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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 onlooker » Sun 16 Jul 2017, 10:26:41

This is ego talking at its highest level.--- No its rational analysis with a precise accountability via Etp analysis of our energetic situation as regards Oil. All you naysayers really have is so far everything is okay and ignoring the calamitous trajectory
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby shortonoil » Sun 16 Jul 2017, 10:48:25

This is ego talking at its highest level.


That is stupidity of infinite expanse. Not one producer on the planet is replacing the reserves that they are extracting. Is the obvious too much for your muddled brain to comprehend? Explain to us where tomorrow's oil is going to come from at $46/ barrel; are you proposing that it will be picked from a $20/ barrel shale tree? Your denial of reality is verging on psychopathic delusion.

When present known, and developed reserves are gone the oil age will be over, and present extractable, and developed reserves are in very short supply. Your lies will be catching up to you before the next new significant field comes on line. That takes 6 to 8 years, and they haven't even found it yet.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby pstarr » Sun 16 Jul 2017, 11:15:37

ROCKMAN wrote: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 am not interested in of oil-company HUGENESS (ain't they grand!) or theft of common natural capital. The point is: REAL oil-field depreciation and depletion continue apace faster than E&P can replace it. Kicking the can down the road into the taxpayer's lap is a strategy of a bored beggar.

The tax and accounting tricks have been agreed upon by our idiot populace. Same dunces who put Trump (and/or Hillary) in office. Doesn't make it right
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby Cog » Sun 16 Jul 2017, 12:14:00

So the ETP model is no longer about facts and figures but justice? The goalposts continue to shift.

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

Unread postby Yoshua » Sun 16 Jul 2017, 12:34:19

The etp model is about depletion of conventional crude oil reserves. The reserves stand at 340B barrels today. When they are gonne it's anyone's guess what the world will look like.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby shortonoil » Sun 16 Jul 2017, 12:54:19

So the ETP model is no longer about facts and figures but justice?


The world brought 4 Gb of new oil on line in 2016 and burned 34. For those who are still counting 1, 2, 3, many that may be a difficult concept to get their head wrapped around. If you borrow an extra set of fingers and toes, you may be able to figure out what it means? In the mean time it looks like we will be forced to listen to your ridiculous and senseless babble!
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby shortonoil » Sun 16 Jul 2017, 13:26:05

For instance it's why the professional market analysts and institutional investors pushed the value of Chevron up 35% in the last 2 years.


Would they be buying the stock even if the company wasn't profitable? In this schizophrenic, central bank controlled market, yes. Amazon is not profitable, and Tesla is not profitable but their stock has skyrocketed. Tesla has never even had a positive cash flow year; they burn through cash as if it grows on trees. The main reason for a stock to go up in this market is that the company is in a position to borrow the money to buy back its own stock. Speculators (who were at one time investors) jump in when they start doing that as it means that the stock is going to go up. P&E ratios mean nothing in this market; it is all about momentum. The fact that a company like Chevron who has had its revenue fall by 54% in 3 years would have its stock go up is just more evidence that we are absolutely, and completely totally screwed!
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby rockdoc123 » Sun 16 Jul 2017, 14:17:15

The fact that a company like Chevron who has had its revenue fall by 54% in 3 years would have its stock go up is just more evidence that we are absolutely, and completely totally screwed!



well hopefully the rest of the population is not as inept as you at interpreting a financial sheet. As I said up thread for 2015:

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.


and Rockman pointed out:

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 pstarr » Sun 16 Jul 2017, 14:19:41

So how about the missing depreciation and depletion?
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby rockdoc123 » Sun 16 Jul 2017, 14:39:25

The point is: REAL oil-field depreciation and depletion continue apace faster than E&P can replace it. Kicking the can down the road into the taxpayer's lap is a strategy of a bored beggar.


It's pretty clear you do not understand the terms depreciation and depletion as they are used under the general rules of accounting for oil and gas properties.

So how about the missing depreciation and depletion?


Let me put this in simple terms....accounting requires that all equipment on a site, buildings, facilities etc are depreciated on a regular basis it speaks to total asset value of the company but it does not speak to how much money that company is churning out. Likewise in extractive industries depletion is used to value assets in the balance sheet and adjust costs associated with extraction in the appropriate time period. DD&A are not cash items and have no impact on cashflow of the operation. As such I looked at only those items which are cash items...revenues, production costs, exploration costs and G&A.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby Physicsnerd » Sun 16 Jul 2017, 16:03:18

Is it standard practice to ignore DD&A to find a positive cash flow?

Figures don't lie, but liars figure!
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby rockdoc123 » Sun 16 Jul 2017, 16:32:25

Is it standard practice to ignore DD&A to find a positive cash flow?


It is if you are interested in answering the question.....is the company making money off of its activities. As I have said a number of times oil and gas companies attempt to spend their revenue either through new land, new wells or dividend payments plus whatever carrying costs they have. If they can do all that from their revenue stream after OPEX then they are in good shape as long as their wells pan out. If on the other hand you are interested in understanding the book value of the company at a particular time then DD&A is a useful number to look at. One thing I would say is I spent the better part of my decades of oil and gas experience looking at acquisitions and never once were we concerned about DD&A until the final due diligence when we looked at past years accounting.

DD&A does not affect the cashflow from activities..it is an accounting exercise, a valuable one and a requirement under IFRS ( and other accounting) guidelines.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby dirtyharry » Mon 17 Jul 2017, 01:00:48

Another one bites the dust . http://wolfstreet.com/2017/07/17/2-bill ... most-zero/

The future of O&G investors .
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby donstewart » Mon 17 Jul 2017, 07:38:11

DD and A
When I was doing my MBA almost 40 years ago, one of the things we studied was how to structure financial measurements which were meaningful in terms of the different functional operations in the business. Thus, the CFO had measurements which related to the efficiency of the financing, but not to the efficiency of the operations. The COO had measurements which related to the efficiency of the operations, but not to the efficiency of the financing. And so forth.

Measuring results which exclude DD and A is the sort of thing a corporation does when it is looking strictly at Operations. Which is well and good so long as one understands that the total corporation is more than Operations.

One could make the same arguments about Replacement of Reserves. The COO is not responsible for replacing reserves...just efficiently operating the reserves which are already there. BUT, if the corporations wants to be perceived as a 'sustainable enterprise' by the stock market, it probably has to spend some effort and money on replacing reserves.

The C Suite is traditionally charged with making all the cylinders fire. Which usually means that the COO, for example, participates at two levels. First, the COO is responsible for efficiently operating a business without regard to DD and A. BUT, second, the COO is ALSO part of the group which steers the total corporation. Of course, when it comes to the corporation, the CEO is the big gorilla in the room.

I don't know if the model I learned 40 years ago is still in favor. But if it is, much of the discussion here is missing the point.

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

Unread postby pstarr » Mon 17 Jul 2017, 13:01:08

So its the waste-water disposal that causes earthquakes in Oklahoma. We no longer simply drill for once-abundant oil. We bust up the planet instead.
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Now if we can only harvest the free sustainable green energy of earthquakes? Who needs oil :x 8) har har har
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby AdamB » Mon 17 Jul 2017, 14:15:33

Yoshua wrote:Adam

9T barrels ? Sure, there are a lot of hydrocarbons in the earths crust.


The IEA wasn't quantifying crustal abundance, but oil recoverable at a given price. Sorry.

Yoshua wrote:Most of it would need an oil price above $300/barrel...


Do try and listen...the IEA put a specific $$ on it, and it was <$150/bbl. So no, not $300/bbl. Not that it matters all that much, the EIA price path through mid century in the high case extends up to around $225-$250/bbl land, so the resource is even larger, because the IEA stopped counting at around $150. And we have EIA white papers discussing this..not that you've ever read them. Goodness knows no one hear wants anything to do with getting real live experts involved.

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

Do you understand ?


I understand that $150 oil isn't economic when sitting in a glut where the price is closer to $40. And I understand that the price will be different tomorrow, and according to the kind of experts Short runs away from, $150 is a possibility, and therefore more resources are a quid pro quo.

Do you understand? It is only hard for those who can't learn.

Yoshua wrote: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.


BP doesn't have 1.7T barrels of reserves. Where do you get this nonsense? From Short? Even he knows better than this, and he doesn't know much of anything related to the oil field.

Yoshua wrote:Why on earth is Saudi Arabia spending money on exploration and warning of a supply crunch if those fantasy reserves were real ?


Who said those reserves were in Saudi Arabia? I didn't. And in the middle of our current GLUT, people are still drilling wells right here in the Permian Basin. So sure, even during a bust, people are still out looking. Because the industry can count on all those consumers to keep doing what they are named after.

Yoshua wrote: 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.


You can use the word "conventional" in front of oil after you can explain how its different from the same oil sourced elsewhere, otherwise its just some make believe distinction so that folks like Jeff Brown don't end up looking like...well...the obvious.

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

Unread postby pstarr » Mon 17 Jul 2017, 15:19:28

AdamB wrote:blah blah blah
. . .
blah blah blah
. . .
You can use the word "conventional" in front of oil after you can explain how its different from the same oil sourced elsewhere, otherwise its just some make believe distinction so that folks like Jeff Brown don't end up looking like...well...the obvious.

You know I rarely read your posts, they are only devices to attack posters and push thoughtful posts off the page, hence the pointless graphics (which btw are energy hogs). But really?

Jeffrey Browns (that's Jeffrey to you :x ) ELM contribution to peak oil studies is critical, and correct. And nothing to do with API gravity.
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The poster child for the export land model was Indonesia, one-time member of OPEC and major oil exporter, which watched exports evaporate as oil production went into decline while domestic oil consumption ballooned (Figure 1). Production peaked at 1.69 Mbpd in 1977 but only began to decline post-1991. But as population and prosperity rose, the production surplus turned to deficit in 2003 and by 2015, Indonesia imported 740,000 bpd. Should this be repeated in many of the oil exporting countries, it must surely leave the oil importing countries gasping for breath.
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby asg70 » Mon 17 Jul 2017, 15:27:58

"gasping for breath" is not a prediction.

What he's really alluding to is prices going up, in which case...

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

Unread postby pstarr » Mon 17 Jul 2017, 15:41:40

asg70 wrote:"gasping for breath" is not a prediction.

What he's really alluding to is prices going up, in which case...

...bye bye ETP model.

This thread is about shale, Adam brought up ELM not ETP
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Re: Shale Oil Profitable at $20 Barrel Pt. 2

Unread postby marmico » Mon 17 Jul 2017, 16:02:11

After 10 years, the ELM is another failed model. Ain't no oil export decline. It is apparent that it was neither critical nor correct.

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