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THE Price of Crude pt 13

General discussions of the systemic, societal and civilisational effects of depletion.

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THE Price of Crude pt 13

Unread postby Tanada » Fri 07 Oct 2016, 16:51:49

As the saying goes, time will tell.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: THE Price of Crude pt 12

Unread postby GHung » Fri 07 Oct 2016, 17:03:23

Anyone know what's going on with the forums? Any time I go to a forum topic from the home page I have to log back in and it takes me to the forum page where I have no idea how to find the topic I was originally hoping to read. It's a hopeless loop without browsing all of the forums. Help?

Also, every time I switch back to the home page, it logs me out.
Blessed are the Meek, for they shall inherit nothing but their Souls. - Anonymous Ghung Person
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Re: THE Price of Crude pt 12

Unread postby onlooker » Fri 07 Oct 2016, 18:38:17

Yes G, I read a message of upgrade maintenance going on
“"If you think the economy is more important than the environment, try holding your breath while counting your money"”
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Re: THE Price of Crude pt 12

Unread postby Tanada » Mon 10 Oct 2016, 21:04:37

Starting about 6:15 AM EDT this morning the price of WTI contracts recovered the profit taking of Friday afternoon and added a good bit on top of it. This morning peaked at $51.60/bbl from what I can tell and by the end of the day prices had only fallen to $51.10/bbl which is 0.30/bbl above Fridays high bid. That is also about $2/bbl over where prices were before OPEC countries started talking up the price the middle of last week.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: THE Price of Crude pt 12

Unread postby sparky » Tue 11 Oct 2016, 03:08:21

.
the price of crude I like to watch is the monthly OPEC basket price
http://www.opec.org/opec_web/en/data_graphs/40.htm

it match pretty well with the time delay of buying a tanker load and delivering it to wherever
it also avoid the "price-watch through a microscope" syndrome
the news are rather grim , price are on the rise , I would guess for good
the fat ,genetically deficient , Saudis "royals" are slowing discovering that breaking the market price is deeply stupid if you are the biggest exporter .
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Re: THE Price of Crude pt 12

Unread postby ROCKMAN » Tue 11 Oct 2016, 08:53:16

"Saudis "royals" are slowing discovering that breaking the market price is deeply stupid if you are the biggest exporter ." Actually the KSA and the rest of OPEC learned that lesson 30 years ago when the declining ability of the world ability to pay forced oil prices down. And the resultant increase in production in the 80's to max revenue made the situation worse. Just like the same dynamic has driven the market recently. I doubt the KSA is very surprised by the current situation...the Rockman and the rest of the oil weren't. Never a question of "if" but "when".
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Re: THE Price of Crude pt 12

Unread postby sparky » Tue 11 Oct 2016, 13:20:54

.
I suppose we are going to ride on the roller coaster price again ,
that would make it a cycle of twenty years frequency , boom and bust !

what an industry !
definitely not for the fainthearted ,
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Re: THE Price of Crude pt 12

Unread postby ROCKMAN » Thu 13 Oct 2016, 08:27:53

sparky - "definitely not for the fainthearted". But well designed for opportunists. From the start of the shale boom the Rockman exposed the dirty little secret of the oil patch: the play would eventually bust big time. Which is exactly why the pubcos spent money like there was no tomorrow...because they all knew there was no tomorrow. Folks still focus on how much money has been lost and ignore the many $BILLIONS made by they players. Players that knew they had to drill as many wells as fast as possible to get stock prices up so they could cash out before Tue bubble popped. Which is exactly how it played out.

And now more $BILLIONS in future profits are being set up as another set of players are buying all those millions of heavily discounted bbls of PROVED PRODUCING oil reserves.
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Re: THE Price of Crude pt 12

Unread postby Tanada » Thu 13 Oct 2016, 09:10:44

ROCKMAN wrote:sparky - "definitely not for the fainthearted". But well designed for opportunists. From the start of the shale boom the Rockman exposed the dirty little secret of the oil patch: the play would eventually bust big time. Which is exactly why the pubcos spent money like there was no tomorrow...because they all knew there was no tomorrow. Folks still focus on how much money has been lost and ignore the many $BILLIONS made by they players. Players that knew they had to drill as many wells as fast as possible to get stock prices up so they could cash out before Tue bubble popped. Which is exactly how it played out.

And now more $BILLIONS in future profits are being set up as another set of players are buying all those millions of heavily discounted bbls of PROVED PRODUCING oil reserves.


ROCKMAN you make the oil industry investors sound like pump and dump stock market investors.

So the stripper operators get one big slice of the pie, all those wells drilled in the shales in 2009-2011 that are down to stripper production rates, with the prospect that in the next year the even larger number of wells drilled in 2012 will fall into stripper category. At the same time because of the low prices drillers have greatly reduced their demand on services which have cut drilling costs substantially. Drillers have also been able to focus their remaining efforts on just those sweetest of sweet spots in the shale plays so with lower costs and higher average well production the statistics for the companies still drilling, which means when things pick up the balance sheets they use to secure loans will look very good.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: THE Price of Crude pt 12

Unread postby ROCKMAN » Thu 13 Oct 2016, 23:36:10

T - "...you make the oil industry investors sound like pump and dump stock market investors." Need to know who you're talking about. I know it sounds picky but: the companies, like all the pubcos (like Chesapeake) are OPERATORS...the companies that pay to have wells drilled. The DRILLERS are the drilling contractors that typically have no money in the wells being drilled. But might have invested heavily in new equipment to take advantage of the demand surge. Some operators collected capex from initial stock sales but most came from lenders...some of whom structured loans that made them look like semi-investors getting a piece of the pie in addition to interest...call them "mezzanine bankers". They'll take higher risks then a conventional bank. The stockholders didn't invest in a single shale well...they obviously invested in the companies drilling shale wells.

The management, board of directors and company staff of a pubco don't loose a f*cking $ even when they drill a dry hole. Do you think we're stupid? LOL. Except for the relatively small amount of stock they own the company doesn't belong to them...it belongs to the shareholders.

The company personnel made $billions on the shale boom and most (the smarter ones) didn't loose a penny. The owners of Petrohawk, a " closely held" pubcos (a very few insider shareholders) walked away with $12 BILLION when they sold the company (and all its undeveloped shale acreage) to a widely held pubco (thousands if not tens of thousands of shareholders). And from the day that deal closed the buying pubco's stock started loosing value...even when oil prices were high. Forget the $12 billion they company paid: eventually the value of their stock fell almost $100 BILLION.

Petrohawk became the template for most of the pubcos that chased the shales. The drilling contractors et al made $billions by increasing rates on equipment 200% to 400% that often was already paid for. Some did get a tad greedy and borrowed to much to expand. And many mezzanine bankers did alright because they tend to cut out their pound of flesh early on. The conventional bankers...they took a big hit. Not management, of course, since the big banks don't belong to them but to hundreds of thousands if not millions of shareholders.

And now operators are locking in tens of $Billions in future profits buying PROVED PRODUCING oil reserves on the cheap. And it isn't just stripper operators... some big independents.

And the every day "common man" that owned most of the pubco stock? Hell, who do you think supplied the hundreds of $billions made during the shale boom? LOL. From my earliest days at the Oil Drum I preached the same advice: if an investor doesn't have a firm grounding in the oil patch dynamics they have no business investing in our stock.
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Re: THE Price of Crude pt 12

Unread postby radon1 » Fri 14 Oct 2016, 03:55:09

ROCKMAN wrote: if an investor doesn't have a firm grounding in the oil patch dynamics they have no business investing in our stock.


Sounds like "a firm grounding in the oil patch dynamics" is "buy low, sell high".
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Re: THE Price of Crude pt 12

Unread postby shortonoil » Fri 14 Oct 2016, 08:25:40

The daily price of oil is at this point in the cycle is completely irrelevant. It is the long term trend that determines the fate of the industry. If the price is going down long term sellers will find that their best opinion will be to sell as some as possible. Buyers will find that there is no profit to be made in aquiring a commodity that is going down in price. The entire industry will seize up.

Because reserves are no longer being replaced with a drill bit:

https://assets.bwbx.io/images/users/iqj ... /-1x-1.png

aquiring them through acquisition is the only remaining option. That option is soom coming to an end. The price has been declining for almost three years as we projected:

http://www.thehillsgroup.org/depletion2_022.htm

By 2019 the entire industry will be for sale, and there will be no buyers for it. The impact of that to the financial/ monetary system, and remaining economy will obviously be tremendous. For the investor betting on a commodity that is declining in price it is a guaranteed route to bankruptcy.
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Re: THE Price of Crude pt 12

Unread postby sparky » Fri 14 Oct 2016, 09:03:22

.
that's truly scary , our own big boy BHP purchased tight oil assets at the top of the boom .
What could go wrong ?
from the paper the Australian

BHP Billiton admits US shale ‘not a good investment’
"BHP Billiton has given the most frank admission yet around its $US37 billion of US onshore shale acquisitions and spending, with chief financial ­officer Peter Beaven declaring it was not a good investment and that after overpaying for the ­assets, the miner then overspent.
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Re: THE Price of Crude pt 12

Unread postby ROCKMAN » Fri 14 Oct 2016, 12:09:40

"Billiton admits US shale not a good investment".

And their definition of "not a good investment " (like in 2011 paying Petrohawk $12.1 BILLION for its undeveloped Eagle Ford acreage) would be their stock dropping 80% from the shale boom high to its post-boom low. Yep, I agree...not a "good investment". LOL.
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Re: THE Price of Crude pt 12

Unread postby shortonoil » Fri 14 Oct 2016, 12:44:05

"Billiton admits US shale not a good investment"

What is meant by that is an industry that has spent over $1 trillion to create a business with $363 billion in gross sales. Now that is not a good investment because it would take the rest of one's life to get their money back, even if the industry turned suddenly, and miraculously profitable. Which is not very likely either!

A bad investment is a bad investment regardless of how well the speculators have done. Flipping leases has been very profitable for some speculators; pumping shale oil is a bottomless debt hole.
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Re: THE Price of Crude pt 12

Unread postby GoghGoner » Wed 19 Oct 2016, 10:23:31

Still moving up. I was on the wrong side of this move. Beginning to wonder if the great bull run hasn't started. Coal has been on fire but Copper still showing weakness. Hmmm...

U.S. crude hit a more than one-year high on Wednesday after government data showed that U.S. crude stockpiles declined for the sixth time in seven weeks, as refinery activity fell and the country imported less crude.
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Re: THE Price of Crude pt 12

Unread postby ROCKMAN » Wed 19 Oct 2016, 15:00:24

Goner - I've told you before how easy it is to make a fortune in any commodity: buy low...sell high. You better getting moving before the rest of the herd...I mean investors leave you behind.

Me? I'm putting all my money into a tapioca mine.
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Re: THE Price of Crude pt 12

Unread postby GoghGoner » Thu 20 Oct 2016, 06:44:11

ROCKMAN wrote:Goner - I've told you before how easy it is to make a fortune in any commodity: buy low...sell high. You better getting moving before the rest of the herd...I mean investors leave you behind.

Me? I'm putting all my money into a tapioca mine.


Tapioca? I don't know how you get ahead of the herd so easily. Before you know it, there will be tapioca filling stations across the USA. Seriously, if the cost of a commodity is well below the cost to produce a significant portion of its supply, you can buy and hold. Coal was a wonderful opportunity to make some money and so is oil below $50.

ZnO nanoparticles have been prepared from a new bio-fuel, tapioca starch by gel combustion method.
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Re: THE Price of Crude pt 13

Unread postby Tanada » Thu 20 Oct 2016, 07:39:04

The fact that yesterday set a new yearly high seems to have CNBC all in a tizzy but I doubt it is actually all that significant. Lots of selling overnight as people try to cash out at the high mark.
I should be able to change a diaper, plan an invasion, butcher a hog, design a building, write, balance accounts, build a wall, comfort the dying, take orders, give orders, cooperate, act alone, solve equations, pitch manure, program a computer, cook, fight efficiently, die gallantly. Specialization is for insects.
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Re: THE Price of Crude pt 13

Unread postby ROCKMAN » Thu 20 Oct 2016, 07:55:22

T - I'm not sure of the extent of the impact but: contango speculators selling stored oil on price upticks leading to price downticks is an easy feedback loop to envision. You can only pay to store oil so long before it starts to lose value even if you sell high then you bought. Some of the sellers may be negative on their trade and are just trying to reduce their losses if the aren't optimistic about near term significant price increases.
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