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While I agree that the bottom was probably the $26.xx/bbl, I don't think the market will recover until after there are some major bankruptcies and a resurgence in consumption in the US and China. The former will take place over the next 6-12 months and the latter could take longer. Those of us that picked the $45-55/bbl range by end of Dec 2016 may turn out to be correct but it will probably be a squeaker on the low side. So sayeth the magic 8 ball 8^)
He had a family. 3 Children, all adults. As far as I know, his death has not been ruled to b a suicide although it certainly looks like it. He was a practicing Catholic so if it was suicide, then I'm sure he was completely despondent.
He treated CHK's employees as part of his family and I never heard another CHK employee ever make disparaging comments about him - not out of fear but because everybody loved and admired him. The people I knew that worked closely with him talked about him like my grandfather talked about MacArthur (my grandfather reported to MacArthur) - with adoration.
We shouldn't judge. Amongst other reasons - there is nothing good to be gained.
Completely agree. He was a very well intentioned human. I worked for CHK for a short while. Things went downhill hill fast after the BOD fired him. Many good folks left as a consequence.
Thx 2 u 2. I figured there had to b flies. In the case of CIE there r only 2 bond issuances. I'm assuming that the company can only force the bond sale if the bonds r callable. Correct or non?
Looks very bad. Took the police several hours to confirm it was Aubrey cuz the car was crushed and incinerated. I sent condolences to a friend at AEP who reports to AM and was unaware that it had happened.
thx again. i don't have $2.7B to spend so it was just a hypothetical. I do own some of CIE's common so one of my concerns was 'what if' somebody does what i suggested. The common would pretty much be a cut boat anchor in that case (and might be in any case). I think you're correct about floating more debt or off-loading assets but it's a tough market for both these days.
cheers
cso
Thx much. Given the long term value of some companies' assets and the current market cap of those companies, it looked like a far cheaper option than buying the stock and assuming the debt. As an example, which I may regret, CIE has a net of ~600M bbls proven and a market cap of $1.1B and $2.7B in debt. That debt can be bought for ~$0.45/$. If the bonds r paid, then the yield is about 20%. If CIE defaults, then somebody has picked up somewhere in the neighborhood of $5B of oil for ~$1.5B.
I figured there must be something wrong or illegal about it cuz it looks too obvious
EXXI has 0% production from shale and by end of 2016 they'll likely have 0% production. The latter may also hold for a couple others in the graphic
A naive question: would it be reasonable for XOM to buy up the junk bonds of certain distressed operators in the GOM, Bakken, and Texas? Some of those companies have very good assets but time is working against them so their bonds are selling at steep discounts. The coupons on those bonds are higher than any of XOM's so if the distressed companies survive than XOM has a tremendous yield at maturity. If the companies default, then XOM owns the assets and covers at least part of their own bond interest payments.
regarding ITC: i have no disagreement regarding their transmission of electricity from wind and solar or that the Dakotas are windy. My point was that ITC is agnostic with regard to the source of their customers' electrical generation. So...
https://en.wikipedia.org/wiki/ITC_Transmission
you'll note they do business with First Energy. So going to the First Energy website:
https://www.firstenergycorp.com/about/generation_system.html
I think we can safely delete my "probably" and accept what i said as a statement of fact
what makes you think i didnt? i looked at their service areas and where their transmission lines ran and their extent. There is no way that a transmission company that big that services the utilities they service runs solely from solar and wind generators.
"ITC transmits electricity from at least wind mills..." and probably from coal, nuclear, and gas.
looks to me like a person could pick up a quick 10% by buying ITS now and taking the $45 from from Fortis
electric cars won't substitute for gasoline fueled cars to an extent that will have an impact on oil prices. If somebody really wanted to entertain themselves in proving the point, they could do a back of the envelope, rough calculation of the power derived from the roughly 140 billion gallons of gasoline consumed in the US/yr and compare that number to the power consumed by the number of electric cars in the US. I suspect that to make a dent in the gasoline, the battery industry would have to grow by several powers of 10. And even if govts could throw enough money at the industry to dent oil consumption, then it still wouldnt make batteries more efficient than liquid fuels.
If govts could manage to penalize combustion engines, then using natural gas or nuclear fueled plants to charge batteries could put a dent in the oil consumption and offset battery inefficiency. However, I dont believe that the anti-carbon crowd would stop at coal and oil. Nuclear is up there with coal in that crowd so that isnt going to happen. Part of my point was that some form of carbon would be required to charge any quantity of car batteries that would put a dent in oil consumption. Solar farms and windmills couldnt do the trick.
There was a story in the WSJ or Washington Post (not sure which) a few days ago about Obama visiting a electric car battery plant in Georgia. The story pointed out out that the economics and production numbers werent quite working out to what had been touted when Obama and friends were throwing money at the industry in 2009.
Tesla may be an exception but a lot of "green energy" companies look very Trumpian. Great at rewarding corporate officers and founders and just as great at wasting tax dollars and stiffing investors.
Reminds me of "field of dreams" with a bad ending for the companies investing heavily on electric cars. In order to become competitive in a non subsidized market, cheap batteries will be required in addition to solving the miles/charge and charging time problems. And even if those are overcome, then there will be a needed fuel source to charge those batteries. Natural gas is the cheapest, most efficient fuel. It won't be fields of solar panels and windmills. Governments can't bend thermodynamics forever.
"very small in amount" is close enough to my intended meaning of nominal. But I do agree that "nominal" is a nominally useful word 8^)
Thx for the link, it was a good refresher, but I don't think that was the one I was thinking of.
Thus the words 'might nominally'
I have to go w biotech_researcher on this one even though the weaker dollar might nominally increase commodity prices.
Can you resurrect the link to the presentation about 1.5 yrs ago in which the presenter argued that oil prices would be crushed (not the more recent GS interview in which the guy stated there was a 50% chance of $20/bbl)? I believe there was a PowerPoint file associated with a video presentation.
I suppose stagflation could just as easily refer to a stagnating deflationary economy, however, the stagflation of the 1970s was high interest rates, high unemployment, and high inflation - the opposite of the current environment (unemployment being debatable).
yeah, i saw the "rights plan" primarily as a poison pill but it also seemed to potentially offer something of value to the convertible holders that might exceed the value of the 3% bonds in BK, e.g. at a minimum the rights are tradeable and if there is a take over, then they have the dividend bearing preferred shares. The company benefits by removing additional debt and interest at essentially no cost and if there is a takeover, then the exercise of the rights may generate enough cash to maintain solvency.
looks to me that the best outcome for the common holder would be conversion of the convertibles and a takeover in the next 30 days.
this might be naive or completely ignorant but would it be possible that the "Rights Plan" is also intended to provide incentive to the convertible bond holders to convert to common and take the preferred share rights? If I understand this correctly, that would remove some debt and interest and if the rights become exercisable, then it would provide operating capital to EXXI. The incentive to the convertible holders being through trading value of the rights and the preferred shares if the rights become exercisable.
if that's deranged, i shant be offended by being told so.
thx
Charlie
My $0.02 is that bankruptcies hitting in the 2nd half of the yr will be the thing that starts clearing the surplus. Not gonna be pleasant.
Apparently, Chesapeake has delayed payment of bonuses. I'm amazed that there was an expectation of bonuses. If bonuses are still paid twice yearly, I'll be more amazed but I don't think it will be a concern this year.
He's clearly getting advice from that economic genius Jimmy Carter who tried similarly stupid things ~1980.
Shaking Things Up: BP Reorganizes its Senior Executives
http://www.rigzone.com/news/article.asp?hpf=1&a_id=142798&utm_source=DailyNewsletter&utm_medium=email&utm_term=2016-02-02&utm_content=&utm_campaign=feature_1#sthash.xBEilbv5.dpuf
COP whacked close to 20% of their upper management months ago. In stark contrast, SLB's management from top to bottom is largely untouched.
The NYer article is shallow. This is a much better analysis although it glosses over things like the effects of hurricanes and strife in the Middle East.
https://en.m.wikipedia.org/wiki/2000s_energy_crisis
In 2007-2008 and now oil prices and most other commodities were in lock step so whatever was affecting oil was probably also involved in the other.
The relative value of the US dollar is the magic factor. As long as countries around the world keep playing Russian roulette with their currencies, oil prices will stay in the sewer.
Those costs are much more sensible. Tullow announced recently that they are going ahead with their deployment of the world's largest floating production platform off Ghana citing that their production costs associated with that vessel are $15/bbl. The discovery and development costs are sunk and they need the cash flow. That gets to your 3rd leg comment which i think is underway but there are some big BKs waiting in the wings. However, while most folks seem to be focused on whether oil will ever get back to $80/bbl, I'd focus on natural gas and in what century that will see $5/MMBTU. As you've pointed out oil prices are largely influenced by things other than supply & demand. Not the case for NG.
GE is continuing their unconventional reservoirs research lab build in Oklahoma City. GE and Exxon seem to be the only folks in the O&G industry that are hiring research scientists.
Good point - damned pesky details
I don't know the specifics of their systems but I suspect jbog's analysis is correct. The only caveat I'd add is that if their design takes advantage of gravitational flow rather than working against pumps, then it might not be a perpetual motion scam. In that case the system is effectively operating like a hydroelectric generator in a dam.
Just because some cities have signed on doesn't legitimize the concept. There was, and may still be, a company called Blacklight Power that was scamming Philadelphia and others for many years in the 1990s using another 'free energy' scheme.
I doubt that much of the Khazak oil will come onto the market until prices rise to >>$30/bbl
Rats in urban areas have nothing to do with gardens and everything to do with garbage and, I'm guessing, sewage.
i find the term rodent management and painting NYC's program in a positive light humorous. The rats wouldn't be nearly as bad if the people were less disgusting and careless.
I almost kicked a rat the size of a mini-dachshund that passed in front of me during a nighttime stroll down a sidewalk in Cambridge MA. The thing had no fear of humans and no wonder 'cuz there's plenty of garbage and the 'rodent management' involves 'humane' live traps.
"Sounding great" and being otherwise was also my thought but surprisingly enough most of Beijing's electrical power is from gas fueled plants
https://en.m.wikipedia.org/wiki/List_of_major_power_stations_in_Beijing
According to Wikipedia only one major coal plant close to central Beijing (locations can be mapped from the wiki links at bottom of page). One of their problems may be due to upwind location of some coal plants if prevailing wind is west to east.
Looks to me that Dew's point about automobiles being predominant source of smog may be correct.
and of course they'll need more coal fueled power plants to charge all those EVs. Go global warming.
Shortable coal companies are getting scarce but coal fired power plants are not going to disappear anytime soon.
The graph in that article showing battery costs shows one of the problems with renewables and those sorts of costs are frequently left out when discussing the competitiveness of renewables.
https://en.m.wikipedia.org/wiki/Cost_of_electricity_by_source
http://economics.mit.edu/faculty/pjoskow/papers,
http://economics.mit.edu/files/6317
An example of misleading costs is shown for geothermal on the wiki page. It would appear to have large cost advantages but that is difficult to reconcile with the actual cases of the California geothermal plants which would've disappeared many years ago if it were not for a continuous stream of gov't props over the past 45 yrs.
Yours is a better answer but would u disagree with what I said?
I don't think OPEC is functional now. Your original thesis probably has merit but it's a dual where both antagonists could take a bullet and the 2nds are standing behind the antagonists and may get hit by through-and-throughs
The Saudi's care about preserving and maximizing production. The Iranians are using ancient technology and pumping the hell out of their wells (although I don't have an authoritative source on that). Think Cantarell
If you're correct and the Iranians aren't lying (;^£), then we're looking at current or lower oil prices for years to come. CNBC quoted an Iranian oil exec 2 weeks ago claiming their production costs were 1.5 USD/bbl. Of course, they'll ruin their long term productivity but it's been done before. ARAMCO's previous CEO claimed their production costs avg'd ~3.5 USD/bbl ~2010 (heard with my own ears at an MIT energy conference)
The smog that is frequently shown for Beijing and other cities probably does originate from coal-fired plants although I wouldn't discount auto exhaust. While oil may only be ~16% of their energy consumption, 16% of a lot is a lot. Los Angeles had terrible smog in the 70s and 80s and you would've had to go to Nevada to find a coal fired plant.
I also wouldn't condemn coal without determining whether their coal-fired plants utilize scrubbing systems. I'd bet many if not most of their plants don't have functioning scrubbers so they have a Pogo scenario to blame for their smog problem.
While agree with many things in the article u linked, I think it has the energy consumption and economic growth relationship back-assward, eg coal consumption in China increased rapidly because of growth in commerce due to political policy changes rather than greater availability of coal enabling growth in commerce.
It's also obvious that the article was not written by an American as the concept of private ownership of natural resources appears to be foreign to the writer. The position of the US in oil production - cumulative and annual - is entirely due to private ownership vs federal ownership. One only has to look at Mexico, Brazil, and France (amongst others) to see how well gov't ownership and control of natural resources works. The writer also seems to follow the Obama school of economics which believes that it is the govt's responsibility to control the economy.
And what is the story about plotting number of Google searches for a set of words and phrases going back to 1800? The non-zero value for 1920 is just a smidge suspect. I was a beta version user in 1993 when the number of websites could still be counted more precisely than macdonald's hamburgers.
As for global warming: while I'm at one with the physics behind why it can occur, whether it is occurring is uncertain and countries which do compete against each other economically can not continue to be competitive and abandon coal and nuclear power. There's no shortage of natural gas in the US at the moment but it can't supplant those other fuels entirely.
A lot of oil in the Permian is produced using CO2. Roughly 1 ton of CO2 is injected/bbl oil produced. Those producers get a tax credit of $10.92/ton CO2 injected. My memory is foggy on the CO2 pipeline costs from Colorado but I'm guessing it's a couple $/ton so many Permian producers are getting a roughly $8/bbl subsidy gratis of the US taxpayer. Since that's fairly high quality oil without transportation problems and close to refineries, those producers have a large advantage.