Playing the Shale Boom

[Boris]

Just curious if anyone has focused on a component of this run, which I believe has a way to go. Because I have an interest in some minerals, I have looked mainly at the drilling and production portion of the market, but this recent run in natural gas was something I should have played if I was thinking it through. I don't believe $6 nat gas will hold, but with colder weather coming, there may still be some room before it backtracks in warmer months.

How do you invest in energy? I believe $90+ oil is here to stay. I doubt the government will try to kill the best portion of the economy until there is substantial good news elsewhere.

[PICSIX]

If you are looking to invest, not trade, and you believe $90 oil is here to stay you could start with oil stocks that pay high dividends.

[_______]

Or buy XLE, an ETF that tracks the companies in the S and P 500 which engage in the energy sector.

[Shemp Howard]

MHR........going to $20.00 if not taken out sooner.

[Robert Fischer]

Indirect Shale Boom stock play

Rosneft - MCX:ROSN - is this stock any good??

You have the US, Israel, and West Ukraine/Kiev with the Shale gas that is going to supply Europe and at least free them from Gazprom Russian gas do-or-die negotiations.
Major loss for Russia and Gazprom.

At the same time China has been negotiating a long term import deal for Russian gas.
China has repeatedly insisted on a price below what Gazprom Russia was willing to agree to. In May, they are supposed to again try to finalize the deal.

Now with the Shale competition, Russia is pretty much forced to make a bargain price deal that China wants.

Rosneft is a different group than Gazprom(basically Gazprom is the Russian gas monopoly).

moscow times article and some interesting quotes:
http://www.themoscowtimes.com/business/article/rosneft-ratcheting-up-pressure-to-access-pipelines-and-compete-with-gazprom/495885.html

"Rosneft wants to break the monopoly Gazprom to export gas via pipelines, signaling a flare-up between powerful clans, sources said."

"Rosneft in particular wants access to Gazprom's "Sila Sibiri," or Power of Siberia, pipeline designed to carry gas to China at a rate of 38 billion cubic meters a year, sources familiar with the matter said Friday."

"(Igor)Sechin(the CEO of Rosneft), unlike Gazprom, has successfully clinched deals to increase oil supplies to China, which may see Rosneft tripling its crude exports to Russia's neighbor later this decade. The Rosneft source said the company is eying natural gas supplies to China and that around 1 trillion cubic meters of gas is available for the company in East Siberia."

[Robert Fischer]

MOSCOW, April 1 (Reuters) - Russia's Rosneft, said on Tuesday it was on track to start production at its first liquefied natural (LNG) gas plant in the country's far east in 2018-2019, despite East-West tension over Ukraine.

The world's largest listed oil company by output signalled its partnership with U.S. ExxonMobil for building the plant, which will have an initial annual capacity of 5 million tonnes, would not be affected by the standoff.

[Robert Fischer]

Indirect Shale Boom stock play

Rosneft - MCX:ROSN - is this stock any good??

March 11 to June 09
229.48 +10.88(4.7%) = 240.36

4.7%? That's less than a show bet. How do you guys make money on this stuff?

[Robert Fischer]

March 11 to June 09
229.48 +10.88(4.7%) = 240.36

4.7%? That's less than a show bet. How do you guys make money on this stuff?


at least it went up another 1% last night.
242.80 +2.44 (1.02%)

I still don't get this game. I would either need a huge bankroll or the patience of Job...

[badcompany]

at least it went up another 1% last night.
242.80 +2.44 (1.02%)

I still don't get this game. I would either need a huge bankroll or the patience of Job...

Most horseplayers I've seen think of the market in terms of a "score." That type of thinking requires that you jettison proper position sizing. That's why horseplayers are generally piss poor traders/investors.

The proper approach to the market requires thinking in terms of long term growth of capital while minimizing risk. The patience of Job definitely helps. ;)

[_______]

The energy sector as reflected in XLE is up over 10% the last 3 months.

You're right to be disappointed in the performance if it's trailing the sector by that significant a margin. Energy has been the best performing sector over that time period.

But the S and P is only up 3.9% so congrats on beating the overall market.

Ditto what badcompany said.

[Robert Fischer]

last night +6.86 (2.83%) to 249.66

so from 3/11 posted to 6/11:

229.48 +20(8.8%) to 249.66

I'm OUT! lol "sell" or whatever you say.

"Blue Horseshoe loves Anacott Steel." :rolleyes:

8.8% is fine for me, I admit I am clueless here.


It seems that information is very important in having a better idea of which specific days will have the lions share of the fluctuation, rather than being along for the long haul. I certainly don't have the relative level of info I have looking at horse races.

The risk/time ratio seems different from horse racing as well.
Seems like you (generally) lose your money slower than in horse racing (e.g. a show bet you can get 10% but you can also lose your investment in less than two minutes).

The energy sector as reflected in XLE is up over 10% the last 3 months.

You're right to be disappointed in the performance if it's trailing the sector by that significant a margin. Energy has been the best performing sector over that time period.

But the S and P is only up 3.9% so congrats on beating the overall market.

Ditto what badcompany said.

Sounds like a savvy stock player could have diversified in the energy sector and had similar(or better) results with less risk exposure. Makes my beginner's luck seem less impressive after all.

[highnote]

How do you invest in energy? I believe $90+ oil is here to stay. I doubt the government will try to kill the best portion of the economy until there is substantial good news elsewhere.


Casey Research has a lot of good free newsletters on energy. You can also subscribe to their services.

It is possible the U.S. could work in concert with their oil producing allies to flood the market with oil to drive down prices in an attempt to cripple Russia's economy.

So you have to stay on top of international politics, too. If the U.S. and Iran kiss and make up and Iraq oil returns to it's pre-war production then prices could fall.

However, the U.S. also depends on high oil prices to generate income. This could play out in any number of ways.

I'm certainly not an expert, but I read a lot of economic news and that is what I have picked up so far.

I'd also recommend reading the free articles at stratfor.com. George Friedman has a good series of free articles now about the buffer states around Russia -- including Ukraine. He mentions oil as being a major factor in Russia's strategy.

http://www.stratfor.com/weekly/borderlands-view-beyond-ukraine

What we are seeing is regional players toying with new alliance structures. The process is in its infancy, but it is already forcing the Russians to consider their future. An added dimension to this is of course energy. The Russians would appear to have the advantage here: Many of the nations that fear Moscow also depend on it for natural gas. But there is a Russian weakness here as well. Natural gas is a powerful lever, but it is not particularly profitable. Russia's national budget -- indeed, its economy -- is built around oil (http://www.stratfor.com/weekly/past-present-and-future-russian-energy-strategy) . The chief danger Moscow faces is that it doesn't control the price of oil. A radical decline in that benchmark would cause the Russian economy to stagger at the very least. While in Poland, Obama deliberately pointed out Russia's economic problems. He wanted Russian President Vladimir Putin to know that he understands Russia's weakness.



Deployment of military force, while necessary, is therefore not the core element of the developing Western strategy. Rather, the key move is to take steps to flood the world market with oil -- even knowing that implementing this strategy is extremely difficult. It appears likely that once Tehran reaches an agreement with Washington on nuclear weapons, Iran's oil market will open up, and a major source of oil will flow. Additional Iraqi oil is also moving toward the market, and Libyan production might soon resume. Washington itself wields the most powerful weapon: The United States could reverse its current policy and start exporting oil and liquefied natural gas.


Read more: Borderlands: The View Beyond Ukraine | Stratfor
Follow us: @stratfor on Twitter | Stratfor on Facebook

[badcompany]

IMO the ship has pretty much sailed in the play. In this chart, while production is still rising, notice the per well production. The core areas are very profitable but the marginal locations not so much.

http://i95.photobucket.com/albums/l142/thinlizzy21/1984A9E2-3458-4920-9A7A-352E8700A883-734-000000CE7B47EEF3_zpscf674376.jpg

If you want the big players, CLR in the Bakken and PXD in the Permian.

[plainolebill]

The Bakken is becoming an oil factory. The operators are doing pad drilling - multiple wells from one pad do netbacks are improving despite smaller returns on individual wells.

[badcompany]

What a difference six months makes, and this is the "Best of Breed" in the shale oil area:

http://i95.photobucket.com/albums/l142/thinlizzy21/05CD1435-3DD8-4BDA-B083-9A6A112EC8FA_zps2ocle88k.png (http://s95.photobucket.com/user/thinlizzy21/media/05CD1435-3DD8-4BDA-B083-9A6A112EC8FA_zps2ocle88k.png.html)

[lamboguy]

i would say that shale is as dead as oil now. there is probably something else that is going to be heating homes and running cars coming down the pike. that's probably why they are flooding the market with cheap oil now, and more than likely will continue as long as they can make some kind of a profit on it in the Middle East or elsewhere throughout the world.

[badcompany]

There are so many factors at play, it's hard to tell which are at play.

The Saudis have issues in their own backyard with Iran and can use cheap oil as a means of economic warfare. Moreover, the strong dollar, with its increased purchasing power, softens the blow from lower prices.

Here, we have a new robot driven manufacturing sector emerging, which will depend on cheap energy. In addition, lower gas prices help the economy in numerous ways: more discretionary income for consumers and lower energy costs for producers. So, while the drop in oil might effect a few towns in North Dakota and Texas, it's a good thing for the country as a whole.

[badcompany]

https://news.yahoo.com/iran-fall-oil-prices-muslim-treachery-113608236--finance.html

Iran: Fall in oil prices is 'treachery'
By ALI AKBAR DAREINI
14 minutes ago


TEHRAN, Iran (AP) — Iran's President Hassan Rouhani said Wednesday that the sharp fall in global oil prices is the result of "treachery," in an apparent reference to regional rival Saudi Arabia, which opposed production cuts.

Oil prices have plunged by more than 40 percent since June to around $65 a barrel, placing severe strain on Iran's economy, which is already hobbled by international sanctions imposed over its nuclear program. An OPEC meeting last month failed to reach agreement on production curbs, mainly because of Saudi opposition.

Rouhani told a Cabinet meeting Wednesday that the fall in prices is at least partly "politically motivated," the result of a "conspiracy against the interests of the region, the Muslim people and the Muslim world." His comments reflect concerns among Saudi Arabia's rivals that the kingdom is capable of withstanding the revenue losses and is forcing lower oil prices to damage their economies.

[reckless]

How low can oil prices drop? From my perspective, it could go a helluva lot lower than many people believe, or wish to believe. Throwing numbers out like $50 or $40 per barrel isn't as extreme as one may think. A much lower price can't be dismissed also.

There have been basically two headlines that has dominated the 'oil drop' discussion:

(1) The horizontal drilling/technology advances these past few years has made drilling and finding oil a lot easier and less expensive to get. And now this fracking technology and drilling advances are causing an oil glut.

(2) The Saudis have put production in overdrive mode with the hope that this would punish their enemies--(a) the Iranians and (b) the US shale industry--by deflating the price of oil on world markets. The Saudis seem to be holding up to their threats not to cut production. Yes, their action will hurt Iran and the oil producing nations in South America and Africa long before any pain comes to the USA oil/shale industry.

But there is also a third reason that I believe has been pooh-poohed if not totally ignored by the 'business journalism' media:

The demand aspect -- actually the lack of demand aspect -- that has played a real part in this precipitous drop in the price of oil.

The economy, here and throughout the world, has simply not been growing these past five-six years. The US economy is doing slightly better than the rest of the world but it's still anemic, despite the lies coming out of Wash DC and the spin coming out of Wall Street.

Near zero interest rates give a more honest assessment about the weak US economy and lack of demand than any CEO spewing lies on CNBC or Bloomberg.

Understandably, oil is the big story. But anyone who follows the markets must also know that the prices of other commodities as well have fallen big time in 2014. I don't keep charts or even figures handy but I think corn, steel, and iron are all near multi-year lows.

There's little demand out there because the US (and world) economy is very weak. The other reasons given above are valid too, of course, which makes this current drop in oil prices no where near the bottom as I see it.

[_______]

I respectfully disagree about the lack of demand. Other than a normal seasonal winter drop there is no evidence that demand is declining.

I posted a chart (don't you just love those?) from the IEA in the Stock Market Tremors thread. The world used more oil in 2014 than it did in 2013 and is on course to use more in 2015 than in 2014.

I won't pretend to understand why the current oversupply is having such a seemingly outsized impact on price but these things tend to be self correcting.

As for the Saudi's trying to throttle back American production, I think they will succeed in the short term but drive more of the same technological advances that brought us to the present situation. Small innovative American companies taking risks on untested technology created this boom. It wasn't XOM or CVX.

I don't believe lower prices does anything other than punish those late to the game while also creating even more incentive for innovation. Ain't capitalism grand?

[Saratoga_Mike]

The price decline is roughly 75 (supply)/25 (demand), imo. Demand isn't down this yr, but the rate of growth has slowed (from 13 vs 12). More specifically, Chinese demand and certainly European demand has been soft.

[pandy]

Demand may be a bit soft now, but long term it's hard not to see the demand for oil increasing. I don't think the rest of the world is going to catch on to electric cars and fracking for a long time.

[plainolebill]

What a difference six months makes, and this is the "Best of Breed" in the shale oil area:

http://i95.photobucket.com/albums/l142/thinlizzy21/05CD1435-3DD8-4BDA-B083-9A6A112EC8FA_zps2ocle88k.png (http://s95.photobucket.com/user/thinlizzy21/media/05CD1435-3DD8-4BDA-B083-9A6A112EC8FA_zps2ocle88k.png.html)

Old Harold gambled and sold his hedges about a month ago. Not looking like such a great move right now.

I'm not expecting a V shaped recovery in oil prices.

[pandy]

In recent years, everytime oil drops below $80 a barrel, it doesn't stay down for long, shoots right back up to $100 or more.

[ReplayRandall]

In recent years, everytime oil drops below $80 a barrel, it doesn't stay down for long, shoots right back up to $100 or more.

You might be right, but the game has changed with new players producing oil at whatever rate they choose........prices may stay down awhile.

[badcompany]

You might be right, but the game has changed with new players producing oil at whatever rate they choose........prices may stay down awhile.

From a purely technical standpoint, this drop is a different animal. It has that falling off a cliff look to it. I'd be surprised if oil recovers to previous levels any time soon.

http://i95.photobucket.com/albums/l142/thinlizzy21/B83661D0-72DD-4810-81CD-CF0DA8F92D77_zpsjrjbazqc.png (http://s95.photobucket.com/user/thinlizzy21/media/B83661D0-72DD-4810-81CD-CF0DA8F92D77_zpsjrjbazqc.png.html)

[_______]

Still growing but slower in 2015 than previously projected.

Note N. American supply will grow.

https://www.bloomberg.com/news/2014-12-12/iea-cuts-global-oil-demand-forecast-for-4th-time-in-five-months.html

[Boris]

I completely exited oil stocks, except for some XOM I've had for a while, in Oct after enjoying a nice run up and then suffering a nice beating. When the govt didn't step in to soften up the dollar, I felt they were comfortable with letting it go to wherever. The only meaningful chart to me at this point is the dollar. The leveraged shale drillers are in deep doo doo. The drillers with good balance sheets are just in doo doo. If you live in Houston or Dallas, sell your house and go rent.

[Valuist]

I'm not in any oil stocks now but I am keeping an eye on RIG and EVS. Give them a little time to consolidate. RIG owns something like 70% of all the deep sea rigs in the world. Have to think oil isn't going to be under $60 forever.

[_______]

ESV is best in class for the offshore drillers but you better have a strong stomach or a 5 year time line to invest in any of these.

I think if you take a look at debt levels and how many of their rigs have contracts expiring in 2015, you will want to stay far away from RIG. Yes, the stock looks cheap but I'm afraid the price is probably deserved. Build in a dividend cut (they are paying out more in dividends than they will earn in 2015) to any calculations you make.

The offshore market is bifurcated between nearshore and deep water. It's further divided into floaters, jack ups, and static rigs. The marketplace in 2015 looks a little different for each segment and it's important what the mix is for each company in 2015.

I have no idea how low oil is going or how long it will stay down. Commodities that drop like this tend to go lower than most people think is possible and stay down longer than anyone predicts. ESV is positioned to weather a couple of years of low oil. RIG much less so.

[plainolebill]

I pretty much agree with ________ the E&Ps will have pricing power with the cutback in drilling and can probably squeeze the margins for service companies. JMO

[Robert Goren]

I read someplace that it cost the Saudis about $4 a barrel to produce it. It appears that they have not increased production lately, but they haven't decreased it either. Looking from the outside in, I do expect US based production not to slow very much soon. From what I have been able to gather, all this new production is mortgaged to the hilt. They have got to keep pumping even if they losing money because they need the cash to make the payments. The question becomes what happens when they are no longer able to make the payments. This is not like other times when the price of oil has fallen, because so much of the US production is new production. At this point, everybody in the oil industry is praying for a turn around in the economy in China. Demand in China is what drives oil prices now.

[_______]

http://www.reuters.com/article/2015/01/05/us-oil-hedging-analysis-idUSKBN0KE0BX20150105

Interesting look at how existing hedges are getting rolled over and may allow production to continue at high levels for an extended period.

[badcompany]

http://www.reuters.com/article/2015/01/05/us-oil-hedging-analysis-idUSKBN0KE0BX20150105

Interesting look at how existing hedges are getting rolled over and may allow production to continue at high levels for an extended period.

It all seems vague.

The balance sheets of most of the shale oil players were shaky before the collapse of prices. I'm finding it hard to believe that they had the resources to short oil to the point that they can offset the drop in revenue going forward.

And the idea that these companies can outlast the Saudis is even harder to buy. The Saudis produce more oil, can do so at a cheaper price, and have huge cash reserves to cushion a drop in revenue if there even is one.

IMO, the Shale Oil boom is officially bust and the talk about hedging is merely rearranging the deck chairs on the Titanic.

[_______]

It implies a sustained decline. The balance sheets for some (mostly new entrants who have leased land at high cost and are required to drill) are shaky but many others will do just fine.

5 years ago, no one believed you could use fracking to get oil out of the ground. High prices allowed companies like EOG to pioneer techniques that proved everyone wrong. It has since gotten cheaper year after year to drill. I don't think the technological innovation dies as a result of low prices. It accelerates.

Shale oil isn't dead. It'll sit in the ground until pricing makes it profitable to extract. Those extraction costs have proven to be a declining line over time and for many shale companies hedging is allowing them to be profitable now and into the near future.

WTI declining and North American production rising isn't an oxymoron. I think you'll see both in 2015.

[highnote]

Nouriel Roubini wrote a good piece today that touched on how the U.S. is different from Europe when it comes to dealing with changing economics.

In the Europe when there is an economic slump there is only so much that can or will be done to help the struggling country.

In the U.S. if the oil industry in Texas goes into a slump workers can apply for unemployment benefits to help cushion the blow until they can get make adjustments. Or a person can freely moved from Texas to Tennessee to find a new job. Can't really do that in Europe as easily because of language and cultural barriers.

Also, if Texas goes into an economic slump the Fed gov can provide financial assistance with infrastructure projects such as building roads and bridges that can provide employment.

So when oil falls, even though it might cause some problems in the industry, there is aid available and the lower prices help the other parts of the economy. Those other states that benefit will increase spending, which will produce extra tax revenue which can then be used to help the oil producing states. When the oil producing states get back on their feet the extra revenue they generate will produce extra taxes which will be used to help states in need.

So there is a lot of give and take and sharing of risk in the U.S. that other countries don't have.

I'm still long the stock market.

[highnote]

Also... like Japan the European population is aging and they have much different attitudes about immigration and citizenship. A person from Turkey may have lived in Germany for 50 years, but still can't apply for citizenship.

As the European population ages there are fewer people who will be productive. Productivity will decline, but the costs of caring for an aging population will go up and tax revenue will decline.

The U.S. has much easier immigration policies and attitudes and productivity has been maintained by growing the workforce through immigration.

France had a similar problem after WWI. They lost a lot of young men to the war and the birth/death ratio was on the decline. So the gov encouraged sex to grow the population. That is one reason why French sexual attitudes are more liberal than the Protestant attitudes that still resonate through the U.S. society.

Maybe the U.S. should adopt a French approach to sex? Hard to see the U.S. getting involved in programs that encourage people to have more sex. LOL

But I digress....

[lamboguy]

how about texas oil under $50 today

[highnote]

how about texas oil under $50 today

Interesting. If low oil prices are bad for businesses then Tilly's (TYLS) must be the exception.

I bought them around $7 on November 10 and they're over $10 -- up 28 cents today.

TYLS is a youth retail clothing store. My wife took our kids there shopping before Christmas at a mall in Boardman, Ohio. She said it is a terrific store for teens. They are rapidly growing and they don't even have any stores yet here in Connecticut.

I doubled my position, bought at $9 on December 29, after hearing her glowing review. Sounds like a Peter Lynch angle to me.

Worth a look.

[incoming]

Also... like Japan the European population is aging and they have much different attitudes about immigration and citizenship. A person from Turkey may have lived in Germany for 50 years, but still can't apply for citizenship.

As the European population ages there are fewer people who will be productive. Productivity will decline, but the costs of caring for an aging population will go up and tax revenue will decline.

The U.S. has much easier immigration policies and attitudes and productivity has been maintained by growing the workforce through immigration.

France had a similar problem after WWI. They lost a lot of young men to the war and the birth/death ratio was on the decline. So the gov encouraged sex to grow the population. That is one reason why French sexual attitudes are more liberal than the Protestant attitudes that still resonate through the U.S. society.

Maybe the U.S. should adopt a French approach to sex? Hard to see the U.S. getting involved in programs that encourage people to have more sex. LOL

But I digress....

I think the aging population and immigration are the root causes of our lackluster economy. Banking and housing problems hit the WWII population explosion at the top of their retirement years taking a lot of their resources saved for retirement. Our safety nets are being pushed to the maximum and will probably break. Of course, politician are trying to fix these problems without being truthful.

I see most of these economic problem being tied too the unintended consequences of abortions. There have been over 89,000,000 in the US over the last 40 years, most would have been taxpayers.

[ReplayRandall]

I see most of these economic problem being tied too the unintended consequences of abortions. There have been over 89,000,000 in the US over the last 40 years, most would have been taxpayers.


The figure you gave is inaccurate, as the number since Roe v. Wade in 1973 is 56,419,800:

http://www.numberofabortions.com/

[_______]

I tie all the abortions since 1973 to the unintended consequences of high oil prices. People couldn't afford to drive, so what else were they going to do?

And now, we're back on topic.

[highnote]

Immigration, abortion, economics and taxes. I can see this thread turning political. :D

Let's throw in the emergence of extreme-fringe and ultra-nationalistic political groups in response to the bad economy and immigration.

Actually, according to Roubini's article, the fringe/radical political groups are already starting to emerge and gain power in Europe -- just like before WWII with the rise of the Nazi party and the fascists in Italy along with blaming the problems on the Jews and other minorities.

And all of this because of low oil prices. :eek:

(I'm being facetious.)



I think the aging population and immigration are the root causes of our lackluster economy. Banking and housing problems hit the WWII population explosion at the top of their retirement years taking a lot of their resources saved for retirement. Our safety nets are being pushed to the maximum and will probably break. Of course, politician are trying to fix these problems without being truthful.

I see most of these economic problem being tied too the unintended consequences of abortions. There have been over 89,000,000 in the US over the last 40 years, most would have been taxpayers.

[ReplayRandall]

I tie all the abortions since 1973 to the unintended consequences of high oil prices. People couldn't afford to drive, so what else were they going to do?

And now, we're back on topic.

Don't you like correct facts and figures Don, or is that off-topic?

[highnote]

Soooooo.... How about them low oil prices?

[ReplayRandall]

Soooooo.... How about them low oil prices?

That's OK Highnote, I'll just ignore when you give inaccurate info from now on...

[badcompany]

It implies a sustained decline. The balance sheets for some (mostly new entrants who have leased land at high cost and are required to drill) are shaky but many others will do just fine.


WTI declining and North American production rising isn't an oxymoron. I think you'll see both in 2015.

This is CLR's balance sheet:

Note the the recent long term debt explosion. You don't find this disturbing given the effect that the collapse will have on profitability? Do you think Harold Hamm anticipated this?

http://i95.photobucket.com/albums/l142/thinlizzy21/2D00ABC8-AC82-493D-9F2F-65ADC5A515C8_zpsewus2i7w.png (http://s95.photobucket.com/user/thinlizzy21/media/2D00ABC8-AC82-493D-9F2F-65ADC5A515C8_zpsewus2i7w.png.html)

[_______]

Don't you like correct facts and figures Don, or is that off-topic?

I had no problem with your response. I was responding to incoming as you were. Just a different take.

[_______]

This is CLR's balance sheet:

Note the the recent long term debt explosion. You don't find this disturbing given the effect that the collapse will have on profitability? Do you think Harold Hamm anticipated this?

http://i95.photobucket.com/albums/l142/thinlizzy21/2D00ABC8-AC82-493D-9F2F-65ADC5A515C8_zpsewus2i7w.png (http://s95.photobucket.com/user/thinlizzy21/media/2D00ABC8-AC82-493D-9F2F-65ADC5A515C8_zpsewus2i7w.png.html)

I know they were very public about selling out their hedges at a $435 million profit several weeks back. If they didn't reinvest that money into longer term hedges, then I would be less than enthusiastic about their future.

I don't own any shale companies and agree that excess debt is a problem for those with it in this market. But the industry leaders as a whole will come through more efficient and with assets they absorbed from those who weren't.

[highnote]

That's OK Highnote, I'll just ignore when you give inaccurate info from now on...


You'd be doing yourself a favor. :D

[highnote]

That's OK Highnote, I'll just ignore when you give inaccurate info from now on...


Actually, I wasn't ignoring you. I was just, foolishly, trying to keep the thread on topic. I should have just let the thread float wherever it was going to go.

But you're right, fewer abortions would have meant more people. But it is hard to say what the result of fewer abortions would be.

Perhaps there would have been fewer people because people would have been more careful?

Perhaps there would have been more poverty among that population -- which might resulted in higher taxes and lower standard of living for everyone?

Also, many of those abortions may have been medically necessary and were done because trying to get the pregnancy to full term might have resulted in the death of the mother. Should medically necessary abortions be tallied in the category of future taxpayers?

Maybe there would be more crime in that population or perhaps there would have been overpopulation which could have lead to a war? How would a war have affected today's economy?

Who knows for certain?

It's interesting to speculate, but it is almost impossible to say with "accuracy" what the outcome would have been 40 years later.

[incoming]

The figure you gave is inaccurate, as the number since Roe v. Wade in 1973 is 56,419,800:

http://www.numberofabortions.com/

Thanks for the correction, the distorted number on my part wasn't intentional just bad info.

The point that I was in the process of making, we have lost many taxpayers. We have been riding the backs of the WWII "baby boomer" as they accumulated their wealth and worked their way through many years of excellent economic growth. Many lost their wealth through the last economic down turn(not their fault) and will be takers instead of givers as they move into their retirement years. I see shale oil as the revenue stream that will put the US back on the path to prosperity if managed properly. It is in the best interest of most of the world if we succeed. Of course, we have our enemies.

Side Bar: A 12 cent tax increase on gas and diesel was proposed by the senate yesterday.

[highnote]

Side Bar: A 12 cent tax increase on gas and diesel was proposed by the senate yesterday.


Nothing like hitting a guy when he's down and about to get back on his feet.

[Valuist]

How did an oil thread turn into an abortion discussion?

[badcompany]

How did an oil thread turn into an abortion discussion?

I believe the term is "thread drift." :)

[highnote]

How did an oil thread turn into an abortion discussion?

If I understand the first abortion post, the theory is that abortions over 40 years hurt the economy because a country is denied future taxpayers.

So because abortions are seen by the theorist as being an important economic factor, like oil prices, he mentioned them in this thread.

[_______]

This is CLR's balance sheet:

Note the the recent long term debt explosion. You don't find this disturbing given the effect that the collapse will have on profitability? Do you think Harold Hamm anticipated this?

http://i95.photobucket.com/albums/l142/thinlizzy21/2D00ABC8-AC82-493D-9F2F-65ADC5A515C8_zpsewus2i7w.png (http://s95.photobucket.com/user/thinlizzy21/media/2D00ABC8-AC82-493D-9F2F-65ADC5A515C8_zpsewus2i7w.png.html)

http://www.businessinsider.com/kinder-morgan-hiland-partners-shale-deal-2015-1

The headline on this story is a bit deceptive as the asset sold is pipeline infrastructure, not shale assets. I suppose since its servicing the Bakken, it's shale related.

Regardless, CLR just raised $3 billion and Harold Hamm was quoted elsewhere as stating he would be looking to acquire assets from other distressed companies.

Meanwhile, KMI gets a foothold in the Bakken.

[_______]

http://www.businessinsider.com/kinder-morgan-hiland-partners-shale-deal-2015-1

The headline on this story is a bit deceptive as the asset sold is pipeline infrastructure, not shale assets. I suppose since its servicing the Bakken, it's shale related.

Regardless, CLR just raised $3 billion and Harold Hamm was quoted elsewhere as stating he would be looking to acquire assets from other distressed companies.

Meanwhile, KMI gets a foothold in the Bakken.

Edit: my bad. Sale was from a partnership controlled by chairman of CLR, not CLR itself.

[plainolebill]

The entity selling the assets isn't CLR it's Hiland Partners. Hamm has controlling interest in Hiland and I'm not sure CLR benefits at all.

Doesn't seem like a dream deal for KMI but Hamm probably appreciates the extra cash.

[badcompany]

Selling off assets and shorting your own product doesn't sound like a business with a promising future, and, remember, CLR is the top of the food chain in the Bakken. The B and C level companies there have to be in some real deep poop.

Given the drop in oil, you have to think the asset side of the balance sheets are a fiction.

[_______]

I'm not in any oil stocks now but I am keeping an eye on RIG and EVS. Give them a little time to consolidate. RIG owns something like 70% of all the deep sea rigs in the world. Have to think oil isn't going to be under $60 forever.

CEO gone and dividend cut 80% at RIG. The dividend cut buys them some time (about $800 million/year saved) but their debt problems remain a huge overhang.

They built up the most modern fleet in the industry but now have to survive a period of lower day rates while servicing the debt incurred. I wish any investor the best but remain skeptical of their prospects.

ESV reports next week. I bought 10 $32 calls at .70 last week anticipating better news than most expect. The stock is already drifting up on higher Brent. Might be in the money before earnings if this keeps up.

Still huge headwinds for all the offshore players but ESV remains the best prospect in a bad field.

[_______]

CEO gone and dividend cut 80% at RIG. The dividend cut buys them some time (about $800 million/year saved) but their debt problems remain a huge overhang.

They built up the most modern fleet in the industry but now have to survive a period of lower day rates while servicing the debt incurred. I wish any investor the best but remain skeptical of their prospects.

ESV reports next week. I bought 10 $32 calls at .70 last week anticipating better news than most expect. The stock is already drifting up on higher Brent. Might be in the money before earnings if this keeps up.

Still huge headwinds for all the offshore players but ESV remains the best prospect in a bad field.

3/20 expiration on the calls.

[badcompany]

Apparently, this guy thinks the price of oil will stay down for a while:



(Bloomberg) -- Warren Buffett’s Berkshire Hathaway Inc. eliminated its holding in Exxon Mobil Corp., exiting a $3.7 billion investment in the world’s largest energy company as oil prices fell.
Berkshire had no holding in the Exxon as of Dec. 31, according to a regulatory filing Tuesday from Buffett’s Omaha, Nebraska-based company detailing its U.S. stock portfolio. That compares with about 41 million shares three months earlier. Berkshire also increased its investment in agricultural equipment maker Deere & Co. and disclosed a stake in 21st Century Fox Inc.
Oil prices have fallen by about half since June amid a glut in production. While Buffett is celebrated as one of the best investors of all time, some of his stock picks faltered last year. He wrote down the value of a holding in Tesco Plc after the British grocer cut profit estimates multiple times. One of his biggest bets, International Business Machines Corp., fell below the price he paid for it.
“Picking stocks is hard and getting them right all the time is impossible,” said Cliff Gallant, an analyst at Nomura Holdings Inc.
Berkshire also eliminated a smaller stake in ConocoPhillips. Irving, Texas-based Exxon Mobil slipped 55 cents to $92.50 in extended trading at 4:42 p.m. in New York. ConocoPhillips dropped 26 cents to $69.21.
Berkshire held 17.1 million shares of Deere as of Dec. 31, the filing shows. The stake is valued at about $1.54 billion, based on today’s closing price of $89.92 per share of the Moline, Illinois-based company. Buffett’s company held 7.57 million shares of Deere as of Sept. 30, according to a document filed Tuesday with the U.S Securities and Exchange Commission.
The holding in 21st Century Fox was 4.75 million shares, valued at more than $160 million based on today’s closing price. The New York-based media company is led by billionaire Rupert Murdoch.
To contact the reporters on this story: Noah Buhayar in Seattle at nbuhayar@bloomberg.net; Zachary Tracer in New York at ztracer1@bloomberg.net
To contact the editors responsible for this story: Dan Kraut at dkraut2@bloomberg.net Dan Reichl

[Robert Fischer]

Indirect Shale Boom stock play

Rosneft - MCX:ROSN - is this stock any good??

You have the US, Israel, and West Ukraine/Kiev with the Shale gas that is going to supply Europe and at least free them from Gazprom Russian gas do-or-die negotiations.
Major loss for Russia and Gazprom.

At the same time China has been negotiating a long term import deal for Russian gas.
China has repeatedly insisted on a price below what Gazprom Russia was willing to agree to. In May, they are supposed to again try to finalize the deal.

Now with the Shale competition, Russia is pretty much forced to make a bargain price deal that China wants.

Rosneft is a different group than Gazprom(basically Gazprom is the Russian gas monopoly).

moscow times article and some interesting quotes:
http://www.themoscowtimes.com/business/article/rosneft-ratcheting-up-pressure-to-access-pipelines-and-compete-with-gazprom/495885.html
https://twitter.com/jason_kassa/status/1493633023392235521