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I suspect that the recent interest is partially related to the close similarity in drilling rig activity between 2008-9 and 2014-15. The month to month differences are <1% (generally <0.5%) for every month over the past 18 months. If the similarity holds then, we are currently at the market bottom. I'm not convinced the parallel will hold. The oil market may still be close to a bottom - I just don't think it will recover like it did in 2010 but stay flatter for longer. When international growth does pick up the production surpluses and demand for storage will go away quickly. I also think the double-whammy of personnel losses in 2010 and 2015 will create many long term problems in the industry. A lot of experience has gone away that won't be coming back.
Of course, trying to operate in California didn't help
Keep in mind that Venezuela's oil is generally low quality so they would've been like fly's in a pig sty at $75/bbl at any time.
I think Iranian crude has been making its way into the market for a while and this is part of the reason for the Iranians' boldness as well as the Saudi countering actions.
As for Obama, the man will never learn. If he weren't irretrievably delusional he might benefit from a review of the various truce negotiations during the Korean War up thru the recent announcement by N Korea that they are developing ballistic missile subs. The n. Korean and Iranian gov'ts prioritize annoying the US above the welfare of their own citizenry.
Something that Barry has been doing for several yrs.
There are some logical and probably factual errors in that article. Being the largest importer of oil (even if true) is not necessarily a good thing.
This makes a lot of sense. Much of the exported Bakken crude would almost certainly be used as diluent.
If u hadn't posted the link and follow-up comment I would've thought u were joking. Pretty sad. I've heard that the butchering in HAL/BHI is more brutal than in SLB. Anybody with cash who wants to pick up pieces of oil service companies will be able to pick them up at fire sale prices.
Lol. You're not wrong. From what I've seen and heard, SLB's reaction to the change in market conditions under this CEO is much more rapid, and possibly severe, than under previous CEOs. Probably a good thing.
Rig count over past 6 months is almost identical to the collapse starting ~Dec 2008. It took until 2010 for layoffs to reach as deeply as they are now.
I've only seen links to audio only presentation. If u have link to video, please post
Yeah, it's grim. Same thing going on across the entire industry. I suspect that I'll b proven wrong about my expectation of a sharp rebound.
Me too. OPEC production highest in 2 yrs
Brain fart on my part. I was thinking Kazakstan.
While Isis may've been part of the consideration, I suspect the technical difficulties and costs of doing business there are the primary factors. Way too many opportunities for bad things to happen there whether those bad things b bullets, H2S, or getting bogged down in a U.S. court over a bribery allegation.
The zealot's recount of Monsanto's history isn't particularly accurate. I'm a big fan of Monsanto and don't find anything about their past particularly abhorant. The Wikipedia entry for MON is a far better history and as it points out, the new MON is still carrying liabilities for the old MON. If they were unrelated companies, that wouldn't be true.
Maybe the real source of the problems is in this sentence
"The corruption scandal has also embroiled the largest construction companies in Brazil, which has influenced public work projects in the country, and has brought President Dilma Rousseff under fire. Ms. Rousseff was the Chairman of the Board during a partial duration of the corruption scandal. "
Very poorly written article. I suspect the $24B in cuts is a little light - as in that could be just for the 1st qtr.
I'd look for info regarding relative shares of N Sea, NAM, and deep water anywhere vs Middle East. Judging by what I see in the job market, the former are losing humans while recruiters are looking for humans to go to the latter.
By a long shot
That's why I consider it a meaningless action. Obama will be gone or at least going out the door before any company would do anything. In addition, exploration companies will keep in mind that the Saudi's are willing to use blunt force to discourage over production so until there is a sustained shortage, such areas will largely be left alone
Which is meaningless at current oil prices. More of Barry's bromides.
And while we're on the topic of corporate transformations: MON used to be a chemical manufacturer with a big chunk of their revenue related to nuclear weapons production.
I'm guessing that poster has a kitchen full of GE appliances but has never looked at a 10k or Wikipedia
How could that be. Nobody has to repay college loans now.
I'm only partially kidding.
I don't think shale is relevant. States with large oil industry related work forces will see a bump in unemployment. The 3 largest service companies will likely lose at least 20k people although not all of those will be in the US. North American producers will easily exceed that number. If you can find a number for US workers in the oil and gas industry (sans refineries), then multiply it by 0.1 and I'd guess that will be on the low side.
I'm sure you've seen this from the WSJ Already but....
"There was limited forward looking commentary on either North America or the International markets,” she said of Schlumberger’s financial filing to the Securities and Exchange Commission. “Given the early stages of the downturn we believe accurate management guidance is challenging to impossible.”
been a grim couple of days with probably more to come over next few months. The WSJ story mentions 9000k jobs gone in past tense and refers to 4th qtr 2014. I think it should be present tense. Feels very much like 2008-9.
I have no well founded clue on both questions.
Autocorrupt caused some grammar problems in my 1st reply
I'd say anyone listed on the entire industry. SLB is responding to E&P and it appears to me that they are doing so much more quickly than under previous CEO
Total bunk
As you've pointed out; 'tis the prisoner's dilemma
Things are getting a bit shaky - layoffs finally becoming heavy. I knew energy company stock prices wouldn't stabilize until this happened. Unfortunately, I think we have more coming.
Word I get that blaming the U.S. is working and there are many people longing for the return of the 1970s
there's not much reason for there to be a connection between oil and food prices. Some oil is used to transport the food and drive harvesters etc but I suspect those fuel costs are relatively minor. The big hydrocarbon input to food is natural gas which is used to produce fertilizer and various *cides. Costs to farmers for those products are large. This is one of the reasons why companies like MON, DOW, and DD are quite happy with low NG prices.
Most oil is used for transporting humans - not food.
As a professional in the field making an informed WAG (Is there such a thing?) how much further percentage-wise are oil stocks likely to fall?
my qualitative WAG [for that certainly exists] is that even healthy oil company stocks have further to go before they catch up to the drop in oil; 10-20% more over next year wouldnt surprise me. I also wouldnt be shocked if PBR went to $3. I hope none of those things happen but hope hasnt proven to be a good strategy.
I think many companies have been budgeting for $80ish/bbl over past couple years and have been quite happy to get more but they havent gone hog wild on spending and are likewise reacting conservatively to the swing to $50ish/bbl.
On the depressing side: I've heard non-specific talk that N. Sea operations are hurting and see signs of project cutbacks in places you might not expect. Apparently, real estate prices are dropping in places that havent seen such things since 2010 and rental places in scenic Fort Mac are now easy to find. However, I havent heard of mass layoffs. There is paring but it's not a slaughter like 1986, 1999, or 2009. If oil prices stay as they are now or drop further over next 3-6 months, i think we'll see a lot of layoffs and pervasive cutbacks in drilling and that will put a bottom on oil. Alternatively, US economic growth could eat up the small surplus that currently exists and we'd be at the bottom about now. So I'm 'hoping' that you're one of those very talented stock prognosticators and I'm wrong.
Charlie
I suspect that over 5 yrs that your general comment is correct but I'll be very pleasantly surprised if we've seen bottom.
I agree about the Russians lack of skill. Is there enough oil/potential profits to interest U.S. companies?
There is not a lack of technical skill or knowledge on a personnel basis (some of the smartest, most capable folks i know in the oil biz are Russian). Many who were in Russia working for western companies have been relocated to the UK, Norway, Houston, etc. over the past several months. Those that were left behind have effectively disappeared into a blackhole. What Russian companies probably lack is organizational, supply, and infrastructure capability (and probably lower calibre technical personnel). Once upon a time, the USSR drilled what i think is still the deepest (vertical) well ever drilled and a lot of new technology needed to be developed to drill that well. I'm not sure if they used any western companies but I suspect not given its proximity to Archangel.
The answer to your 2nd question is almost certainly not for production companies. Any hydrocarbons are likely to be gas rather than oil. If there is gas, then that might be useful for the Cubans since they're a bit scarce of fuel resources. However, any gas production would be useless for export and Cuba doesnt have much money or political inclination to pay things like royalties. The only interested US companies would be on the drilling and service side and i'm pretty sure that they'd insist on an escrow arrangement.
What type of applications are you involved in? One of the divisions of the company I work for is heavily involved in low temperature applications in the pharma industry.
sorry took so long to get back to you. I'm involved in a wide range of thermo applications. My formal educational background is in aqueous electrolyte thermo (solution properties and solution+solid equilibria). The range of chemical systems i deal with now seems to be unlimited (i.e. not just aqueous systems and not limited to hydrocarbons). Applications range from recovering refined or synthetic hydrocarbons from drilling mud, sensor development, cement reactions, scaling, corrosion.... Even did a little experimental and modeling work on actinide reactions in a high temperature, sour gas field after a neutron source was lost in a well (which happens with surprising and disturbing frequency). While I'm horribly ignorant of biochemistry my principal project at the moment involves various biomass to kerogen, bitumen, and oil transformations and exchange/complexing reactions (both self sourced and between rocks). It is only related to "algae-oil" in that it involves algae (and other creatures) on one end and oil on the other. Really cool stuff but oil company people and bacteria is a difficult combination 8^). If anybody knows a source of gram-ish quantities of metalloenzymes (e.g. hydrogenase, nitrogenase, SoD) for cheap please let me know. Cheapest stuff i've found is urease which is suboptimal.
I do thermodynamics for a living.
Reading between the lines on your linked article and OB's: 1) the continued use of the word filtered suggests either that it is part of regulatory language or the blind are leading the blind and 2) the mention of $2500 per well suggests that the mechanism for reducing butane and propane is intended to be installed at the wellhead similar to a oil-water separator. The latter suggests that something like a vacuum unit will be 'strapped' on at every wellhead to 'boil' off the lightest hydrocarbons. The power to run such things won't be very costly, which is probably where the $0.10/bbl come from, however the cost of keeping the units running (think H2S corrosion) and penalties when they don't run or production has to be interrupted to fix a failed unit are probably much higher. In addition, it still doesn't address the disposition of the removed butane and propane. These are valuable products yet without pipelines they are orphaned. If they are flared then they'll increase the 'carbon footprint' dramatically and the environmentalists will then flog the producers for that without drawing the link back to themselves .
Sounds like a very poor choice of wording - probably on the part of the article's author - rather than in regulatory language. Filtering won't do squat. What they'll do is a very simple distillation which has the upside of qualifying the distillate for export under current federal rules.
Of corse, they gloss over the point of what happens to the butane and propane that they want removed. There would have to be a large increase in local barbecue grill sales to use it all.
The bottom line is a pipeline or 5 is needed and that requires being rid of obama.
I particularly liked this comment:
"I think this is going to cost industry a significant amount of money, but I don't think it will be substantial,..."
If u look at the production numbers for the last yr (world and major producers) you'll see that any 'oil glut' is not due to increased production. That means consumption is off and that isn't because Japan and Detroit are producing nothing but battery powered cars.
SA can withstand lower oil prices for quite a while. Venezuela can not. The Saudi concerns are not just shale production which I suspect has only a very small competitive relationship to Saudi oil.
Personally, I think the Saudis have effectively taken it upon themselves to provide a more effective stimulus plan for the world economy than all of the crap that has been done by the US, Japanese, EU, and PRC governments. And they get to stick it to Iran and Russia at the same time.