Donate Bitcoin

Donate Paypal


PeakOil is You

PeakOil is You

Saudi Aramco IPO

Discussions about the economic and financial ramifications of PEAK OIL

Re: Saudi Aramco IPO

Unread postby rockdoc123 » Thu 18 Oct 2018, 20:27:10

Practically anything with carbon, hydrogen and oxygen is oil . . . at the right price. I'll bet your buddies could upgrade whole wheat bread and call it dilbit if you paid them enough


You are without a doubt an ignorant ass. You have been told numerous times what the definition of Proven Reserves is according to the SEC (it is detailed and impossible to tweak), you have been told numerous times that since Sarbanes Oxley came into force these Reserves need to be audited by third parties who take on legal responsibility for that assessment. The SEC regularly goes after companies they believe are "gilding the lily" and it is now about disclosure not about Reserve reporting due to the restrictions. You have also been told numerous times that the definition of Crude Reserves according to the EIA includes oil produced and only that condensate that is produced and blended back into the oil stream for transportation to refineries. Yet you continually come up with these asinine claims that somehow Proven Reserves include a bunch of other things including ethanol. If you can't be bothered to educate yourself on the subject I respectfully suggest you shut the heck up. You aren't' adding to the conversation and basically appear to be trolling which I am lead to believe is not something you should be doing on this site.
User avatar
rockdoc123
Expert
Expert
 
Posts: 6598
Joined: Mon 16 May 2005, 02:00:00

Re: Saudi Aramco IPO

Unread postby Yoshua » Fri 19 Oct 2018, 02:40:33

Did someone say $40 oil?

Image
Yoshua
Heavy Crude
Heavy Crude
 
Posts: 1318
Joined: Sat 28 May 2016, 05:45:42

Re: Saudi Aramco IPO

Unread postby shortonoil » Fri 19 Oct 2018, 10:02:12

Did someone say $40 oil?


From just market forces alone, oil should now be in the low $40s, but that is not going to be allowed to happen until the PTB have lost all control. With $40 oil we would be seeing producers shutting their doors around the world. $40 oil will be a good benchmark to use for when the Peak (as projected from Hubbert's curve) and the "dead state" (as projected from the Etp Model) begin supplementing one another, and signifying the ongoing collapse of modern civilization. That will be preceded by a number of monetary/ financial system's failures; Venezuela like failures will become common place. The Peak is almost upon us, or already here, and the dead state will occur around 2030. When the world's $237 trillion in debt begins to self destruct (maintenance on that debt is now $7.1 trillion a year or 8.9% of world GDP) $40, $30, $20 ..... oil will become a reality. The monkeys in charge of pulling the levers will have deserted their post, and will be heading for their bug out digs in New Zealand. With a little luck we may not see $40 oil until maybe 2025. If the clowns in chief start shooting at one another, it will come a lot sooner. Navigating this era will be a monumental task, and once hyperinflation kicks in from central bank printing, a lot of humanity just simply isn't going to make it!
User avatar
shortonoil
False ETP Prophet
False ETP Prophet
 
Posts: 5765
Joined: Thu 02 Dec 2004, 03:00:00
Location: VA USA

Re: Saudi Aramco IPO

Unread postby kublikhan » Fri 19 Oct 2018, 10:12:39

Yoshua wrote:Did someone say $40 oil?
That graph doesn't mean the price of oil is $40. The blue line is the price of oil in US dollars, IE $68. The red line is the exchange rate of the Australian dollar for the us dollar, IE .70953. That means if you want to get the price of oil in Australian dollars you divide $68.67/.70953 = 96.78 AUD/bbl. Actually it's gone up slightly since then to over 97 AUD/bbl.


shortonoil wrote:With a little luck we may not see $40 oil until maybe 2025.
And we have just set a new backpedal record! Someone call Guinness!
The oil barrel is half-full.
User avatar
kublikhan
Master Prognosticator
Master Prognosticator
 
Posts: 4412
Joined: Tue 06 Nov 2007, 03:00:00
Location: Illinois

Re: Saudi Aramco IPO

Unread postby onlooker » Fri 19 Oct 2018, 12:14:18

FINANCIAL RED FLAGS FOR FRACKING
Despite rising oil prices, the red ink continues to flow for fracking companies



https://www.sightline.org/2018/10/17/us ... red-flags/
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10268
Joined: Sun 10 Nov 2013, 12:49:04
Location: NY, USA

Re: Saudi Aramco IPO

Unread postby rockdoc123 » Fri 19 Oct 2018, 12:32:35

And we have just set a new backpedal record! Someone call Guinness!


Indeed. It would be hilarious if not so predictable.

Image
User avatar
rockdoc123
Expert
Expert
 
Posts: 6598
Joined: Mon 16 May 2005, 02:00:00

Re: Saudi Aramco IPO

Unread postby ROCKMAN » Fri 19 Oct 2018, 13:30:58

From onlooker’s link: “…sub-groupings of oil-focused, gas-focused, and diversified companies all failed to cover their capital expenditures with internally generated cash flows. As a whole, these companies depleted $5 billion in cash reserves from January through June to keep capital projects on track while sustaining distributions to investors.”

And once again we have a child’s perspective of petroleum company investment profiles. I’ll use Rockman’s company as an example. A perfect example for two reasons: 1) it started only 10 years ago and thus had no heritage production/revenue; 2) it has never drilled/frac’d a shale well. The initial strategy was to drill deep NG prospects with significant condensate yields. In Year 1 it spent about $60 million and drilled a number of very successful wells mostly in south Louisiana. And did not borrowed one $1 to do so: owned by a billionaire. In Y2 spent about $80 million drilling. Did the company’s cash flow cover that $80 million budget? Of course not: that would have meant the Y1 wells generated a net $80 million. Having a well generate 100% of its cost in 12 months is great and does happen on rare occasions but it is far from the norm in the industry. As best as I can recall the estimated recovery of the $60 million spent on Y1 wells was projected to take 2.8 years.

Think about that for a moment: how many here have invested $X and made $X back in a year? That would represent 100% net revenue, right? And $ZERO PROFIT, right? Wait, how can that be: you invest $X and get $X back in 12 months and NO PROFIT? Yes, because until you make $X + $1 you have made NO PROFIT from your investment, right?

Now think about the investment profile of a petroleum company where the revenue stream of its investments take a number of years to net that capex spent to drill those wells. Back to Rockman’s company: 2.8 years after it invested that initial $60 million it had yet to make $1 profit on that $60 million investment, right? And obviously it had a huge negative cash flow after Y1 + Y2 having spent $140 million ($60 million + $80 million) but was still 1.8 years away from netting the initial $60 million Y1 investment, right?

So how good was that initial $60 million investment? IOW its rate of return. Easy to calculate: wait until all those wells deplete and take their revenue stream vs the time taken to recover and run the numbers. But can’t even do that calculation today: 2 of those wells are still producing. But can easily do it for each of the individual wells that have depleted. And all turned a profit. Just my rough guess but I would say an average 16% ROR. A 16% ROR is well above the historic industry average. Of course folks who get pissed off when they see the price at the pump or monthly NG bill would never believe that: those damn oil companies rip us off and make obscene profits. LOL. But that’s because their emotions blind them then to the reality.

Now consider this: how do you calculate the total profitability of Rockman’s company Y1 profitability after Y2 given the additional $80 million in capex invested? Obviously you can’t: you’re at least 1.8 years away from being able to even paying out the Y1 expenditure and even longer to reach the recovery of 100% of the Y2 expenditure let alone its profit.

OK, now you either understand why you can’t base the petroleum industry profitability on the revenue from any one year compared to how much it spent that year on new drilling. Or you don’t and will never be convinced of your ignorance or that of the writers on the onlooker’s article. So having done all I can I’ll just leave you to wallow in your own pit of self-righteous indignation. LOL.

BTW let me also point out that when oil patch optimism soars during a period of rising oil/NG prices it tends to increase borrowing to allow more drilling then its net revenue allows. Which can work out great…until it gets caught with it pants down when prices collapse.
User avatar
ROCKMAN
Expert
Expert
 
Posts: 11209
Joined: Tue 27 May 2008, 02:00:00
Location: TEXAS

Re: Saudi Aramco IPO

Unread postby onlooker » Fri 19 Oct 2018, 13:41:33

Actually, I have to admit the logic and math do seem to support Rockman's assessment. So, I was wrong to post it
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10268
Joined: Sun 10 Nov 2013, 12:49:04
Location: NY, USA

Re: Saudi Aramco IPO

Unread postby ROCKMAN » Fri 19 Oct 2018, 14:13:15

looker - No, I'm glad you posted it. We see the same stupidity reported in many places...including here. And not trying to be insulting but the explanation I just posted is greatly simplified. In fact I suspect we'll see a post from Doc shortly chastising me for being overly simplified. LOL. As you point out the logic isn't that difficult to follow. But only IF you haven't swallowed the Kool-Aid and have an open mind. For those that have I won't waste our space here responding to them. They are lost causes IMHO.

Just think about what we see regularly posted here: the petroleum industry for the last 10 years has invested 100's of $billions in the unconventional plays and has been LOSING MONEY THE ENTIRE TIME. And the industry is still here. How do you have a constructive debate with anyone that truly believes that. After all, we aren't the federal govt. LOL.
User avatar
ROCKMAN
Expert
Expert
 
Posts: 11209
Joined: Tue 27 May 2008, 02:00:00
Location: TEXAS

Re: Saudi Aramco IPO

Unread postby StarvingLion » Fri 19 Oct 2018, 20:23:53

The Arabian Sun Belt is a fraud, people. Solar is not an energy source at all. KSA is going berserk because of the salt buildup in Ghawar forcing wells further into the field. Production at Ghawar will totally collapse in 2022 causing KSA to go instantly bankrupt. Thats why they are can kicking everything.

Solar Scam: Can Kick
IPO Scam: Can Kick
Reality: Can Kick

And just recently Russia said it would begin production of its shale in 2025. Thats supposed to save the Ghawar collapse. But Russia shale is not brittle, won't fracture....utterly totally hopeless.

https://www.greentechmedia.com/articles ... gs.ePRx9Ys

Failure of ‘World’s Biggest Solar Project’ in Saudi Arabia Is No Surprise

There were concerns from the start.
Jason Deign October 02, 2018
Albanian Pyramid Schemers: "And the Federal Reserve laughed at us. Now look at their catastrophe"
StarvingLion
Heavy Crude
Heavy Crude
 
Posts: 1266
Joined: Sat 03 Aug 2013, 17:59:17

Re: Saudi Aramco IPO

Unread postby StarvingLion » Fri 19 Oct 2018, 20:33:39

The truth is that KSA has to spend 100's of billions of dollars just to maintain current level of oil production.

They cannot even power 30 million air conditioners for their runaway welfare state.

The IPO was supposed to get the welfare state off the books of Aramco.

Aint gonna happen.

BW HillBilly will soon be unveiling The Wood Economy in his astounding latest book. Got Syngas vehicle?
Albanian Pyramid Schemers: "And the Federal Reserve laughed at us. Now look at their catastrophe"
StarvingLion
Heavy Crude
Heavy Crude
 
Posts: 1266
Joined: Sat 03 Aug 2013, 17:59:17

Re: Saudi Aramco IPO

Unread postby Outcast_Searcher » Fri 19 Oct 2018, 23:10:52

Yoshua wrote:Did someone say $40 oil?

Image

So we're playing currency distortion games again? How original! (NOT)
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
User avatar
Outcast_Searcher
COB
COB
 
Posts: 6451
Joined: Sat 27 Jun 2009, 20:26:42

Re: Saudi Aramco IPO

Unread postby pstarr » Mon 22 Oct 2018, 14:02:03

What idiot would purchase shares in collapsing company?
SA has peaked. OPEC has peaked. So goes the world.
pstarr
NeoMaster
NeoMaster
 
Posts: 27948
Joined: Mon 27 Sep 2004, 02:00:00
Location: Behind the Redwood Curtain

Re: Saudi Aramco IPO

Unread postby Plantagenet » Thu 01 Nov 2018, 04:16:49

pstarr wrote:What idiot would purchase shares in collapsing company?


Its not just the Saudi National Oil company or the proposed IPO or the Saudi policy of conducting a war in Yemen that is in trouble now. Crown Prince Muhammad himself is a risk of losing power since the murder of Khashoggi.

Cheers!
"Its a brave new world"
---President Obama, 4/25/16
User avatar
Plantagenet
Expert
Expert
 
Posts: 21972
Joined: Mon 09 Apr 2007, 02:00:00
Location: Alaska (its much bigger than Texas).

Re: Saudi Aramco IPO

Unread postby onlooker » Fri 02 Nov 2018, 16:15:47

Now, analysts at Wood Mackenzie have conducted their own study of Saudi Aramco, and came up with a completely different (and much lower) figure. WoodMac puts Aramco’s true value closer to $400 billion, eighty percent less than the Saudi estimate, and it arrived at the figure by considering future demand and the anticipated average price of oil (on which profits will depend), as well as Saudi Aramco’s status as a state-run company.
Cooking The Books? Saudi Aramco Could Be Overvalued By 500%

Apologies if already posted

https://oilprice.com/Energy/Energy-Gene ... y-500.html
"We are mortal beings doomed to die
User avatar
onlooker
Fission
Fission
 
Posts: 10268
Joined: Sun 10 Nov 2013, 12:49:04
Location: NY, USA

Re: Saudi Aramco IPO

Unread postby Cog » Fri 02 Nov 2018, 17:31:17

pstarr wrote:What idiot would purchase shares in collapsing company?


Tesla ring a bell?
User avatar
Cog
Fusion
Fusion
 
Posts: 12064
Joined: Sat 17 May 2008, 02:00:00
Location: Northern Kekistan

Re: Saudi Aramco IPO

Unread postby rockdoc123 » Fri 02 Nov 2018, 19:56:06

Now, analysts at Wood Mackenzie have conducted their own study of Saudi Aramco, and came up with a completely different (and much lower) figure. WoodMac puts Aramco’s true value closer to $400 billion, eighty percent less than the Saudi estimate, and it arrived at the figure by considering future demand and the anticipated average price of oil (on which profits will depend), as well as Saudi Aramco’s status as a state-run company.
Cooking The Books? Saudi Aramco Could Be Overvalued By 500%


If you read through the entire press piece the underlying problem is identified. Nothing to do with reserves but all to do with the assumptions WoodMac has made regarding the contractor share (in this case Aramco).

WoodMac doesn’t dispute the figure of 261 billion barrels lying under Saudi Arabia and just offshore; that figure has been confirmed by independent sources. Where things get complicated, though, is in the management and taxation of Saudi Aramco, which does not release financial statements. It is known that the company, which is the bedrock of the Saudi economy and the major foundation for state finances, pays a twenty percent royalty on revenues and an 85 percent income tax, supporting the Saudi government and providing a living for the 15,000 members of the Saudi royal family. Tax commitments of that size could have a major impact on the company’s profitability, leaving little in dividends, a factor WoodMac considered in its valuation.


There has been a number of releases from the Saudi government indicating that they have changed both the royalty and tax structure as applies to Aramco. The income tax assessed to Aramco will drop to 50% and the royalty will be on a sliding scale based on production. The comment from other observers is that the royalty tax scheme for Aramco is comparable to many less oil-endowed countries in the world. At say 30% contractor take Aramco is in a pretty good spot. Lets assume they produce 10 MMB/d and see a $40 netback per bbl. Thats over a $140 billion in free cash flow a year much better than they are doing now. Regardless of what sort of discount factor you use 261 billion barrels is worth a lot more than $400 MM.
User avatar
rockdoc123
Expert
Expert
 
Posts: 6598
Joined: Mon 16 May 2005, 02:00:00

Re: Saudi Aramco IPO

Unread postby pstarr » Fri 02 Nov 2018, 21:10:03

You have to be working for the Saudis, right? Do we now refer to you as Sheikh Mohammed ben tabibj a yulujia (that would geology doctor in the native tongue. Or merely ماعز

So it's production rather than reserves. No guarentee of future income. The reserves are the asset. Like selling a car company without an assembly line. The cars just magically appear. That camel won't sell. It's smells and has flies all over
SA has peaked. OPEC has peaked. So goes the world.
pstarr
NeoMaster
NeoMaster
 
Posts: 27948
Joined: Mon 27 Sep 2004, 02:00:00
Location: Behind the Redwood Curtain

Re: Saudi Aramco IPO

Unread postby Outcast_Searcher » Fri 02 Nov 2018, 23:24:19

Cog wrote:
pstarr wrote:What idiot would purchase shares in collapsing company?


Tesla ring a bell?

I have no horse in the Tesla race, but it seems to me that with Tesla now showing profits (or at least certainly NOT showing massive losses any more), that to claim Tesla is "collapsing" isn't at all credible. (Though many of the shorts, with a clear axe to grind, and having been proven wrong MANY times in their claims the past several years, would agree with ANYTHING negative someone has to say about Tesla. Imagine that.)

BTW, I think Musk is basically a jerk (a genius, but a jerk) -- but that doesn't mean Tesla is imploding.

Disclosure: I remain neutral on Tesla overall, which I have been consistently for years. I remain bullish on the EV industry overall, over time, as I have been consistently for years, as the technology is clearly maturing. (To me, EV means all forms of EV's, including HEV, PHEV, and BEV. I think the BEV purists claiming anything but a BEV is horrible are making the imperfect the enemy of the good -- which, IMO, is clearly a stupid bias.)
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
User avatar
Outcast_Searcher
COB
COB
 
Posts: 6451
Joined: Sat 27 Jun 2009, 20:26:42

Re: Saudi Aramco IPO

Unread postby pstarr » Sat 03 Nov 2018, 00:29:14

Outcast_Searcher wrote:
Cog wrote:
pstarr wrote:What idiot would purchase shares in collapsing company?


Tesla ring a bell?

I have no horse in the Tesla race, but it seems to me that with Tesla now showing profits (or at least certainly NOT showing massive losses any more), that to claim Tesla is "collapsing" isn't at all credible. (Though many of the shorts, with a clear axe to grind, and having been proven wrong MANY times in their claims the past several years, would agree with ANYTHING negative someone has to say about Tesla. Imagine that.)

BTW, I think Musk is basically a jerk (a genius, but a jerk) -- but that doesn't mean Tesla is imploding.

Disclosure: I remain neutral on Tesla overall, which I have been consistently for years. I remain bullish on the EV industry overall, over time, as I have been consistently for years, as the technology is clearly maturing. (To me, EV means all forms of EV's, including HEV, PHEV, and BEV. I think the BEV purists claiming anything but a BEV is horrible are making the imperfect the enemy of the good -- which, IMO, is clearly a stupid bias.)

So has, or has not, Saudi Arabia peaked?
SA has peaked. OPEC has peaked. So goes the world.
pstarr
NeoMaster
NeoMaster
 
Posts: 27948
Joined: Mon 27 Sep 2004, 02:00:00
Location: Behind the Redwood Curtain

PreviousNext

Return to Economics & Finance

Who is online

Users browsing this forum: No registered users and 16 guests

cron