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ROCKMAN wrote:Ralfy - "...if the global economy weakens considerably..." I'm sure you heard it before: the one-eyed man is king in the land of the blind. And the man with the big checkbook is king in the land of the weakened economies. It's not that difficult to understand. For instance the highest profits made in the real estate market is done on properties bought DURING A BUST.

Imagine if you had invested your life savings in a Dow Jones index fund just 8 years ago when it was 6,600. Now it would be worth 19,800+. IOW in just 8 years you could have tripled your money. What are the odds of buying DJA today at 19,800 and selling it for about 60,000 in 10 years?

Hell, just ask your neighborhood broker: I'm sure he can provide you a story that clearly shows that possibility. LOL

Checkbooks only work when there is assurance that economic growth is indefinite. Outside house flipping and magical technofix fantasies, that will require more material resources, including oil.

If you have any evidence to ensure that, let us know.

ralfy wrote:

ROCKMAN wrote:Just as the companies buying those distressed assets today on the cheap will see very nice profits in the future.

Unfortunately, those profits will be worthless if the global economy weakens considerably. The same goes for big bucks as well as buying high and selling low.

Industry had the most powerful force in the world working in its favor ralfy....consumers. You, your friends, their friends, entire countries of people, faithfully buying petrochemical products day in and day out. Rockman and his industry thank you.

ralfy wrote:Checkbooks only work when there is assurance that economic growth is indefinite.

Hardly. They worked during earth day in 1970 when the world was going to die in pollution, and people wanted growth, they worked when Ehrlich proclaimed the coming starvation, and people wanted growth, and the same with stagflation in the 70s, inflation in the 80's, wars and stock market busts along the way, peak oils in 2000, 2005, 2006, 2008 and whenever else it has been claimed since, and checkbooks still worked.

They still work today ralfy, I wrote one last month to buy a car from a nice retired couple, and they are getting ready to die, so they certainly aren't even thinking about economic growth being infinite.

ralfy wrote:Outside house flipping and magical technofix fantasies, that will require more material resources, including oil.

If you have any evidence to ensure that, let us know.

If you have any evidence that for my checkbook to work, it requires YOUR off kilter belief systems to be installed in those I write them to, please, lets see it.

Ralfy - "Checkbooks only work when there is assurance that economic growth is indefinite". Don't take it as an insult but spoken like someone that hasn't made a sh*t load of money in a downturn. LOL.

But I'm very prejudiced by my experience. In the mid 80's when the world's economy tanked (and crashed the price of oil/NG) the Rockman made more income then during any time in the first 15 years of his career. A number of reasons but I'll throw out just one: drilling costs. The wells I drilled then cost about $40k completed. The same well today: $240k+. The production from best NG field I discovered sold initially for $0.90/MCF compared to $2.80+/MCF today. Remember the economy was crippled. But totally developed that production from my best field only cost my company $0.12/MCF. The oil patch was financially crippled at the time...an empty checkbook. OTOH my company collected money from fat investors' checkbooks like crazy.

So I'll repeat what many find difficult to accept: historically profit margins in the oil patch were higher during price busts then when the global economy is the weakest leading to decreased dermand creating lower oil/NG prices.

And it's still true today.

Correction: "...historically profit margins in the oil patch were higher during price busts when the global economy is the weakest leading to decreased demand creating lower oil/NG prices.

Do you think profit margins are high now? I don't know if we're still in the price bust, but it seems like it's having a hard time getting back up there again.

ROCKMAN wrote:Ralfy - "Checkbooks only work when there is assurance that economic growth is indefinite". Don't take it as an insult but spoken like someone that hasn't made a sh*t load of money in a downturn. LOL.

But I'm very prejudiced by my experience. In the mid 80's when the world's economy tanked (and crashed the price of oil/NG) the Rockman made more income then during any time in the first 15 years of his career. A number of reasons but I'll throw out just one: drilling costs. The wells I drilled then cost about $40k completed. The same well today: $240k+. The production from best NG field I discovered sold initially for $0.90/MCF compared to $2.80+/MCF today. Remember the economy was crippled. But totally developed that production from my best field only cost my company $0.12/MCF. The oil patch was financially crippled at the time...an empty checkbook. OTOH my company collected money from fat investors' checkbooks like crazy.

So I'll repeat what many find difficult to accept: historically profit margins in the oil patch were higher during price busts then when the global economy is the weakest leading to decreased dermand creating lower oil/NG prices.

And it's still true today.

You can make a "sh*tload of money" in a downturn if you expect an upturn after that. That means the business cycle continues in the long term if oil production (and generally availability of material resources) continues rising indefinitely. That will require the opposite of diminishing returns. Do you have proof of that?

Revi wrote:Do you think profit margins are high now? I don't know if we're still in the price bust, but it seems like it's having a hard time getting back up there again.

Damnable peak oil induced oversupply.....we all need to go do our best to support domestic oil and gas production by soaking up that supply with cool hobbies!!

ralfy wrote:

ROCKMAN wrote:So I'll repeat what many find difficult to accept: historically profit margins in the oil patch were higher during price busts then when the global economy is the weakest leading to decreased dermand creating lower oil/NG prices.

And it's still true today.

You can make a "sh*tload of money" in a downturn if you expect an upturn after that.

You can also make money if you can maintain your IRR, regardless of commodity prices. No upturn needed at all.

ralfy wrote:That means the business cycle continues in the long term if oil production (and generally availability of material resources) continues rising indefinitely. That will require the opposite of diminishing returns. Do you have proof of that?

No, it means you have never worked in the industry during a down cycle. Because diminishing returns was happening before you were born, and it didn't stop growth in oil production in the decades before you were born any more than it is now.

You are the proof of your idea not working out. Well, you and another 6.999+ billion people.

Revi - First, did you read my post about NY trying to sneak some alt electrticity across the Canadian border? That's the angle you shouild get your neighbors talking about. I actually thought about talking to my billionaire owner about buying all the TransCanada alt electricity and then screwing all you Yankees with rate hikes. LOL. But I am serious. There may be some long term contracts in place but when they expire he would have your asses right where he wants them. Hey, if not my owner then it would be someone else. As I keep saying: it ain't personal...just business. If you don't take steps to protect your interests that's on you. LOL.

"Do you think profit margins are high now?" For some companies, like mine, yes. In a couple of months I'll drill the third horizontal well in a 70 year old oil field I'm redeveloping. My last well cost $2.8 million...the next one $1.8 million. During bust prices go down. Did you take note of how cheap the 24 wells I drilled back in the 80's bust?

I don't know if folks think I making this sh*t up. I'm not talking about a f*cking theory. LOL. Remember I've been doing this for more then 40 years. I'll tell the same story again: you only think you just saw a serious drilling bust when the rig count fell from 1,800...you ain't seen nothin'. LOL. During the late 70's boom the rig count hit 4,500+...did you know that? You don't have a clue how much crap got drilled because oil prices jumped proportionally as much as happened in the recent boom. The latest boom that resulted in a dramatic increase in US oil production. Do you know how you can tell that those high oil prices in the 70's created huge LOSSES AND NOT PROFITS? Look at this curve and see for yourself how 4,500+ rigs drilling produced no significant increase in production:

https://outrunchange.com/2014/05/21/sha ... ak-oil-34/

Now in you mind think how much capex was spent in one year with 4,500 rigs drilling compared to 1,800. Again I appreciate the difficulty of understanding the DOCUMENTED FACTS: profitability of drilling for oil/NG IS NOT determined by the price of oil/NG. It's a function of how much it cost to develop those reserves compared to how much you sell your production for regardless of the absolute price.

The biggest profit potential is developed when prices are low. Think back to companies that drilled up or bought oil production in the late 90's when oiooiol was less then $20/bbl. Do you think companies drilled prospects that wouldn't be profitable at that price? Consider what you could have bought (or drilled up) an oil field for in 1998 when the average price was $14.50/bbl. You would not have done it if it weren't profitable at that price, right? So how much more profitable would that investment be just two years later when oil averaged $30/bbl? IOW more then twice what you had run economics on.

Do I really need to explain the profit margin of drilling prospects that use $90/bbl to justify when a few years later prices fall to under $50/bbl.

And ralfy: you don't need to expect future growth to make a sh*t load of money in a downturn...you just need to drill profitable wells. Look at my post: I made a sh*tload of money for those investors in the 80's based on the low NG prices at the time. Those were short lived wells...they were going to produce much after 5 years or so.

Think about it: do you think anyone is drilling wells now the don't expect to make a profit on at $50/bbl? Do you think anyone is paying $50/bbl for PROVED PRODUCING reserves right now? Of course not: the going price is around $12 to $18 per bbl. IOW even if oil stays at $50/bbl for ever these are profitable investments.

All can offer is that y'all stop think the oil patch is one homogeneous dynamic. It ain't. There are companies not only drilling or buying profitable reserves today but also setting themselves up to make a sh*tload of money if prices jump up $10 to $20 per bbl in the next year or two.

Well I hope somebody makes some money. It's been the lifeblood of this economy for so long we have forgotten how people lived before it was around. I was driving around thinking about how in some ways we have not come up too much around here. There are about 2 abandoned houses, farms or businesses for every 10 around here. I have been counting as I drive down the road, and as I walk around town. It's about the same everywhere in Central Maine. I don't know what happened to all these people, but they are gone. Meanwhile there are homeless people everywhere. And drug addicts, lots of them. I don't know what happened, but there are very few people living the American dream anymore. It was probably better around here before oil. The towns were inhabited, people lived on farms. Nowadays it's just a strange ghost town. Most people live out in trailer parks on the edge of town. It's all hollowed out.

I don't have the money nor do I have the influence to negotiate electricity contracts. Sorry Rockman. I just pay as little as possible to those creeps. It's my only way of fighting back. Thanks.

Back on topic, the film is getting shown at the Carrabassett Valley Public Library at 4:30 pm on Thursday, Feb. 23rd.

Check it out if you are in the Sugarloaf area. Here's a poster:

I showed it up at Sugarloaf, which was fun. We were on the local TV station and showed it at the Carrabassett Public Library, which is quite nice. Only about 7 people showed up, but I met a guy who does excavation and site work, and he said he has a client who is preparing a farm. He is an oil guy and he asked him why he is spending so much time to get an old farm going again. He replied "you don't want to know". Eventually he found out that he is preparing for the time when oil doesn't work any more. The client said that fracking and other enhanced recovery techniques don't make sense economically and that they won't work. He wants to find a place near the Canadian border, with mountains around it so that he can get there and live when it gets nasty. The excavation contractor had found out about peak oil and was interested in it, so I consider it to be a success. It's was great to talk to three other people who know about it. I got in some great xc skiing on the Maine Huts and Trails as well. It was a great little peak oil vacation!

Revi - I assume the oil guy is fairly young? If he's an old fart like the Rockman and has the $'s to build a run-to spot he's not likely to live long enough to see the really bad times. Maybe like my owner: he just wants a place to go during our hot summers in Texas. LOL.

I think the guy is fairly young. He plans on running there if things get bad. As you said, it's probably a project for him with the added incentive of a great place to go when the summer gets hot. He is rehabilitating hayfields out of the intervales where the soil is the best around here. This guy wants to have a self sufficient homestead, so maybe he knows something is up. He mentioned a lot of economic problems as well. You have to admit that we could have some economic troubles if they don't raise the debt ceiling soon...

Two more showings this summer on the coast! We are going to show it at the Good Life Center on Cape Rosier (made famous by the Nearings) Monday, July 10th at 7pm and at the Rockland Library on Thursday, July 13th at 6:30. Come and meet the director, Nelson Cole, and of course I'll be there.

http://goodlife.org

http://www.rocklandlibrary.org/cs/?render=homepage

The director has been working on a final cut.

It will be uuuuuuuuuuge!

A lot of people make it to the coast of Maine in the summer, so there might be some Peak Oil people there!

Both are accessible by boat, so think about it Newfie...

Revi wrote:Two more showings this summer on the coast! We are going to show it at the Good Life Center on Cape Rosier (made famous by the Nearings) Monday, July 10th at 7pm and at the Rockland Library on Thursday, July 13th at 6:30. Come and meet the director, Nelson Cole, and of course I'll be there.

Oh no! July 13? Revi, say it isn't so! You are going to lose HUGE chunks of potential audience because of this:

http://www.internationalenergyworkshop. ... gs-10.html

These folks are all energy, and all modeling, globally, and are the exact opposite of web "experts" drawing all decline, all the time curves of oil production. They are in the US only like once every 4 years, and are some of the world's leading experts on these issues. They won't be able to stop by the Rockland library if they have this world class energy conference to attend, and your talk is right in the middle of their schedule!

If the ETP folks wanted to be taken seriously, they would be here, who knows, maybe they will be?

I guess we'll miss most of those folks. This film is about one man's obsession with peak oil, so it is interesting to a wider audience than just the experts. We are hoping for a group of around 35 people. It's a film by a local film maker, so that might draw some people as well. We'll see. Thanks for your interest in it!

It's a deeply unpopular message, so maybe I'll start to tell people it's like a historical documentary of the time when we all thought oil would run out. That might be a better sell than telling them what's actually going on. Say it's a doc about the first decade of the 21st century and one man's obsession with what he saw as reality. Much better that way.

Revi wrote:I guess we'll miss most of those folks.

Unlikely. Every one of them can probably recite chapter and verse on why you don't use bell shaped curves for much of anything. Don't want them spoiling the show, because as you've described, this is entertainment, not something with anything of use to the quants.