/there-are-no-winners-in-oil-markets-price-war/#3cce35795676

But I think what is lost in all of this is Venezuela. They are proper fucked

 

There are some rays of hope in there.  Theoretically, yes Russia can withstand $25/bbl for several years the same way Saudi can.  But they'd be left with nothing in the end.  Russia would have to impose severe austerity to do that at a time when Russians' trust in Putin is pretty low.  The Russian budget balances at $42/bbl because their tax was set at $23/bbl.  So right now, either Rosneft et al are selling oil for negative prices, or Russia has already chopped their tax in half.  Probably the latter.

The world doesn't work at these prices for long.  Economies and countries break.  Wild, unpredictable stuff starts happening.  E.g., this was probably the result of a suspected coup attempt:

https://www.reuters.com/article/us-saudi-corruption/saudi-arabia-detains-298-public-officials-in-new-corruption-probes-idUSKBN21212I

Right this second, the vast majority of Canadian oil production is not generating much margin.  Operating expenses for oil sands is really high, and Western Canadian Select is trading at less than $15.  Shit doesn't work.

Lots of production around the rest of the world teetering on the edge of negative margins right now.  And that's on existing production, much less new wells and projects that require additional capital.

I think we go back to normal-ish by Q4 this year.  Hopefully sooner.

Edited March 17, 2020 by ryskey

[Eastwood 4,394]

9 minutes ago, Dr. Beeper said:

So you really see a scenario where we are stuck in the teens for 5 years?  Because that's what a 30-year low would be.  I think we may have traded in the single digits in the late 90s.

If Russia and SA pump at full capacity playing their game of chicken? I think we could hover around $20 until one of them blinks. Then we'll have a lot of oversupply to dig through with whatever demand is left. The more this all plays out, the more I think they bail way sooner than later. They were barking at each other before the shit really hit the fan. I wonder how much of where we stand today, as an entire world, entered into Putin's calculus when he took the first shot across the bow by telling SA to take a walk on extended cuts. After Putin pissed them off, they countered by saying they'll open ever spigot sticking out of the sand starting April 1. Both of those ideas aren't looking so hot now.

[Johnny Chimpo 489]

Yea this is looking like it’s gonna be pretty fuckin rough for a while. 

[BTW 370]

I’ll point out that while (seemingly) temporary, the shut down of the country, and to some extent the world, means petroleum usage is at a low we haven’t seen in a long time. I expect this to have trickle-down effects that take > a year unwind. This is on top of the current pullback front the SA/Russia price war. We are proper fucked for 2 years ... at least. I hope everyone is comfortable in the $30s

[Trey3216 15,452]

I think demand, even with the economy wrecked, isn’t going to see the demand destruction we’d normally see.  
 

prices are already relatively low comparatively.   In ‘08, we were still at high prices ($4+ for unleaded) at Labor Day if I’m not mistaken.  
 

without China level government quarantines, people are going to take kids to parks and what not to get them outside and occupying time. 
 

Over the next few months, there are going to be some ideas thought about, pondered over, that are going to lead us out of this deal as quickly as we dove into it, and far beyond.   
 

it may not totally be in the oil business, but that business will play a major part of the new businesses being built.  
 

America will come out of this time like we did after WWII; bigger, badder, wealthier and stealthier than ever, because we are one place that has the productive means and power to make it all happen.  We will succeed.  We will be beyond full employment.  

[ryskey 449]

15 minutes ago, Dr. Beeper said:

Yeah, it seems that way on the surface. That’s why the optimism from @ryskey intrigues me. I suspect his views stem from the assumption that Russians and Saudis will cool it. 

Yes.  Either they cool it or something breaks really bad.  Like MBS being overthrown, or Rosneft stock goes to 0, or Iran launches missiles that actually hurt.  And I don't think anyone truly understands how detrimental even $20/bbl is for existing production.  A lot will be generating negative margins.

COVID is a one-time event.  It's simply an offset in inventory, albeit a very big one.  The fundamentals of supply and demand will still exist afterward.  2021 was already going to be a structural shortage due to lack of shale growth and lack of megaprojects.  Guyana is not big enough to matter much.  It's going to take a while to burn off that COVID inventory, but the ship was already headed a certain direction and it's impossible to turn around fast enough to prevent a price spike at some point.  COVID just made that price spike more violent.  Don't know if it happens in '21 or '22 but it's going to happen.  You can't pull this much capital away from this industry and simultaneously expect oil prices to remain depressed.

I think we're back in the $40s by Q3 or Q4.

[Trey3216 15,452]

1 hour ago, Dr. Beeper said:

So what’s your crystal ball on prices Mr. $4 Natty?

Haha.  I don’t fucking know anymore.  Every minute shit changes.  I’m trying to think on normal/proper-fucked/aggy-barn levels all at the same time.  I don’t compute aggy-barn. 

[Fudge Nuggets 19,455]

9 hours ago, ryskey said:

COVID is a one-time event.  It's simply an offset in inventory, albeit a very big one. 

Maybe it is, maybe it isn't.  Until a vaccine is developed we can't rule out future outbreaks.

[TonyTexas 10,772]

14 hours ago, Message Board User said:

Any word on layoffs?

A co-worker of mine said her son in Odessa already got a pink slip.

 

[Don Johnson 4,847]

$24.62