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ROCKMAN wrote:ralfy - The difference, of course, is that in the Titanic analogy survivors generally found themselves in safe places where it was business as usual." Did you not see all the examples I gave of companies that once they cleared Chapter 11 "found themselves in safe places where it was business as usual."? In particular where the creditors ended up owning the company. Again consider Halcon: got rid of $billions in debt, got a $600 million line is asset based credit and is using that capex to drill big wells in the Permian Basin. IOW thanks to the federal bankruptcy law it is now a financially sound operation "carrying on business as usual."

Halcon creditors not only made it onto the lifeboats but got first class seating. LOL. Of course, the original shareholders were left on deck as the ship slipped beneath the waves.

Again folks should study the federal bankruptcy laws. Especially Cheaper 11: it is specifically designed to allow company in very bad financial condition to reorganize into companies that end up "in safe places where it was business as usual".

IOW the law is SPECIFICALLY written to allow severely damaged companies to prospers at the expense of the creditors or original owners. Essentially designed to allow those companies to not only survive but have the potential to prosper.

As explained in other threads, the oil industry has up to $3 trillion in debt, has to make payments on $500 billion of that during the next few years, and is making those payments by eating up more of its cash flows, selling off assets, laying off thousands of employees, and letting go of around $1 trillion in investments, all with the hope that oil prices will go up significantly so that they don't have to keep doing these things. Meanwhile, the more credit created the deeper the debt hole of the global economy, and higher oil prices have a negative effect on the same economy.

ralfy - "the oil industry has up to $3 trillion in debt" First, that number has never been documented. But we'll skip that. But more then 130 companies have cleared Chapter 11 bankruptcy and have eliminated upwards of $100 billion in debt, eliminated hundreds of $millions in annual interests payments and have also established $billions of new credit lines that are allowing them to hire and begin new drilling operations.

And however much debt remains those companies are servicing the debt satisfactory otherwise they would have filed bankruptcy. Of course they may not be in great financial shape but they are still in business. Maybe not doing nearly as much business as as few years ago. But have survived and still in business.

There is $14 trillion a day of financial transactions in the USA. $100 billion is not even a blip on that.

But in bankruptcy, a variety a people eat a loss and its spread out to some extent and passed on in future business transactions. $100 billion sounds like a lot but its not.

ralfy - "the oil industry has up to $3 trillion in debt" First, that number has never been documented as far as I know. But we'll skip that for now. But more then 130 companies have cleared Chapter 11 bankruptcy and have eliminated upwards of $100 billion in debt, eliminated hundreds of $millions in annual interests payments and have also established $billions of new credit lines that are allowing them to hire and begin new drilling operations. The Rockman's company never took on debt so we're a different type of animal. But last month we hired a young engineer to help us in our production acquisition efforts.

And however much debt remains the vast majority of companies are servicing the debt satisfactory otherwise they would have filed bankruptcy. Based on your $3 TRILLION total debt number more then 97% of the debt is still being repaid by the companies that HAVE NOT filed bankruptcy. Of course they may not be in great financial shape but they are still in business. Maybe not doing nearly as much business as as few years ago. OTOH the rig count has tripled since it hit the recent low point and is now back to 50% of the boom peak. But they have survived so far and still in business to some degree.

You can't have it both ways: if the debt is as large as the $3 trillion you claim but at most $100 BILLION has been dismissed by the bankruptcy court then the industry is surviving much better then the "oil business is dead" has been ranting about. Not prospering, of course. But surviving.

Bankruptcy has been part of the oil business for a very long time. Rockman even made a special thread for it. But in the ETP world, a new bankruptcy is cause to run for the hills and wait for the apocalypse. Anyone who has worked in the O/G industry long enough has seen this all play out. I worked for a couple of years as a mud-logger with Schlumberger and saw the spikes and crash in my particular field.

This was in 1979. They once left the four of us mud-loggers on a semi-submersible drill rig for 28 days. We were so busy there was no replacements for us, even though we were supposed to work 2 weeks on and 1 week off. The only way we got off the rig was they reached total depth of 25,000 feet. A year later they were laying us off in droves. Its the nature of the business but people outside the industry freak out about it.

But in the ETP world, a new bankruptcy is cause to run for the hills and wait for the apocalypse.

It's the Hills Group, not the hills. We use the hills to hide our still. This must be another Cog troglodyte pig Latin affirmation. Confirmation that he does not know one single thing about the Etp Model, and is not likely to learn. It requires the use of numbers over 20, and the fly on his pants broke years ago. 21 is now completely out of reach.

http://www.thehillsgroup.org

You didn't respond to a single thing I posted Shorty but instead responded with a personal attack. Are you feeling desperate that no one is buying your "special " ETP report.

I don't expect ETP'ers to actually know anything about the oil industry. That has been proven repeatedly right here. But I do expect you folks to respond in a civil manner.

baha wrote:My big-picture view of it includes the losses.

The money/credit that just disappeared during these bankruptcies should count toward the overall cost of producing the next barrel. The ETP model says production costs will go up...Does that 100 billion in debt that was 'eliminated' count as production costs?

Referencing the etp model is no different than referencing the opinion of Santa Claus. Perhaps even dumber.

shortonoil wrote:

But in the ETP world, a new bankruptcy is cause to run for the hills and wait for the apocalypse.

It's the Hills Group, not the hills.

So it has the value of Santa's opinion...and his elves. What can be lower in value than that, the Easter Bunny?

Why weren't you at the IEW conference LEARNING something? Then you wouldn't be making mistakes so obvious that folks at random websites can't spot them a mile away.

baha wrote:AdamB, the magic of this site comes from the opinions.

So you are saying that the value of Santa Claus and his opinion is as valid as Shorts? I can agree with that I guess.

baha wrote:I don't know anything about the oil industry or much about economics, but I think it all smells fishy. If we can ID the stinkiest part, we can have an idea of where the breakdown will occur. It's not the FF industry or any other. It's a house of cards and eventually one will slide out and it will all fall. Like in '08.

Not into Doom, into Transition...I hope.

Thank you COG Your financial analysis makes me feel like a bump on a gnat's ass.

There is a problem with the "magic" of opinions, and it is common to the internet. If, on this website, we happen to be discussing some topic related to geology, or geochemistry, of what value is the opinion of the uneducated and inexperienced compared to Rockman and RocDoc? It is a valid question, because it lies at the heart of internet conversations in general.

You go into a forum, having been diagnosed with some form of brain cancer. You ask all your friends, what to do, what to do? Someone like pstarr tells you to take Vitamin C and drink green tea, a perfect cure. You get this level of opinion from 999 people, all with pstarrs lack of experience in the neurosciences. And then you have ONE brain surgeon in this forum, and they give you their opinion as well.

Tell me, of what value is the opinion of the 999, versus the 1?

Regardless of the "magic", variety, or entertainment value of the 999, when it comes to answering the asked question.

baha wrote:Excuse me for seeing this shell game for what it is. We all talk about how the system is manipulated and the numbers aren't real...but no one can put their finger on it.

I don't know anything about the oil industry or much about economics, but I think it all smells fishy.

Look, that's fine if you (and many doomers, etc) feel that the system (i.e. economic data generally) is "manipulated and the numbers aren't real". But please don't assign that attitude to "all" of us, because that is false.

Frankly, I don't think the government is anywhere NEAR competent enough to pull off the various conspiracy theories people constantly assign to them. For example:

1). Not 911, re the "truthers" -- not even close. (Not and have no CREDIBLE evidence for it).
2). Not manipulating "the data" about the economy, long term, and no CREDIBLE evidence for it.
3). Not manipulating "the data" about the climate, as the AGW deniers would have us believe -- not long term, not with all the various global datasets and measurement across decades and into history (ice cores, etc).

The AGW deniers (generally) don't know much about science, BTW -- they are apparently too ignorant to understand how much that matters -- that their uninformed opinion isn't worth much compared to the informed opinion of a huge proportion of the global scientific community, when considering scientific matters.

I respect what you're doing with solar a lot. In that venue, your opinion clearly matters and you're accomplishing things.

However, with respect, "I think it smells fishy" about the national or global economic numbers doesn't carry a lot of weight if you don't have formal economic training, IMO, for much the same reasons the AGW denier crowd is passionate but clueless. Especially when over time, despite your suspicions, the economy ends up chugging right along on the general path the government (via all its sources) reports, year after year.

I say that not to you specifically, but to the entire "the economy will collapse any time now because I know two people on my street who lost their job recently" crowd on this site (as though anecdotal evidence or uninformed personal belief outweighs the entire body of economic data and thinking). The same crowd who despite month after month, year after year, are constantly wrong about their dire short term economic predictions, but refuse to learn anything.

(For those who realized you can't time collapse in the short term and admit it -- kudos to them).

Retail apocalypse
http://www.businessinsider.com/the-reta ... ica-2017-3

Consumer debt spiralling higher

Word the unemployment numbers are cooked

Economy fine and dandy best recovery ever.

Potemkin economies can only hide reality with their facade for so long.

baha - "...but I think it all smells fishy. If we can ID the stinkiest part, we can have an idea of where the breakdown will occur." I can offer the OPINION of someone who has worked 41 years in the oil patch. And the worst stink comes from the publicly traded petroleum companies. Having worked for many of them during his long career the Rockman tolerated that smell many times...the pay was good. LOL.

The Wall Street shark that took control of the last pubco the Rockman was employed at intentionally pushed us into liquidation bankruptcy despite the fact we were in a recovery trend. Our president refused and got fired for it. BTW he is now the president of the privately owned company the Rockman works for today. Also the Rockman got fired (by his president friend) first for mouthing off at a board of director's meeting. One of the benefits of being skilled enough to easily get another gig. LOL. But not as an employee of a pubco...as a consultant. Consultants are like mercenaries: we aren't responsible for how the "war" is waged: we have no authority, just lend support, collect our wages and go down the road. LOL.

The shark did it because he would save more money by using us as a write off against the huge profits he was making elsewhere then having our company survive. So he destroyed a viable company and the 30 remaining people lost their jobs.

Just one example of the many dirty manipulative tricks used by pubcos the Rockman has witnessed over 4 decades. Which is why he and his current president/engineer (the one who fired him 20 years ago) chose to ride out the end of their careers with a private company: the owner's business plan was simple: drill wells that are profitable.

The sad thing is that the public knows very little about the service private companies provide to the land owners, govt tax collectors and petroleum consumers. In general they don't seek notoriety and don't really give a sh*t if the public understands their contribution to the economy. LOL.

Which is why you never hear the name of the Rockman's company. It doesn't even have a website...how old school is that? LOL. Also why you won't find a published paper about the successful horizontal wells the Rockman drilled in a nearly depleted 71 year old conventional oil field. The first commercially successful effort in a trend where numerous others have tried and failed. Private companies just love CA's...Confidently Agreements. LOL.

Like I said: private owners don't really care if anyone knows what they are doing. The profits are more important then the bragging rights.

Darian - You post got me thinking about debt other then the $3 trillion some claim the petroleum industry owes. Debt that so far is still being serviced by 97% of that supposedly owed by the industry.

So:

Personal household debt - $12.7 TRILLION
Corporate debt not including energy - $12.5 TRILLION
(Interesting: utilities owe $4.5 TRILLION, more then any other sector while energy owes $2.6 trillion according to CNBC -

https://www.cnbc.com/2017/04/11/corpora ... -most.html

Now add the $19 TRILLION owed by the federal govt.

So total debt (not including energy) = about $45 TRILLION. Of course that doesn't included the many TRILLIONS in underfunded retirement accounts, pension plans, etc. And then there's the little numbers game the feds play with Social Security, Medicare, et al.

Suddenly that paltry $2.6 TRILLION (less then 5% of the total) the oil patch owes doesn't look so shocking. Especially since 97% of that debt is still making interest and principal payments. LOL.

Also less then 300 petroleum companies filed bankruptcy in the last 2 years. And in 2016 alone 38,000 US corporations and 819,000 individual citizens filed bankruptcy. BTW the majority of personal bankruptcies were the result of medical bills.

I think folks have a lot more to worry about the oil patch bankruptcy filings. Like the $266 BILLION interest alone the federal govt pays on its debt while paying $0 on the principal.

ROCKMAN wrote:I think folks have a lot more to worry about [than] the oil patch bankruptcy filings. Like the $266 BILLION interest alone the federal govt pays on its debt while paying $0 on the principal.

You mean while adding significantly to the principal every year, of course.

And if interest rates ever become more normal, that $266 Billion could easily double or triple. Or bring back the early 80's and it could get pretty out of hand rather quickly.

But why worry? After all, there are elections to win! And constituents to get votes from. And various programs each side refuses to even consider defunding. And if we pretend nothing is wrong long enough, hopefully that debt will be somebody ELSE's problem!

ROCKMAN wrote:ralfy - "the oil industry has up to $3 trillion in debt" First, that number has never been documented. But we'll skip that. But more then 130 companies have cleared Chapter 11 bankruptcy and have eliminated upwards of $100 billion in debt, eliminated hundreds of $millions in annual interests payments and have also established $billions of new credit lines that are allowing them to hire and begin new drilling operations.

And however much debt remains those companies are servicing the debt satisfactory otherwise they would have filed bankruptcy. Of course they may not be in great financial shape but they are still in business. Maybe not doing nearly as much business as as few years ago. But have survived and still in business.

It was mentioned by the BIS:

http://www.bis.org/publ/qtrpdf/r_qt1503f.htm

Also, from what I gathered, fresh lines of credit were extended in response to bankruptcies. But the main reason why finance markets crashed several years ago was increasing levels of credit. Also, additional credit was provided based on the assumption that the industry will recover and thrive in the long term, and that requires the reversal of the effects of peak oil.