Oil

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Re: Oil

Post by sayhey » 24 Aug 2016 18:14

You just get your cannabis from BC.

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Re: Oil

Post by gobsmack » 25 Aug 2016 08:56

The big banks are reporting strong earnings and it sounds like they are not talking much about oil these days. It seems like the focus has shifted to a potential housing bust. It puzzles me a bit that we are not hearing more bad news from the oil patch (not that I am wishing for it). Oil prices still continue to be fairly depressed and the average WTI/WSC gap has actually widened in 2016. My expectation was that, under these circumstances, a weak CAD was going to be the lifeline keeping companies afloat. But CAD does not appear to be even that weak these days. Am I missing something?

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Re: Oil

Post by Flaccidsteele » 29 Aug 2016 00:46

Just some more data to throw into the pile.

Which Countries Are Damaged Most By Low Oil Prices
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Re: Oil

Post by 2 yen » 17 Nov 2016 14:25

What does this 'largest ever' oil find in Texas mean for the oil sands and the pipeline companies that carry oil sands crude and diluents? i.e. Keyera, Pembina, Interpipeline, etc.

http://www.bloomberg.com/news/articles/ ... l-u-s-says

http://www.usatoday.com/story/money/nat ... /94013292/

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Re: Oil

Post by AltaRed » 17 Nov 2016 16:58

It means we are unlikely to see $100 (2014 Dollar) oil prices again except for very short periods of supply disruption. That said, the Geological Survey is not very good at estimating 'economically recoverable' reserves or even oil-in-place so that recent information has to be taken with a huge dose of salt grains. Until a lot of drilling and development takes place, no one knows the degree to which this shale oil in the Permian basin will be a factor long term. Remember that the oil companies have long known that this shale oil has been there. The issue has always been economic recovery. Continued advances in horizonal drilling and fracking is now bringing that within reach. Ultimately I believe Permian shale oil will be the largest producing basin in the USA but that might take 10-20 years.

In the meantime, oil will plug along, probably mostly rangebound in the $40-70 range for years to come. I think the Canadian oil industry will hold its own, but I do not believe we will see overall production levels much beyond what we already have (beyond CNRL's Horizon and Suncor's Fort Hills yet to come). I think there is room for one more pipeline, e.g. Keystone or TransMountain, but I have doubts about both. Energy East is dead in the water if Keystone XL ultimately happens.

To respond directly to your question, I think the regional pipelines will top out pretty soon on their oil expansion activity. It remains to be seen if BC LNG will ever happen, which will allow for a few more gas liquid opportunities in NEBC. That said, I have not been an owner, nor have any intentions of becoming an owner in Keyera, Pembina, IPL, etc. I think they will become mostly 'mature' entities. Now that I have stuck my neck out, I will undoubtedly be wrong.

P.S. I am betting that Trudeau will approve TransMountain in December. He's been throwing money at BC's west coast recently (coast Guard et al) to soften up Christy Clark and help her skate around her so called 5 conditions. I'm pretty sure he and she have already had that conversation a few months ago.

Added much later: Keyera may not be quite in the same league as Pembina and IPL. It depends on their their exposure to frac spreads. Any company who is susceptible to frac spreads is at risk given the 'ceiling' on oil prices and the slowly climbing natural gas prices. AltaGas, I think, has pretty much eliminated (or at least reduced) their exposure to frac spreads
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Re: Oil

Post by 2 yen » 17 Nov 2016 21:11

AltaRed wrote:It means we are unlikely to see $100 (2014 Dollar) oil prices again except for very short periods of supply disruption. That said, the Geological Survey is not very good at estimating 'economically recoverable' reserves or even oil-in-place so that recent information has to be taken with a huge dose of salt grains. Until a lot of drilling and development takes place, no one knows the degree to which this shale oil in the Permian basin will be a factor long term. Remember that the oil companies have long known that this shale oil has been there. The issue has always been economic recovery. Continued advances in horizonal drilling and fracking is now bringing that within reach. Ultimately I believe Permian shale oil will be the largest producing basin in the USA but that might take 10-20 years.

In the meantime, oil will plug along, probably mostly rangebound in the $40-70 range for years to come. I think the Canadian oil industry will hold its own, but I do not believe we will see overall production levels much beyond what we already have (beyond CNRL's Horizon and Suncor's Fort Hills yet to come). I think there is room for one more pipeline, e.g. Keystone or TransMountain, but I have doubts about both. Energy East is dead in the water if Keystone XL ultimately happens.

To respond directly to your question, I think the regional pipelines will top out pretty soon on their oil expansion activity. It remains to be seen if BC LNG will ever happen, which will allow for a few more gas liquid opportunities in NEBC. That said, I have not been an owner, nor have any intentions of becoming an owner in Keyera, Pembina, IPL, etc. I think they will become mostly 'mature' entities. Now that I have stuck my neck out, I will undoubtedly be wrong.

P.S. I am betting that Trudeau will approve TransMountain in December. He's been throwing money at BC's west coast recently (coast Guard et al) to soften up Christy Clark and help her skate around her so called 5 conditions. I'm pretty sure he and she have already had that conversation a few months ago.

Added much later: Keyera may not be quite in the same league as Pembina and IPL. It depends on their their exposure to frac spreads. Any company who is susceptible to frac spreads is at risk given the 'ceiling' on oil prices and the slowly climbing natural gas prices. AltaGas, I think, has pretty much eliminated (or at least reduced) their exposure to frac spreads
Interesting synopsis. Thanks Alta!

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Re: Oil

Post by Shakespeare » 17 Nov 2016 21:21

As I expected, it means the end of the oil sands megaprojects - not because of the Greens, but because the oil is too expensive. However, SAG plants, which expand one well at a time, can continue to grow production.
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Re: Oil

Post by AltaRed » 18 Nov 2016 10:22

Shakespeare wrote:As I expected, it means the end of the oil sands megaprojects - not because of the Greens, but because the oil is too expensive. However, SAG plants, which expand one well at a time, can continue to grow production.
I tend to agree any new mining megaprojects are likely gone but we were pretty close to doing that anyway. Much of the remaining 'mineable' oilsands will likely be replacement extensions to existing production facilities. Syncrude's pioneering use of 'hydrotransport' for their Aurora North mine did just that.
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Re: Oil

Post by nisser » 20 Nov 2016 19:07

Price to cash flow according to morningstar:

Imperial - 22
Suncor - 15
Cenovus - 16
CNRL - 13
Vermillion - 12
Tourmalline - 11
Whitecap - 11

What are people hoping for?

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Re: Oil

Post by AltaRed » 30 Nov 2016 13:17

Looks like OPEC has done enough to curtail the slide in oil prices. I suspect we will see oil prices be range bound for years to come. Every time oil prices slide towards $40, someone will make enough noise on a reduction to provide 'floor support' but there is enough ability out there to increase production with oil prices in the $55-60 range to effectively provide a ceiling on oil prices for years to come. The USA alone can recover their 1 million barrel per day slide in fairly short order and oil prices in the $55-60 range will be enough to cause Permian shale production to increase. Oil companies better get used to range bound oil prices.
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Re: Oil

Post by Peculiar_Investor » 30 Nov 2016 13:25

AltaRed wrote:Oil companies better get used to range bound oil prices.
So should their investors :wink:
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Re: Oil

Post by newguy » 30 Nov 2016 14:06

AltaRed wrote:Looks like OPEC has done enough to curtail the slide in oil prices......The USA alone can recover their 1 million barrel per day slide in fairly short order
Sounds a little contradictory.

I wonder if there's any research on how effective cartels are when their market shares are so low. One article said a cut from around 35 to 34 mmbd. That's not even half of world production, and like you said, it will easily be made up elsewhere. But still, a 3% cut for a 9% price rise (closer to 10% now) sounds good for a day or two.

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Re: Oil

Post by AltaRed » 30 Nov 2016 14:25

I believe the 'action' is enough to keep futures above $40. No one wants to be caught excessively 'short' so the nuance is enough to provde a 'noisy' floor. Time will tell.
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Re: Oil

Post by nisser » 06 Dec 2016 20:55

AltaRed wrote:Looks like OPEC has done enough to curtail the slide in oil prices. I suspect we will see oil prices be range bound for years to come. Every time oil prices slide towards $40, someone will make enough noise on a reduction to provide 'floor support' but there is enough ability out there to increase production with oil prices in the $55-60 range to effectively provide a ceiling on oil prices for years to come. The USA alone can recover their 1 million barrel per day slide in fairly short order and oil prices in the $55-60 range will be enough to cause Permian shale production to increase. Oil companies better get used to range bound oil prices.

Makes you wonder why people are willing to pay such exorbitant multiples for these companies when they will likely continue to report losses for years to come...

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Re: Oil

Post by AltaRed » 20 Mar 2017 17:57

Texas messes with OPEC is a worthwhile piece for those playing oil to read. The Permian in a huge swath of the middle of Texas was the hotbed of oil for a very long time in the heady early days of oil. Now with all the horizontal drilling and fracing technology in hand, all those shale layers that were uneconomic in the old days may well be the major global player for some time.
The latest resurgence of U.S. shale oil output from the basin has caught OPEC off guard. Its strength even prompted U.S. government experts to recently predict that American oil production could soar to a new record by 2018.
I'd suggest that US oil production could beat its prior recent peak of 9.6 million barrels per day by late summer if the current level of activity in the Permian continues. So much for re-vitalization of Canadian oils and Canada's GDP for that matter.
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Re: Oil

Post by Shakespeare » 20 Mar 2017 18:09

The oil sands are always going to be marginal because of the cost of production and land locking.
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Re: Oil

Post by AltaRed » 20 Mar 2017 18:27

Shakespeare wrote:
20 Mar 2017 18:09
The oil sands are always going to be marginal because of the cost of production and land locking.
I was thinking more about the likes of CPG, Whitecap, Spartan and others where there has been market pricing speculation on. Could be a way for many to lose their shirts if they are betting on relatively near term oil pricing resurgence. Oil may be lower for longer than anyone can stay solvent.

The existing big oil sands plants will continue to operate simply due to the huge sunk capex cost and degree of fixed cost. But Fort Hills and Horizon may well be the last of the mega plants.
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Re: Oil

Post by OnlyMyOpinion » 20 Mar 2017 20:55

The Alberta government's assumption that oil prices will bail them out of their deficits ($68 oil in 2 yrs) may be sorely mistaken given the prospects for hztl oil development and growth in the US.
Whether they are able to keep their hands off the tarished golden goose's neck - oil industry royalties - remains to be seen.

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Re: Oil

Post by Shurville » 30 Mar 2017 15:43

Why are the global biggies like Conoco-Philips,Shell , Total and others bailing out of the Tar Sands?

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Re: Oil

Post by AltaRed » 30 Mar 2017 20:10

There are more economic opportunities elsewhere to invest their capital such as the Texas Permian basin. That has always been the case when significant capital moves elsewhere. Gotta admit things like inability to get pipelines built and carbon taxes are significant factors.
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Re: Oil

Post by kcowan » 31 Mar 2017 14:22

Bloomberg World had a feature on oil yesterday. They interviewed representatives from all the major eastern oil producers. They all said that oil will be range-bound in the $50 to $60 range owing to supply-management.

Some of them also said that new shale development would be unlikely because their break-even is $40 and there is insufficient confidence in consistently achieving that higher price. WTFDIK...
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Re: Oil

Post by AltaRed » 31 Mar 2017 19:26

Texans are bullheaded. They have all blown their brains out buying land positions in the Permian. They are unlikely to do nothing.
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Re: Oil

Post by Shakespeare » 23 May 2017 20:02

Shell to sell $4.1-billion stake in CNRL - The Globe and Mail
Royal Dutch Shell Plc has decided to offload a roughly $4.1-billion stake in Canadian Natural Resources Ltd (CNRL) that it acquired as part of a deal to retreat from Canada’s oil sands earlier this year, people familiar with the situation told Reuters.

The energy company has been interviewing investment banks to hire a financial adviser for the share sale, four people said in the past week, declining to be named as the discussions are confidential.
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Re: Oil

Post by AltaRed » 23 May 2017 23:22

Not a surprise I suppose given the state of Canadian (lack of) political will and vision on projects of a national scale for over a decade. If I was a budget decision participant in a multi-national oil company, I'd not spend any serious 'oil' money in Canada. Gas investments perhaps given the right conditions, but not oil.
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