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THE Fracking Thread pt 4

Discussions of conventional and alternative energy production technologies.

Re: THE Fracking Thread pt 4

Unread postby ROCKMAN » Sat 24 Mar 2018, 11:32:35

coffee - There you go again: using facts to attack good hardworking patriots. Don't you even care about "the children"? LOL.
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Re: THE Fracking Thread pt 4

Unread postby Tanada » Fri 24 Aug 2018, 21:36:48

Argentina to resume gas exports to Chile

Argentina will resume pipeline natural gas exports to neighboring Chile on 1 September for the first time in more than a decade, reflecting increased production from the Vaca Muerta shale formation.

Argentina's government published a resolution today outlining the process for companies to receive approval to carry out the sales to Chile.

The agreement will open the door to sales of as much as 22mn m3/d (777mn cf/d) of gas to Chile, according to the government of Neuquen province, which hosts Vaca Muerta.

All gas produced under a subsidy program that pays producers of approved tight and shale gas projects in the Neuquen basin as much as $7.50/mn Btu cannot be exported, according to the resolution. The subsidy, which was designed to boost production, is no longer needed because of rising production, energy minister Javier Iguacel said late last month.

The resolution published today emphasizes that exports will only be allowed to take place if they do not hurt domestic supply.

Argentina's gas output increased 4.5pc to 127.2mn m3/d in the first six months of 2018, compared to the same period last year.

Once a reliable gas exporter for the region, Argentina started to restrict exports in 2004 amid soaring demand and dwindling supply, and in 2008 began importing LNG to supplement pipeline gas from neighboring Bolivia. The cutoff of gas exports mainly impacted Chile, which later turned to LNG as well. Both countries now have two regasification terminals apiece.

Over the last three years, Chile has supplied LNG-derived gas to Argentina to meet peak wintertime supply, using two reversed cross-border pipelines.

In late June 2018 Chile´s state-owned Enap signed a three-year framework gas sales agreement with its Argentinian counterpart IEASA, formerly known as Enarsa, to permit up to 3mn b/d of pipeline supply during the southern hemisphere months.

The total of 93mn m3 of gas received from Chile in July allowed Argentina to save $21mn in diesel that it would have been forced to purchase to operate thermal power plants, according to IEASA.

Argentina's demand for gas peaks in the winter because it is used for heating and the government prioritizes residential supply.


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Re: THE Fracking Thread pt 4

Unread postby ROCKMAN » Sun 26 Aug 2018, 12:24:16

The new export sales might not represent increased recent development of the play as much as the improvement of the pipeline infrastructure and take away capacity. Which would naturally increase additional development of the play in general.

https://pgjonline.com/magazine/2018/jun ... -transport
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Re: THE Fracking Thread pt 4

Unread postby ralfy » Mon 03 Sep 2018, 02:07:13

The Next Financial Crisis Lurks Underground

Amir Azar, a fellow at the Columbia University Center on Global Energy Policy, calculated that the industry’s net debt in 2015 was $200 billion, a 300 percent increase from 2005. But interest expense increased at half the rate debt did because interest rates kept falling. Dr. Azar recently called the post-2008 era of super-low interest rates the “real catalyst of the shale revolution.”
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Re: THE Fracking Thread pt 4

Unread postby coffeeguyzz » Mon 03 Sep 2018, 16:09:43

Great potential 'teaching moment' for anyone truly interested in learning a bit about this so called Shale Revolution, how the media has portrayed/misrepresented it, and what to expect in the future.

Takes all of 10 seconds to Google 'wti in 2015'.

Chart pops up enabling a quick scan of decades of wti pricing at a glance.
Notice anything about 2015, boys and girls?
Ya know, like only 3 months above 51 bucks?

Check out 2014.

Check out 2018.

This is why you folks, and much of the wider population, keep getting caught off guard when you take this unadulterated, cherry picked bullshit as reality.

It's not.

Quoting Chanos and Einhorn? Biggest short sellers on the planet? Puhleeze.

Freakin' referring to Chesapeake from 2002 to 2012???
Today??
In September, 2018???

Pro tip ...
Any article that says " ...widespread concern about the impact of fracking (sic) on the environment, about earthquakes and water contamination ..." is - a priori - an uninformed presentation by a Know Nothing author.

Proof?

Who amongst you has read the massive 2016 report from the EPA on the environmental effects of frac'ing?

Anyone?

The writer from the Times clearly has not, as this meta study, incorporating over 1,200 studies, papers, reports found NO systemic problems despite the contorted dramas from Parker county, Dimock, and Pavillion.

If you folks wish to continue to choose to be willfully blind to the hydrocarbon abundance in the USA, then taking the above piece as truth would be the way to go.

For those of us who choose to live in reality, the Shale Revolution has demonstrably unleashed a brighter tomorrow for our communities, families, and country.
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Re: THE Fracking Thread pt 4

Unread postby ralfy » Mon 03 Sep 2018, 20:59:36

coffeeguyzz wrote:Great potential 'teaching moment' for anyone truly interested in learning a bit about this so called Shale Revolution, how the media has portrayed/misrepresented it, and what to expect in the future.

Takes all of 10 seconds to Google 'wti in 2015'.

Chart pops up enabling a quick scan of decades of wti pricing at a glance.
Notice anything about 2015, boys and girls?
Ya know, like only 3 months above 51 bucks?

Check out 2014.

Check out 2018.

This is why you folks, and much of the wider population, keep getting caught off guard when you take this unadulterated, cherry picked bullshit as reality.

It's not.

Quoting Chanos and Einhorn? Biggest short sellers on the planet? Puhleeze.

Freakin' referring to Chesapeake from 2002 to 2012???
Today??
In September, 2018???

Pro tip ...
Any article that says " ...widespread concern about the impact of fracking (sic) on the environment, about earthquakes and water contamination ..." is - a priori - an uninformed presentation by a Know Nothing author.

Proof?

Who amongst you has read the massive 2016 report from the EPA on the environmental effects of frac'ing?

Anyone?

The writer from the Times clearly has not, as this meta study, incorporating over 1,200 studies, papers, reports found NO systemic problems despite the contorted dramas from Parker county, Dimock, and Pavillion.

If you folks wish to continue to choose to be willfully blind to the hydrocarbon abundance in the USA, then taking the above piece as truth would be the way to go.

For those of us who choose to live in reality, the Shale Revolution has demonstrably unleashed a brighter tomorrow for our communities, families, and country.


Increasing debt.
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Re: THE Fracking Thread pt 4

Unread postby coffeeguyzz » Tue 04 Sep 2018, 00:07:11

ralfy

That is exactly my point.
The debt is in various states of being paid off by an increasing number of companies.

It is not increasing.

At 65/70 buck wti (to say nothing of LLS being above $75), many of these operators are actually in pretty strong financial position.

This, despite 2 years of ball busting low revenue.
Corner has already been demonstrably turned.

Above article is last year's news.
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Re: THE Fracking Thread pt 4

Unread postby marmico » Tue 04 Sep 2018, 07:12:16

As cash flow increases, U.S. oil companies continue trends of debt reduction and hedging
https://www.eia.gov/petroleum/weekly/ar ... _print.php

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Re: THE Fracking Thread pt 4

Unread postby rockdoc123 » Tue 04 Sep 2018, 09:38:51

That is exactly my point.
The debt is in various states of being paid off by an increasing number of companies.

It is not increasing


This is a very good point and indicates one of the problems some folks run into by not fully understanding how the industry worked or how it continually changes to meet new challenges.

The reason for the run-up in debt is 2 fold to my mind: 1. the shale business was incredibly competitive. For bad or good the industry tends to be run by owners/management who tend toward the "lemming" approach rather than the "wildcatter" approach. They go where everyone else is going. To their mind this is a means of mitigating risk but as a consequence lease rates are higher and in order to capture enough land to be successful (you have to drill a lot of wells in the unconventional business to have high enough rates to be considered successful) you have to work beyond cash flow, hence taking on debt and 2. most of these companies are publicly traded and the investment community as a whole views them as growth engines, not dividend machines. Hence they want to see lots of activity and steadily increasing production rates...again the solution is increased debt. In fact, the investment community looked at debt to equity ratios as a means of understanding how much growth potential a company might have..higher debt meaning they could drill more wells and grow faster.
In any event that all came crashing to a precipitous end in 2014 when the oil price fell. The high debt affected some companies more than others, companies with significant cash flow and the ability to push activities into the future were able to deal with a proportionate increase of their free cash flow to debt repayment, others ended up having to renegotiate terms with banks who were more than willing to do so (better a lower carrying charge paid out over more years than being stuck with an oil and gas property with drilling obligations the bank would not know what to do with). In the worst case, some companies ended up declaring Chapter 11 (or the Canadian equivalent) which gave them breathing space to restructure or alternatively sell their assets. And going forward as marmico points out all of these companies have been directing more of their free cash flow to debt retirement. This pattern will continue until such time as companies are pressured by the investment community to grow exponentially once again and the cycle will repeat itself.
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Re: THE Fracking Thread pt 4

Unread postby coffeeguyzz » Tue 04 Sep 2018, 15:15:03

... and a followup to rocdoc's and marmico's comments from TODAY'S news, not from a decade ago ...
Southwestern just sold off its Fayetteville operations for almost $2 billion to a privately funded operator.
$900 million of this will go to PAYING OFF DEBT, $200 MM for stock buyback, $600 MM for increased Appalachian Basin development.

This type of activity continues across a wide swath of this industry.

Media 'reporters' with an agenda continue to mislead willful Disbelievers.
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Re: THE Fracking Thread pt 4

Unread postby ralfy » Tue 04 Sep 2018, 21:15:34

coffeeguyzz wrote:ralfy

That is exactly my point.
The debt is in various states of being paid off by an increasing number of companies.

It is not increasing.

At 65/70 buck wti (to say nothing of LLS being above $75), many of these operators are actually in pretty strong financial position.

This, despite 2 years of ball busting low revenue.
Corner has already been demonstrably turned.

Above article is last year's news.


That is not your point. Debt is increasing, now estimated at more than $2 trillion by the BIS, with $0.5 trillion in debt repayments that need to be repaid every five years, and only if oil prices exceed $80. Take note that that's only for debt repayments. The oil industry has to take on even more debts in exchange for lower increases in oil production, and that requires even higher oil prices.

That's why you skipped every other point in "last year's news," including layoffs of thousands of workers and companies selling off assets and burning through their cash flows.

Your level of cherry picking is incredible.
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Re: THE Fracking Thread pt 4

Unread postby ralfy » Tue 04 Sep 2018, 21:24:15

coffeeguyzz wrote:... and a followup to rocdoc's and marmico's comments from TODAY'S news, not from a decade ago ...
Southwestern just sold off its Fayetteville operations for almost $2 billion to a privately funded operator.
$900 million of this will go to PAYING OFF DEBT, $200 MM for stock buyback, $600 MM for increased Appalachian Basin development.

This type of activity continues across a wide swath of this industry.

Media 'reporters' with an agenda continue to mislead willful Disbelievers.


And how many more operations can they keep selling off, and what do buyers do with them if prices don't go up and creditors demand more?

And what happens to consumers when prices do go up?

In short, increasing debt taking place to cover what is essentially the effects of peak oil and the complete opposite of your claim of "hydrocarbon abundance", and higher prices needed to cover those debts. With low prices, companies sell off assets, burn through their cash flows, and lay off workers, hoping that prices will eventually go up so that they can take on more debt again. And that can only be paid off if prices keep rising.

Given that, is there anything that you still want to say that doesn't counter what the same "media 'reporters'" are saying?
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Re: THE Fracking Thread pt 4

Unread postby ROCKMAN » Sat 08 Sep 2018, 13:18:18

ralfy - Not sure what creditors you're talking about. Southwestern has no creditors: $900 PAID OFF THE DEBT. And the new owners: they bought the production with their own money: that's what "privately funded" means. And what makes you think those buyers require higher prices to turn a profit on their acquisition. And due to the sale Southwestern has $600 million in net income to fund other projects...no borrowing required. And bought $200 million of their own stock without borrowing a penny.

Your choice, of course. But you might want to re-read coffee's post with a less prejudiced eye.
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Re: THE Fracking Thread pt 4

Unread postby ralfy » Sat 08 Sep 2018, 18:57:51

ROCKMAN wrote:ralfy - Not sure what creditors you're talking about. Southwestern has no creditors: $900 PAID OFF THE DEBT. And the new owners: they bought the production with their own money: that's what "privately funded" means. And what makes you think those buyers require higher prices to turn a profit on their acquisition. And due to the sale Southwestern has $600 million in net income to fund other projects...no borrowing required. And bought $200 million of their own stock without borrowing a penny.

Your choice, of course. But you might want to re-read coffee's post with a less prejudiced eye.


If this is the same company,

Southwestern Energy to sell Fayetteville shale unit

Southwestern plans to pay off $900 million of its more than $3 billion in debt with the proceeds, and will spend $200 million to repurchase shares over the next 12 months, Way said.


Also,

In July, BHP Billiton (BHP.AX) sold its Fayetteville assets for about $300 million to Merit Energy Co as part of its exit from U.S. shale properties. Low gas prices have encouraged companies to seek more profitable liquids production.


As I said earlier, if any, what Coffee presents confirms what the Times article presents. It gets worse when one realizes that Southwestern <> oil industry.

From what I remember, the industry has debts of more than $2 trillion, and it has to make debt repayments of $0.5 trillion for several more years. Other sources reported in other threads indicate that they have been selling assets, burning through cash flows, and laying off thousands with the hope that oil prices will go up once more. If any, that was what they were counting on when they borrowed heavily, and significant portions via junk bonds.

Finally, as pointed out in the Times article and by Kopits, the industry has been experiencing diminishing returns, i.e., borrowing larger amounts of money for lower increases in oil production. Hence, "Fueled by debt and years of easy credit, America’s energy boom is on shaky footing."
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Re: THE Fracking Thread pt 4

Unread postby ROCKMAN » Mon 10 Sep 2018, 13:10:05

ralfie - Thanks for the clarification. The statement seemed to imply the $900 million was the company's total debt. But don't let corporate debt fool you: most carry some debt regardless of profitability. There was a small flurry of bankruptcies when oil prices first fell. But the vast majority of those companies came out in much better condition and continued operating. How many fillings have you seen reported lately?

You can't look at debt alone to judge a company's health: Microsoft currently has $80+ BILLION in debt...$72 BILLION in long term debt. I doubt Bill is worried about making payroll this month. LOL.

https://www.stock-analysis-on.net/NASDA ... lysis/Debt
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Re: THE Fracking Thread pt 4

Unread postby ralfy » Tue 11 Sep 2018, 10:53:42

pstarr wrote:
So which is it? Do we go with Reuters, that left-wing anti-energy Antifa mouthpiece . . . or our very own industry insiders?


The news agency probably got the info from the debt maturity schedule in the SWN August 2018 investor update.
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Re: THE Fracking Thread pt 4

Unread postby ralfy » Tue 11 Sep 2018, 11:07:19

ROCKMAN wrote:ralfie - Thanks for the clarification. The statement seemed to imply the $900 million was the company's total debt. But don't let corporate debt fool you: most carry some debt regardless of profitability. There was a small flurry of bankruptcies when oil prices first fell. But the vast majority of those companies came out in much better condition and continued operating. How many fillings have you seen reported lately?

You can't look at debt alone to judge a company's health: Microsoft currently has $80+ BILLION in debt...$72 BILLION in long term debt. I doubt Bill is worried about making payroll this month. LOL.

https://www.stock-analysis-on.net/NASDA ... lysis/Debt


According to the Bloomberg article shared in this forum months ago, the oil industry needs to pay off around $0.5 trillion in debt repayments (part of over $2 trillion in debts, as estimated by the BIS), but the article also states that this and the need to borrow more money to increase production can only be done if oil prices go up (preferably, around $100 a barrel). But high prices also hurt the global economy because disposable income levels are low.

This is part of the problem of diminishing returns, where oil companies have to borrow increasing amounts of money to come up with decreasing increases in production, and what is produced has to be sold at higher prices each time. Steven Kopits explains the problem in one of his lectures.

That's the premise of the NY Times article, which I believe anyone who has basic knowledge of peak oil should have known by now. Even the fact that we are resorting to fracking is a sign that there is no such thing as "abundance."
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Re: THE Fracking Thread pt 4

Unread postby coffeeguyzz » Tue 11 Sep 2018, 13:35:00

The 900 million that SWN paid was for a specific portion of their debt portfolio.

Rocdoc attempted, once again, to expand the overall view on how the upstream boys regularly go charging into areas with high exuberance in the early stages of a new region.

It is not uncommon for companies to shed - in multi billion dollar amounts - acreage and operations to both streamline their businesses and reduce debt.

Of all the over arching components into this entire "Will It Work?"/"When Will It Collapse?" imbroglio, the fact that a wide swath of industries from Petro chemical, ports, shipping, pipelines, midstream infrastructure, even the most 'downstream entities like smelters, steel producers, consumer oriented manufacturers (think white goods, vehicles, Foxconn, etc) are cumulatively investing in the trillions of dollars might lead one to expect a whole lot of oil/gas is coming our way.
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