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Shale Oil Profitable at $20 Barrel Pt. 2

Discuss research and forecasts regarding hydrocarbon depletion.

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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby ROCKMAN » Sat 15 Jul 2017, 15:51:26

Doc - Not criticizing you but I wonder why you keep spending time explaining the same facts over and over again? They are either intellectually unable to comprehended the accounting methods or do understand and are just too intellectually dishonest to admit it because it doesn't support their bullshit spin efforts.

For instance I'm sure you recall all the hysterics put out by some of those armchair warriors when the oil patch bankruptcy count started to climb. Of course the circumstances that led to all those Chapter 11 filings were very negative. But notice how none have chimed in as I showed in the other thread almost all of those filings represented positives for those companies. In fact in some cases huge positives for some like Halcon. After ownership was transferred to the creditors (at a 99% discount from its peak market value) much of the debt disappeared and a $600 credit line appeared. And now the "new" Halcon is about to get a $1.4 BILLION infusion of cash by sell some Williston Basin assets. Assets that probably didn't look that attractive to the new owners. A move that prompted an 18% increase in stock price so apparently the professional market analysts agree. Stock of which the former creditors now own 96%. The original shareholders got slaughtered. But not the debt owners or the corporation known as Halcon.

Obvious at your age holding your breathe until you see acknowledgement of such events by the "petroleum industry is dead" crowd could be dangerous...be careful. LOL
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby pstarr » Sat 15 Jul 2017, 16:16:58

rockdoc123 wrote:
Now who exactly is making money in the oil business at $46; this was at $53:

You guys are kind of funny, or touched in head:

Lets look at actual balance sheets for a few of these companies

BP in 2015 saw a negative results of operations (income minus all accounting costs recognized under IFRS) of -$1488 million. But of that $3671.00 is associated with DD&A which is a purely accounting measure and does not speak to cashflow from the corporation. When you take revenues and subtract production costs, exploration costs and G&A you get a positive $1,326 million.

Chevron in the same year saw negative results of operations of -$3,802 million but when you ignore DD&A and Impairments they had a positive before tax income of $9,982 million.

Exxon Mobil saw negative results of operations of -$1572 million in 2015 but when you ignore DD&A and Impairments they had a positive before tax income of $2,777 million.

why ignore DD&A?
What is 'Depreciation, Depletion and Amortization – DD&A'
Depreciation, depletion and amortization (DD&A) are noncash expenses used in accrual accounting. Depreciation is a means of allocating the cost of a material asset over its useful life, and depletion is used to allocate the cost of extracting natural resources from the Earth and is the actual physical depletion of a natural resource by a company. Amortization is the deduction of capital expenses over a specified time period, typically the life of an asset.

Doesn't equipment wear out, don't reserves deplete?
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby asg70 » Sat 15 Jul 2017, 17:02:35

rockdoc123 wrote:The only reason these countries haven’t progressed to where the US is has to do with the fact they are a decade behind the game and there is a complete absence of the necessary hardware and services necessary in all of these countries.


Not the only reason. The biggest is that the oil market simply doesn't need the additional supply brought online at present. When it seems like these players can reap a suitable return they will get busy (including getting the necessary hardware and services). Money talks and shit walks.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby asg70 » Sat 15 Jul 2017, 17:05:51

shortonoil wrote:Since "doomer" is not part of the English language we can assume that a "doomer" is troglodyte pig Latin for someone who eats African fruit the size of an apple.


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Sorry you have a bug up your ass over the fact that slang is a thing. Deal with it.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby pstarr » Sat 15 Jul 2017, 17:23:19

asg70 wrote:
rockdoc123 wrote:The only reason these countries haven’t progressed to where the US is has to do with the fact they are a decade behind the game and there is a complete absence of the necessary hardware and services necessary in all of these countries.


Not the only reason. The biggest is that the oil market simply doesn't need the additional supply brought online at present. When it seems like these players can reap a suitable return they will get busy (including getting the necessary hardware and services). Money talks and shit walks.

You still don't get it. This is not an oil supply glut but rather a consumer demand dearth. The rest of the world is hurting.
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Production was supposed to be far above 110mbpd by now. But those projections for additional oil were downgraded as prices dropped and the low-hanging fruit became to costly to produce. Except in debt-ridden America
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby onlooker » Sat 15 Jul 2017, 18:03:41

http://observer.com/2017/01/brace-for-t ... h-of-2018/
The rate and nature of new oil discoveries has declined dramatically over the last few decades, reaching almost negligible levels on a global scale, the report finds. Compare this to the report’s warning that just to keep production flat against increasing decline rates, the world will need to add four Saudi Arabia’s worth of production by 2040

while European government scientists show that the value of energy produced by oil has declined by half within just the first 15 years of the 21st century.

Among the report’s most shocking findings is that “81% of the world’s total liquids production is already in decline.”
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby onlooker » Sat 15 Jul 2017, 18:15:28

https://srsroccoreport.com/the-mighty-u ... n-in-2017/
The Mighty U.S. Shale Oil Industry To Lose Another $20 Billion In 2017
“When the last tree is cut down, the last fish eaten and the last stream poisoned, you will realize that you cannot eat money.”
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby rockdoc123 » Sat 15 Jul 2017, 18:56:14

You still don't get it. This is not an oil supply glut but rather a consumer demand dearth. 


Jesus wept. How many times do we have to keep directing you to the demand curve for the world. It has increased steadily. You always point to European countries whose economies were most affected by the global credit crisis as somehow being indicative. It’s not and here is the chart once again to demonstrate that.
The EIA most recent OMR report indicates that current demand of 97 MMb/d is 5% higher than it was in 2014 when prices were $100/bbl.

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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby AdamB » Sat 15 Jul 2017, 20:01:52

Yoshua wrote:The world oil production of 35B must be replaced each year if we are going to have oil in the future.


Not really. It depends on how much is already in inventory, as to how many fallow years and volumes can draw that down. IEA estimates run to about 9 trillion or so already know and costed out we've used 1.3T, seems to me we don't need to find any more...oh...your remaining lifetime really, if we choose to live off inventory.

Yoshua]
So Adam and Rockdoc: How much would it cost to replace this amount of oil per barrel ?
[/quote]

According to the IEA, the next 7.7 TRILLION barrels can be had for <$150/bbl, in 2008 dollars.

At an international modeling conference last week, real live honest to goodness modelers and programmers and engineers had estimated all the smaller components, basin by basin, onshore and off, reserves, reserve growth, undiscovered, the tight oils and shale gases, including all the things that the hill gang likes to exclude because...you know...it requires data and whatnot.

[quote="Yoshua wrote:
We are trying to look at the total... while you are looking at 1% of production.


Then the IEA number of 7.7T or so would seem to be what you are looking for. Of course, this excludes GTL and hydrates.

Yoshua wrote:Shale gas was produced in small amounts compared to the total until 2008. Today shale gas counts for 2/3 of total nat gas production in the US.


We know. The EIA told us a long time ago....even when peakers like Art Berman were proclaiming energy crisis...in the middle of glut. Funny how that is the only thing they ever claim, regardless of reality, isn't it?
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby Cog » Sat 15 Jul 2017, 20:03:17

The ETP'ers are forced by their allegiance to their model that demand must be going down no matter how many times its pointed out that they are outright and flatly wrong about it.

Blind allegiance to a model, without facts, leads you to gross errors in predicting real world events. But such is the lot of the ETP'er.

High oil prices failed to create the doom they wanted so now its low oil prices(because of a glut) that is going to create the doom.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby AdamB » Sat 15 Jul 2017, 20:05:55

shortonoil wrote:Anyway, shale is a nothing burger; after 10 years of development and over $1 trillion it is producing less than half of what Saudi Arabia exports.


Any references to why then posters on this website knew of shale potential in advance? And you were pretending that the world would end because George Bush was in charge? And peakers like you were pretending that the US had peaked and was in terminal decline? You know what terminal decline is right? Or are you on record around here somewhere saying that terminal decline is really increases in oil production in a matter of a few years the size of Ghawar? Now THAT would be a prediction, and you don't even need regression models that you say can't predict to do it!
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby AdamB » Sat 15 Jul 2017, 20:13:34

donstewart wrote:shale; less debt; more equity; negative cash flow

I said that the shale companies had been paying down debt by adding equity. I referenced some comments by Art Berman.


You did. And I keep recommending you use sources that aren't the equivalent of quoting Santa Claus. Difficult to find new sources of warmed over peak oilers, but try it, maybe you'll grow a new neuron or two, and presto! Next thing you know, you'll understand why you shouldn't use references that are already a laughingstock.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby AdamB » Sat 15 Jul 2017, 20:15:34

Yoshua wrote:The Mighty U.S. Shale Oil Industry To Lose Another $20 Billion In 2017

https://srsroccoreport.com/the-mighty-u ... n-in-2017/


Gold bugs who were actually DUMB enough to consult the Hill folks on USGS resource assessment numbers know what, exactly, about the shale industry? Other than NOT knowing the same basic things about depletion allowances and amortization and whatnot that Shorty has already proven is alien to the oil-ignorant?
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby ROCKMAN » Sat 15 Jul 2017, 20:38:00

pstarr - "Why ignore DD&A?" Doc isn't ignoring DD&A. He's just pointing that it's a portion of the US tax code that's essentially a subsidy to the petroleum industry allowing it to shield much of its profit from being tax. For instance it's why the professional market analysts and institutional investors pushed the value of Chevron up 35% in the last 2 years. So you really think they would do that Chevron isn't a profitable company. Really??? LOL.

I repeat: Those that won't acknowledge the true profitability of many of the oil companies are either intellectually unable to comprehended the accounting methods or do understand and are just too intellectually dishonest to admit it because it doesn't support their bullshit spin efforts.

For instance times are not nearly as fat as they were a few years ago. But the two largest US companies still made a profit last year. From:

Most Profitable Oil and Gas Companies of 2016 http://www.investopedia.com/articles/company-insights/081716/most-profitable-oil-and-gas-companies-2016-pspx-tep.asp#ixzz4mxITlLRX

Exxon Mobil is the largest U.S. energy company in terms of market cap, revenues and volume produced. The company's impressive scale leads to exceptionally high profits, though the business model leads to substantially lower margins than those enjoyed by midstream firms. This has been especially true in 2016, when crude oil prices approached their lowest levels in roughly a decade. Exxon Mobil managed 4.51% net margin over the 12 months ended June 2016, which is the lowest level of the past decade. Net margin was as high as 10.5% during that span. Despite this dip, Exxon Mobil still generated $10.5 billion in net profits. EPS is expected to fall 35.4% year-over-year in 2016 as low energy prices wreak havoc on earnings, but similar pain is being felt by other firms across the sector.


Chevron is the second-largest U.S. diversified oil and gas company, and it is influenced by the same fundamental drivers as Exxon Mobil. The company's 1% net margin over the 12 months that ended in June 2016 was the lowest of the past decade, during which time margins often fell between 8% and 10%. This precipitous fall still yielded $1.3 billion in net profits, and analysts are forecasting improvements in the second half of 2016.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby asg70 » Sat 15 Jul 2017, 21:51:23

pstarr wrote:You still don't get it. This is not an oil supply glut but rather a consumer demand dearth.


I understand that's your own individual "theory", sort of a side-shoot of ETP. Unfortunately, it's wrong and no amount of repetition will convince us otherwise.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby Yoshua » Sun 16 Jul 2017, 06:07:03

Adam

9T barrels ? Sure, there are a lot of hydrocarbons in the earths crust. Most of it would need an oil price above $300/barrel... but very little of it would generate economic value even close to $300/barrel to the economy... so most of it stay in the earths crust.

The economic activity generated by those recourses is less than the economic activity needed to produce those recourses.

Do you understand ?

Even BP's 1.7T barrels of reserves is overstated. Orinoco super heavy, Canadian tar sands, shale oil and Saudi fantasy reserves are and will be uneconomic to produce.

Why on earth is Saudi Arabia spending money on exploration and warning of a supply crunch if those fantasy reserves were real ? They are of course exploring conventional crude oil since they know that the heavy oil that have and EOR to produce from their depleted reservoirs are uneconomic recourses.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby Cog » Sun 16 Jul 2017, 08:02:44

Better get on the horn to Canada and tell them to stop shipping that oil sands oil down here. Its impossible for them to make money on it. LOL

In fact, you should call up the CEO's of every oil producing company and tell them they can't produce oil anymore since they are losing money. Maybe they will offer you a job as financial advisor.

Want to know why ETP'ers are held up to scorn? Because of statements like yours Yoshua
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby shortonoil » Sun 16 Jul 2017, 08:46:38

Want to know why ETP'ers are held up to scorn?


That is particularly true of the pig Latin speaking troglodytes. If one's scientific and mathematical skills ended somewhere in the 15th century Etp is probably a little overwhelming. That group is more into things like black magic, witch hunts and reading the entrails of a goat to understand what is going on. Some of them even believe in absurdities like $20 shale. Of course if the Chinese believed that China would look like a pin cushion in about week. Go back to your Ouija board, and sharp pointed sticks. The world doesn't have the time for you myths and legends; we are facing a civilization destroying event! The ending of the oil age.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby Yoshua » Sun 16 Jul 2017, 08:49:05

Oil majors have been selling off their stakes in tar sand or been forced to write down their reserves.

You advise the oil majors Cog.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby asg70 » Sun 16 Jul 2017, 09:27:20

shortonoil wrote:The world doesn't have the time for you myths and legends; we are facing a civilization destroying event! The ending of the oil age.


This is ego talking at its highest level. Marginalize dissent and hold yourself up as a savior. Messiah complexes are probably the worst way to bring people around. If anything they provide a motive for your epistemic closure.

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