Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
Register for free to join our community of investors and share your ideas. You will also get access to streaming quotes, interactive charts, trades, portfolio, live options flow and more tools.
“A lot of the transactions I did for SiteStar, they get recorded in my name and it gets – you have to deed it over…”
Why don't you post the complete sentence for us all to see.. be transparent!
This is the promise they make...
I sure don't see anyone jumping all over those 45's in joy of a possible new management.. anybody out here? lol
I think a Definitive Proxy Statement was filed?
Sitestar Comments on Moore's Attempt to Remove a Majority of the Members of the Sitestar Board of Directors Advises Stockholders to Take No Action at This Time
Lynchburg, Virginia ? January 21, 2015 ? Sitestar Corporation (OTCQB: SYTE) (''Sitestar'' or the ''Company'') today issued the following statement regarding the filing by the Moore Shareholder Group (''Moore'') of definitive proxy materials with the Securities and Exchange Commission (''SEC'') in order to solicit proxies to call a Special Meeting of Sitestar?s stockholders on February 12, 2015 in New Canaan, Connecticut. The purpose of the meeting is to elect nine nominees to the Sitestar Board to replace the majority of the current Board; Frank R. Erhartic, Jr., President and CEO of Sitestar; and Daniel Judd, CFO of Sitestar. Mr. Moore is the third member of the current Sitestar Board and would continue to be a member of the Sitestar Board under the Moore preliminary proxy materials. Sitestar urges all of its stockholders to refrain from taking any action, including returning any proxy card sent by Moore, until they have reviewed the recommendation of Sitestar?s Board of Directors that will be included in a proxy statement to be filed by the Company. Under federal securities laws Moore cannot solicit proxies from Sitestar stockholders until Moore provides stockholders with definitive proxy solicitation materials. The Sitestar Board intends to call for a special meeting of stockholders on March 12, 2015 to allow sufficient time for the December 31, 2014 fiscal year end financial statements to be completed and will pursue the course of action that the Board believes is in the best interests of the Company and all of its stockholders.
In response to the Moore proxy solicitation, Frank R. Erhartic, Jr., President and CEO of Sitestar, stated, ''We are committed to the long-term interest of the Company and our shareholders and will oppose any group that seeks to derail our efforts that have turned this Company around. If you believe that you have been approached by this group for purchase of your shares or for a Proxy vote, please contact our office immediately.''
Akerman LLP and FitzGerald Yap Kreditor LLP are serving as legal counsel to the Company.
I thought I would post a survey to take.
What is your Proxy Vote?
That gab filled today... They always seem to fill on this one..
Shale Is Losing to OPEC, to Judge by Mothballed Drilling Rigs
By Lynn Doan - Jan 16, 2015
U.S. drillers have taken a record number of oil rigs out of service in the past six weeks as OPEC sustains its production, sending prices below $50 a barrel.
The oil rig count has fallen by 209 since Dec. 5, the steepest six-week decline since Baker Hughes Inc. (BHI) began tracking the data in July 1987. The count was down 55 this week to 1,366. Horizontal rigs used in U.S. shale formations that account for virtually all of the nation’s oil production growth fell by 48, the biggest single-week drop.
Analysts including HSBC Holdings Plc say the decline shows that the Organization of Petroleum Exporting Countries is winning its fight for market share and slowing the growth that’s propelled U.S. production to the highest in at least three decades. OPEC’s decision not to curb its output amid increasing supplies from the U.S. and other countries has driven global oil prices down 58 percent since June.
“OPEC’s strategy is working, and it will be obvious in U.S. production by midyear when growth from shale plays will come to a halt,” James Williams, president of energy consulting company WTRG Economics in London, Arkansas, said by telephone Friday. “You can imagine the impact on any industry from a 50 percent impact on sales.”
West Texas Intermediate for February delivery rose $2.44 on Friday to settle at $48.69 a barrel on the New York Mercantile Exchange, up 33 cents for the week, the first gain since November. Brent, the international benchmark, rose $1.90 to end the day at $50.17 on the London-based ICE Futures Europe Exchange, a weekly gain of 6 cents for the front-month contract.
Shut-Ins
“Prices are being forced toward levels that would force outright shut-ins in high-cost areas, mainly in Canada and the U.S.,” Societe Generale SA (GLE) analysts including Mark Keenan, its head of commodities research for Asia in Singapore, said in a research note Jan. 14.
The slump in oil rigs has yet to stop the unprecedented growth in U.S. oil production, which added 60,000 barrels a day in the week ended Jan. 9 to 9.19 million, Energy Information Administration data show. That’s the most in weekly data since at least 1983.
Meanwhile, projects are being canceled and budgets cut around the globe. Royal Dutch Shell Plc (RDSA) called off a $6.5 billion project in Qatar. Contract drillers Helmerich & Payne Inc. (HP) and Pioneer Energy Services Corp. (PES) lost U.S. rig contracts. Mexican oil service companies cut more than 10,000 people. Suncor Energy Inc. (SU) fired workers in Canada.
Permian Basin
The Permian Basin of Texas and New Mexico, the largest U.S. oil field, lost the most rigs this week, declining by 15 to 487, Baker Hughes data show. Rigs in Texas’s Eagle Ford formation dropped 12 to 185, and the Williston Basin, home of North Dakota’s prolific Bakken formation, declined by six to 165.
“We are seeing leading indicators of weak prices starting to drive the rebalancing that OPEC is seeking to achieve,” HSBC analysts including Gordon Gray said in a research note Jan. 15.
Rigs drilling for natural gas in the U.S. dropped by 19 to 310. Inventories of the heating fuel in the lower 48 states totaled 2.853 trillion cubic feet last week, 11 percent above year-earlier levels.
Natural gas for February delivery dropped 3.1 cents to settle at $3.127 per million British thermal units on the Nymex Friday, down 29 percent in the past year.
I have limit orders in at low points and will keep this up for a year.. It is an average in buy.
My next buy is in Feb unless it take a big crash. Low oil is going to boost the economy IMO.. The big drillers are going to tighten up supply.. I think it will reverse.. when is the big question.
Nice pop today though..
We have a new Pre filing…
So we will have the opportunity to vote.
Let me go through some of it and give my opinion.
I personally liked trading this stock. I have no problem with not voting on board members myself. And it has done pretty good because these guys have run it up. Now they need an exit strategy because this penny, like most, is not liquid. If they try to sell, they get pounded.
This is the real reason for the vote… They want control... To end this company and likely have no money to buy Frank out.
I think if they take over, anyone who owns this stock other than these guys will lose.
This is normal for this one.. Up big.. down big..
I think the gap is going to fill...
Do you think oil is going to stay this low priced? I don't
How long will it take for oil to reverse? A year maybe
Should I average in? I am
Should I have fear? Don't spend what you cannot lose
Does this ETF follow oil? No, it follows oil companies
Does a drop in oil effect oil company profits? Yes, but many are integrated back from plastics and gasoline and often they hold prices as they go down not having huge impact on profits.
Can fracking make cheap oil? Yes, upfront cost are the most cost; once those are done, they can extract cheap oil.
Do these oil companies hedge? Yes... Not all will be good ones but the pain of lower oil not as great as if no hedge.
It happens with these types of ETF when too low.. I assume it will happen soon.
I bet a Reverse split announcement anytime now..
That is a pre filing...
Until the real one comes out, it does not mean much. Sword rattling...
I absolutely hate those fund guys as part of the board. I can see Moore and that older guy "Bill" May yes.. but something happened that Frank didn't like about Jeff??
any of those bankers.. NO WAY.
Those men could care less about SYTE.. I have been around too many private equity guys to know any different. It's all about what they want in their pockets as quick as possible.
Moore.. don't be manipulated.. they may be buddy buddy with your right now.. but you will learn. Beware.
Frank needs to fight right now..
True.. All kinds of things could happen..
That group takes over and starts moving some houses or they don't do any better.
They RS and dilute the shares.
They liquidate.
Frank sells out to them.
Franks cleans up shop and wins a proxy.
HOLY SHIT.. these kids are about to cost us a fortune.
How much will it cost to have all these board members?
I sure hope they are paying the following and not SYTE..
U.S. is in an oil war with Russia and OPEC: Katusa
Oil prices have tanked this year. Oversupply and diminishing consumption have resulted in oil falling to its cheapest price since May of 2009. “It’s a three-way oil war between OPEC, Russia and North American shale,” says Marin Katusa, author of “The Colder War,” and chief energy investment strategist at Casey Research.
Katusa doesn’t see production slowing in 2015: “We know that OPEC will not be cutting back production. They’re going to increase it. Russia has increased production to all-time highs.” With Russia and OPEC refusing to give up market share how will the shale industry compete?
Katusa thinks the longevity and staying power of the shale industry will keep it viable and profitable. “The versatility and the survivability of a lot of these shale producers will surprise people. I don’t see that the shale sector is going to collapse over night,” he says. Shale sweet spots like North Dakota’s Bakken region and Texas’ Eagle Ford area will help keep production levels up and output steady.
If you’re looking to invest in the energy sector, Katusa says don’t follow the crowd: “You have to be a contrarian and when everyone is hating oil that’s when you start looking.” Capitalizing on the lowest cost of production is a good rule of thumb. Right now oil is cheaper to produce but Katusa sees the shale sector eventually catching up. Also, look for shale to benefit from low interest rates.
Katusa advises staying away from companies like Billionaire Harold Hamm’s Continental Resources (CLR), who’s stock saw nearly a third of its value wiped away this year. “You want to stick with the liquids. You want to stay away from companies that have high debt.” He thinks there are plenty of good companies with big upsides: “I think Enterprise group (E.TO) is going to surprise a lot of people. They’re a $70B company, pay a 4% yield and they don’t have the volatility risk in the price of oil.”
As for oil prices in 2015, Katusa sees stability on the horizon: “I don’t see $20 oil. But I do see a trading range, a near term correction to maybe $65. We’re going to be in a trading range between $45-65 oil.”
http://finance.yahoo.com/news/oil-wars--opec--russia---shale-182539804.html#morequotes
Hard to say what will happen at the meeting... I suppose a proxy will be sent for any business question needing a vote.
US Oil Rigs Are Shutting Down Like Crazy
.
Business Insider
By Myles Udland
2 hours ago
The number of US oil rigs in operation keeps tumbling.
The latest Baker Hughes rig count data showed that the total number of US rigs in operation — which includes both oil and gas rigs — fell by 35 last week, to 1,840 from 1,875. This report is usually released on Friday afternoons, but was released on Monday due to last week's Christmas holiday.
This is down from 1,920 for the week ended December 5. Oil rigs in use fell by 37 last week, while gas rigs actually rose by 2.
For the week ending December 12, the number of oil rigs in use fell by 27, which at that time was the single biggest weekly decline in two years. The following week, the number of rigs in use fell by 18.
The drop in oil rigs on Monday also comes alongside two discouraging pieces of news for the oil industry. The price of West Texas Intermediate oil is crashing again, touching $53 a barrel for the first time since May 2009 and declining more than 3% on the day.
Additionally, manufacturing data from the Dallas Fed showed that business leaders in Texas are growing concerned about the drop in the price of oil. As one Texas business executive said, the drop in crude oil prices was, "going to make things ugly ... quickly."
And according to Monday's report, Texas saw 16 rigs shut down last week.
In Canada, the number of rigs in use also continues to crater, which rigs in use falling by a staggering 135 last week to 256, which is below the same point a year ago. Canada's production, however, is more seasonal than the US.
Here is the chart for US rig use, which now shows a noticeable drawdown over the last month, even on a 14-year time scale.
Why financial planners avoid ERX...
Understand contango or normal backwardation markets.
This example shows both with ERX..
Assume you buy one share of the index and make that "X" shares of ERX at a given point. 3X is for daily, not over time. You can see the chart. We want it going up obviously.. that might get us more than 3x's...
Index Sector Weightings %
Oil & Gas 73.71
Oil & Gas Services 18.38
Pipelines 7.13
Coal 0.78
Top Ten Holdings %
Exxon Mobil Corp 15.22
Chevron Corp 13.01
Schlumberger Ltd 7.74
ConocoPhillips 3.91
EOG Resources Inc 3.72
Halliburton Co 3.69
Occidental Petroleum Corp 3.68
Pioneer Natural Resources Co 3.59
Anadarko Petroleum Corp 3.36
Williams Cos Inc/The 2.95
http://www.direxioninvestments.com/wp-content/uploads/2014/02/ERXERY-Fact-Sheet.pdf
Drilling Our Way Into Oblivion: Shale Was About Land Gambling With Cheap Debt, Not Technological Miracles
Submitted by Tyler Durden on 12/21/2014
Oh, that sweet black gold won’t leave us alone, will it? West Texas Intermediate went through some speedbumps Friday, but ended over +5%, though still only at $57. Think them buyers know something we don’t? I don’t either. I see people covering lousy bets. And PPT (and that’s not the one we used to spray our crops with).
The damage done must be epic by now, throughout the financial system, but we’re not hearing much about that yet, are we? We will in time, not to worry. Everyone’s invested in oil, and big time too, and they’ve all just become party to a loss of about half of what both oil itself and oil stocks were worth just this summer.
There’s those who can ride it out and wait for sunnier days, but many funds don’t have that luxury. Who wants to be manager of Norway’s huge oil-based sovereign fund these days? With all these long-term obligations entered into when oil was selling for $110, no questions asked? The Vikings must be selling assets east, west, left and right. But they’re not going to tell us, not if they can help it.
Just like all the other money managers who pray every morning and night on their weak knees for this nightmare to pass. Your pension fund, your government, they’re all losing. BIG. They’ll try and hide those losses as long as they can. But trust me on this one: all major funds have oil in a prominent place in their portfolios. And there’s a Bloomberg index that says the average share values of 76 North American oil companies, i.e. not just the price of oil, have lost 49% of their value since June. There will be Blood with a capital B.
The discussions over the past few weeks have all been about OPEC, whether they would cut output or not. And I’m not really getting that. There are 3 major producers today, you might even label them swing producers: Saudi Arabia, Russia, and the US. But all the talk is always about OPEC cutting. What about Russia? Well, they can’t really, can they, with all the sanctions and the threat they are to the ruble. Russia must produce full tilt just to make up for those sanctions. The Saudis know that if they cut, other producers, OPEC or not, will fill in the gap they leave behind. At $55 a barrel, everyone’s desperate. Therefore, the Saudis are not cutting, because it would only cost them market share, and prices still wouldn’t rise.
So why does everyone in the western media keep talking about OPEC cutting output, and not the US, just as the same everyone is so proud of saying the US challenges the Saudis for biggest producer status?! Why doesn’t the US cut production? It’s almost as big as Saudi Arabia, after all. Why doesn’t Washington order the (shale) oil patch to tone it down, instead of having everyone talk about OPEC? I know, energy independence and all that, but it’s still a curious thing. Want to save the shale patch? Cut it down to size.
Anyway, this is what we have on offer: the oil industry faces a triple whammy. Oil prices are down 50%, oil company share valuations are also down 50%, and their production costs are rising, in quite a few cases exponentially so. That’s what they, and we, face while slip-sliding into the new year. Do I need to explain that that does not bode well? Let’s do a news round. Starting with Bloomberg on how the shale boys are stumbling over their hedges and other ‘insurance’ policies. All you really need to know is: “Producers are inherently bullish ..” And then you can take it from there.
Oil Crash Exposes New Risks for U.S. Shale Drillers
Tumbling oil prices have exposed a weakness in the insurance that some U.S. shale drillers bought to protect themselves against a crash. At least six companies, including Pioneer Natural Resources and Noble Energy, used a strategy known as a three-way collar that doesn’t guarantee a minimum price if crude falls below a certain level, according to company filings. While three-ways can be cheaper than other hedges, they can leave drillers exposed to steep declines.
“Producers are inherently bullish,” said Mike Corley, of Mercatus Energy Advisors. “It’s just the nature of the business. You’re not going to go drill holes in the ground if you think prices are going down.” [..] Shares of oil companies are also dropping, with a 49% decline in the 76-member Bloomberg Intelligence North America E&P Valuation Peers index from this year’s peak in June. The drilling had been driven by high oil prices and low-cost financing.
Companies spent $1.30 for every dollar earned selling oil and gas in the third quarter, according to data compiled by Bloomberg on 56 of the U.S.-listed companies in the E&P index. Financing costs are now rising as prices sink.
The average borrowing cost for energy companies in the U.S. high-yield debt market has almost doubled to 10.43% from an all-time low of 5.68% in June, Bank of America Merrill Lynch data show. [..]
Pioneer, one of the biggest U.S. shale oil producers, used three-ways to cover 85% of its projected 2015 output, the company’s December investor presentation shows. The strategy capped the upside price at $99.36 a barrel and guaranteed a minimum, or floor, of $87.98. By themselves, those positions would ensure almost $34 a barrel more than yesterday’s price.
However, Pioneer added a third element by selling a put option, sometimes called a subfloor, at $73.54. That gives the buyer the right to sell oil at that price by a specific date. Below that threshold, Pioneer is no longer entitled to the floor of $87.98, only the difference between the floor and the subfloor, or $14.44 on top of the market price. So at yesterday’s price of $54.11, Pioneer would realize $68.55 a barrel.
Where does this turn from insurance to casino, right? It’s a blurred line. Nobody worried about that as long as prices were NOT $55 a barrel. But now they have to. Pioneer gets $68.55 a barrel. Big deal. That’s still well over 30% less than in June.
In Europe, oil is a big issue too. They still have some of the stuff there after all. And that too has halved in value. North Sea oil is a large part of total UK tax revenues, but it’s also energy independence. And already there are people saying that the entire industry is dying.
North Sea Oil Industry ‘Close To Collapse’
The UK’s oil industry is in “crisis” as prices drop, a senior industry leader has told the BBC. Oil companies and service providers are cutting staff and investment to save money. Robin Allan, chairman of the independent explorers’ association Brindex, told the BBC that the industry was “close to collapse”. Almost no new projects in the North Sea are profitable with oil below $60 a barrel, he claims. “It’s almost impossible to make money at these oil prices”, Mr Allan, who is a director of Premier Oil in addition to chairing Brindex, told the BBC.
“It’s a huge crisis.” “This has happened before, and the industry adapts, but the adaptation is one of slashing people, slashing projects and reducing costs wherever possible, and that’s painful for our staff, painful for companies and painful for the country. “It’s close to collapse. In terms of new investments – there will be none, everyone is retreating, people are being laid off at most companies this week and in the coming weeks. Budgets for 2015 are being cut by everyone.”
His remarks echo comments made by the veteran oil man and government adviser Sir Ian Wood, who last week predicted a wave of job losses in the North Sea over the next 18 months. US-based oil giant ConocoPhillips is cutting 230 out of 1,650 jobs in the UK. This month it announced a 20% reduction in its worldwide capital expenditure budget, in response to falling oil prices.
Other big oil firms are expected to make similar cuts to their drilling and exploration budgets. Research from Goldman Sachs predicted that they would need to cut capital expenditure by 30% to restore their profitability at current prices. Service providers to the industry have also been hit. Texas-based oilfield services company Schlumberger cut back its UK-based fleet of geological survey ships in December, taking an $800m loss and cutting an unspecified number of jobs.
[..] .. as a lot of production ceases to make money below $80 barrel (it’s now in the region of $63), North Sea producers and those in their supply chain now face pressure to cut costs sharply. Those costs have been rising steeply in recent years. And measured per barrel of production, they’ve been rising at an alarming rate.
400,000 people work in the industry in the UK, plus at least twice as many in supporting fields, and most of those jobs are in Scotland. Not good.
And it’s not going to stop either, as the following Bloomberg piece makes crystal clear, and for obvious reasons. Once you’ve dug a well, you have to squeeze it for all you got. Makes perfect sense to me.
But… A 42-year record in US domestic production just as prices plummet by 50%, that has to be a game changer. And then you run into problems.
Exxon Mobil Shows Why US Oil Output Rises as Prices Plunge
Crude oil production from U.S. wells is poised to approach a 42-year record next year as drillers ignore the recent decline in price pointing them in the opposite direction. U.S. energy producers plan to pump more crude in 2015 as declining equipment costs and enhanced drilling techniques more than offset the collapse in oil markets, said Troy Eckard, whose Eckard Global owns stakes in more than 260 North Dakota shale wells.
Oil companies, while trimming 2015 budgets to cope with the lowest crude prices in five years, are also shifting their focus to their most-prolific, lowest-cost fields, which means extracting more oil with fewer drilling rigs, said Goldman Sachs. Global giant Exxon Mobil, the largest U.S. energy company, will increase oil production next year by the biggest margin since 2010. [..]
“Companies that are already producing oil will continue to operate those wells because the cost of drilling them is already sunk into the ground,” said Timothy Rudderow, who manages $1.5 billion as chief investment officer at Mount Lucas Management. “But I wouldn’t want to have to be making long-term production decisions with this kind of volatility.”[..] U.S. oil production is set to reach 9.42 million barrels a day in May, which would be the highest monthly average since November 1972, according to the Energy Department..
Existing wells remain profitable even as benchmark crude futures hover near the $55-a-barrel mark because operating costs going forward are usually $25 or less, Tom Petrie, chairman of Petrie Partners said. That’s why prices that have tumbled 47% from this year’s peak on June 20 haven’t prompted any American oil producers to shut down wells, said Petrie. The average cost to operate an existing well in most parts of the U.S. “is about $20 a barrel,” Petrie said. [..] Until you dip into that and start losing money on a cash basis day in, day out, you don’t think about shutting in” wells.
Once oil companies sink cash into drilling wells, lining them with steel pipes and concrete, blasting the surrounding rocks into rubble with hydraulic fracturing, and linking them to pipeline systems, they have no incentive to scale back production, said Andrew Cosgrove, an analyst at Bloomberg. Those investments, which represent “sunk costs,” are no longer a drain on cash flow, Cosgrove said. Instead, they generate capital companies use to repay debt, fund additional drilling, pay out dividends and buy back shares, he said.
Exxon Chairman and CEO Rex Tillerson pledged in March to raise output by an annual average of 2% to 3% during the 2015-2017 period.
Things run fine at existing wells. Prices get governments in Russia and other producers into trouble, but most can catch that fall up to a point. In the US shale patch, it’s a different story, because there it’s not like once you’ve drilled a well, you can move for years to come. Saudi’s famed Ghawar field has been gushing for 60 years. Shale wells deplete 80-90% in just two years.
It’s like comparing a business that can keep durable goods in stock for years, with one that has only perishables and needs to move them ASAP. A whole different business model, but operating in the same market, and competing for the same customers.
The shale patch can exist in its present form only if it has access to nigh limitless credit, and only if prices are in the $100 or up range. Wells in the patch deplete faster than you can say POOF, and drilling new wells costs $10 million or more a piece. Without access to credit, that’s simply not going to happen.
Don’t forget, shale companies came into the ‘new lower price era’ with big debt issues already in place – borrowing well over $100 billion more annually than they earned, for at least 3 years running, and then in Q3 2014 they spent ‘$1.30 for every dollar earned selling oil and gas’ according to Bloomberg’s E&P index.
Q3 is July, August and September. On July 1, WTI traded at $106. On September 30, it still did $91. And in those days, at those prices, the industry bled $1.30 for every dollar earned. What is that ratio today? $2 spent for every $1 earned? $2.50? More? That is not a different business model, that is not a business model at all.
Existing wells, those already drilled, will be allowed to be emptied, but then it’s over. Who’s going to continue to pump millions upon millions into something that’s a guaranteed loss? Nobody. And not only that, but lenders will start calling in their loans, and issue margin calls. “The average borrowing cost for energy companies in the U.S. high-yield debt market has almost doubled to 10.43% from an all-time low of 5.68% in June”, says BoAML.
That’s about all we need to know. Shale was never a viable industry, it was all about gambling on land prices from the start. And now that wager is over, even if the players don’t get it yet. So strictly speaking my title is a tad off: we’re not drilling our way into oblivion, the drilling is about to grind to a halt. But it will still end in oblivion.
http://www.zerohedge.com/news/2014-12-21/drilling-our-way-oblivion-shale-was-about-land-gambling-cheap-debt-not-technological
I think you buy on lows...
IMO this is far better ETF than say a UCO or USO.. The value of a dollar does not seem to correlate like it might for those futures..
look at the perf..
http://stockcharts.com/freecharts/perf.php?$RIENG,ERX,$USD,$WTIC
Good chance GAP will fill too.. That make for a $77 price.
Seems those gaps always fill... Next up is near 78.
Collapse of US shale oil production can save Russian economy
Collapse of US shale oil production can save Russian economy. Russian economy and world oil prices
The nearly forgotten word from the 1990s, "sequestration," apparently returns to Russian lexicon. Reportedly, the Russian government has decided to cut government spending in the budget for the coming 2015. It was even said that public spending would be cut by a tenth, although reductions would not affect social spending.
Spokeswoman for the Russian Prime Minister, Natalia Timakova, stated that the decision to reduce costs by ten percent in 2015-2017 had not been made, at least, for the time being. However, she said, the Russian government considers different options on how to respond to new global market conditions.
Many believe that if officials suddenly deny something, it means that what they deny is actually true. However, how exactly can the government cut spending? What oil prices should Russia put in its budget, taking into account most recent statements from the United Arab Emirates, where it was said that OPEC would not reduce oil production even at $40 a barrel?
"Government spending should be cut in most extreme cases. There is no country in the world that likes doing so, - Doctor of Economics, Professor of the Kuban State University, Alexander Ishkhanov said in an interview with Pravda.Ru . - The real state of affairs in the world today is even darker than the media paint it. Russia should be happy about the fact that the cost of a barrel of oil that we have is about 12 dollars, and the cost of shale oil is around $60. If we have oversupplies of oil, it will fall a lot lower than sixty dollars per barrel. As a result, it will make production of shale oil in the US unprofitable, let alone subsidies on it.
"Therefore, it will kill shale oil production in the US, and the United States will never accept it. Possibly, the US will cut shale oil production, leaving only most profitable fields. I can not imagine the decline in oil prices lower than $55 per barrel. Most likely, oil prices will bounce back to $70, although it is hard to make any forecasts, of course," the expert said.
Get poorer as IMF says or get richer as Putin says
"The directive of the IMF in relation to Russia clearly says that one needs to tighten the course on inflation targeting, reduction of government spending, increase of taxes and strengthening fiscal rules, - deputy of the State Duma of the Russian Federation, member of the Budget and Taxes Committee, Yevgeny Fyodorov, shared his opinion with Pravda.Ru. - I understand that the directive already says what needs to be done, and it is up to our government to prescribe what articles of budget spending need to be cut under instructions from the IMF.
"One can go another way: cut interest rates that the president indicated in his three addresses, run the model of the banking system and the Central Bank and dramatically boost the national economy. One should proceed to investments, to zero inflation and prosperity of the country. It is up to us to choose what to do - get poorer as directed by the IMF or prosper as directed by Putin. This applies to decisions made by the government too," Fyodorov said.
When asked what oil price should the Russian government put in the budget against the backdrop of OPEC's intention not to cut oil production even if oil drops to $40 per barrel , Fyodorov said that the figure should be around 50 dollars per barrel. Although, by and large, the oil problem is a far-fetched one.
Oil does form budget revenue to a large extent, although this revenue is backed with government reserves. That is, in the coming years, there will be no problem as long as there are reserves. Secondly, one needs to count on domestic investment, industry and science, rather than oil. To do this, one needs to make loans cheaper. In a nutshell, one must do the things that will go contrary to what the Central Bank is doing now. In this case, Russia will not depend on oil revenues, Yevgeny Fyodorov believes.
The draft budget for 2015 includes the price of $95 per barrel. In late November, Finance Minister Anton Siluanov proposed to develop a backup budget plan for 2015-2017. Brent crude, on the basis of which the value of Russia's Urals crude is calculated, has fallen to the lowest level in the past five years. The Russian currency continues to become cheaper. The devaluation of the ruble makes Russians convert their ruble savings in dollars and euros, even though government officials tell them not to act so.
Andrei Mikhailov
Pravda.Ru
Saudi Arabia Says Hard for OPEC to Give Up Market Share
By Anthony DiPaola Dec 18, 2014 11:06 PM ET
Saudi Arabia and OPEC would find it “difficult, if not impossible” to give up market share by cutting crude production, the country’s oil minister said.
Global oil markets are experiencing “temporary” instability caused mainly by a slowdown in the world economy, Oil Minister Ali Al-Naimi said, according to comments published yesterday by the Saudi Press Agency. He reiterated the country’s intention to maintain output amid plunging prices.
“In a situation like this, it is difficult, if not impossible, that the kingdom or OPEC would carry out any action that may result in a reduction of its share in market and an increase of others’ shares,” Al-Naimi said, according to the state-run news agency. Saudi Arabia, the largest producer in OPEC, will stick to its oil policies, he said.
The Organization of Petroleum Exporting Countries decided Nov. 27 to keep its production target unchanged at 30 million barrels a day, ignoring calls from members including Venezuela to curb output to address a supply glut. Prices, which had fallen 30 percent for the year by the November meeting, plunged after the decision, now extending the drop to 46 percent.
Steady global economic expansion will resume, spurring oil demand, Al-Naimi said, leading him to be “optimistic about the future.”
Brent crude, the international benchmark, added 8 cents to $59.35 a barrel on the London-based ICE Futures Europe exchange at 11:59 a.m. Singapore time.
Other Regions
Increased supply from regions outside OPEC, where oil-production costs are higher, is affecting the market, Al-Naimi said. Saudi Arabia’s crude output has remained stable as production in other regions rose, he said.
OPEC’s decision to maintain output fanned speculation that Saudi Arabia and other members want North American shale drillers and other producers outside the group to be the first to cut production. Saudi Arabia and Iran this month cut the official price levels of their main light crude grades for sale to Asia to the lowest in at least 14 years.
Comments by Al-Naimi and other OPEC ministers this week that the group won’t hold an emergency meeting may indicate that they’re seeking to drive prices down to force other producers out of the market, said Miswin Mahesh, an analyst at Barclays Plc in London.
Gradual Drop
“It’s all about signaling,” he said by e-mail yesterday. “It almost seems like they are aiming to pull the rug from under non-OPEC suppliers, swiftly rather than slowly. A slow gradual price fall would give room for maneuver and slow the supply adjustment.”
Ministers from the United Arab Emirates and Kuwait this week also said the group wasn’t planning an emergency meeting. Saudi Arabia led a group of Arab Persian Gulf countries in opposing calls by Venezuela and Iran to cut output at the November OPEC gathering.
“How hard will Saudi work to bring prices down really fast?” Jamie Webster, a Washington-based senior director for global oil markets at IHS Inc., said on Twitter. “Answer appears to be ‘very.’”
In November, the 12-member group pumped 30.56 million barrels a day of crude, exceeding its output target for a sixth straight month, according to data compiled by Bloomberg. The group’s own forecasts show that world demand for its crude next year will fall to 28.9 million barrels a day, the lowest since 2003.
Saudi Arabia has large enough financial resources to resist the economic impact of the current oil price fluctuations, Al-Naimi said.
The decline in prices won’t last long, U.A.E. Energy Minister Suhail Al-Mazrouei, said yesterday, according to that country’s state-run news agency. OPEC won’t change its output level and isn’t planning an emergency meeting before the next scheduled gathering on June 5, he said.
This says either Gold is way overpriced.. or oil is way under prices.
Choose what you think...
I have a hard time thinking oil could be underpriced.
Yes.. IMO..
I have traded oil for over 10 years...
IMO, you will not get a better chance to make more money than at any time in your life.. It is not a commodity like silver or gold.. this is THE commodity.
No, I would not buy these USO or UCO.. because of slippage.
Focus on ERX.. average in over the next several few months. It might take as long at 24 months. But it will come.. be patient.
The American Oil Boom Won't Last Long at $65 Per Barrel
By Matthew Philips December 01, 2014
U.S. shale oil production
Photograph by Gregory Bull/AP Photo
U.S. shale oil production
So maybe OPEC does still matter. After deciding to keep its production levels unchanged at 30 million barrels a day and triggering Friday’s nearly 10 percent selloff, the cartel proved it can still cause huge swings in oil prices-even if it’s in the opposite direction that most of its members wanted to see.
Iran, Iraq, Libya, and Venezuela were all hoping for a cut of at least 1 million barrels to keep prices from going lower. Citibank (C) analysts estimate that the world is producing about 700,000 barrels a day more than total demand requires. With international oil prices below $70 for the first time since 2010, most OPEC member countries will have trouble keeping their budget deficits in check. According to an estimate by Goldman Sachs (GS) last month, only Kuwait, the UAE, and Qatar are safe below $70.
OPEC’s idea is to try to knock out U.S. shale producers by driving prices lower than they can afford. That way Saudi Arabia, the cartel’s biggest exporter, can keep its market share in the U.S. But the damage to its fellow oil exporters could be severe. In Russia, for example, the ruble is plummeting. Iraq is already having trouble fighting ISIS, and lower oil prices won’t help. Libya is in chaos. Venezuela’s economy, already on life support, depends on oil for 95 percent of its export revenue. Iran’s oil minister on Friday told Bloomberg News that he has doubts the strategy will even work: “There’s no fact or figure to say that shale production will definitely decrease,” he said.
Story: At OPEC Meeting, Saudi Arabia Stares Down Texas and North Dakota
U.S. production probably will decrease, even if it takes a while. At $65 a barrel, it’s unlikely the U.S. can keep up its record-setting pace of expanding oil production. U.S. oil has jumped from about 5 million barrels a day in 2008 to more than 9 million. Even before OPEC’s decision, forecasters were calling for a slowdown. Last May, for instance, the Energy Information Agency forecast that total U.S. production would peak just shy of 10 million barrels per day before 2020.
U.S. crude production forecast to peak in 2019
EIA
U.S. crude production forecast to peak in 2019
The question is: How soon will prices start eating into that growth? It might actually take most of next year. Money is already invested in wells that are producing right now; it’s future wells that are at risk as oil companies slash investment for the next few years. “Don’t hold your breath for a production response, since there will be a six-month lag between a drop in rigs and a slowdown in production,” writes Manuj Nikhanj, head of energy research at Investment Technology Group.
That will have a major impact in the next few years, especially since U.S. shale accounts for about 20 percent of all crude oil investment in the world. For the next several months, though, the U.S. will likely keep flooding the market with crude, which should continue to make it cheaper. There’s already talk of prices hitting $40.
Story: The Relentless Production of Shale Oil Is Breaking OPEC’s Neck
On average, the Bakken formation in North Dakota and Montana has a higher cost than some of the other big shale plays in Texas, such as the Eagle Ford and Permian. The Bakken’s biggest operator, Continental Resources (CLR), run by billionaire Harold Hamm, holds about 1.2 million acres of land in the region. That’s well above the next largest leaseholder, Exxon Mobil (XOM), which holds 845,000 acres, according to data from Bloomberg Intelligence.
Top leaseholders in the Bakken
Bloomberg Intelligence
Top leaseholders in the Bakken
The Bakken has been one of the primary engines of growth for the U.S. Since 2007, oil production there has risen from less than 200,000 barrels a day to more than 1 million. The boom happened so fast, pipeline companies didn’t have time to build enough lines to the fields. The result has been a bonanza for railroad companies, which have quickly filled the gap. For the past two years, most of the oil that has left North Dakota has done so on a train.
Bakken crude production
EIA
Bakken crude production
For Bloomberg Businessweek’s Year Ahead issue, Hamm boasted that Continental could operate at $50 a barrel. Now the world will probably get to find out if that’s true.
Ok.. this is my plan.. I do believe this is the chance of a lifetime to make a whole bunch of money. Who really believes oil should be this low? at worst reports said $40...
Taking "X" divide by 12.. Each month going to buy this one to average in and accumulate.
I say in 12 months something is going to happen to bring oil back up.
Wham... We are really gett'n into some nitty gritty..
To report errors in the reporting of the share ownership of Mr. Moore.
On 12/02/2014 the issuer alerted Mr. Moore that there was a discrepancy
in his filing made on or about 4/17/14.
Upon looking at the document and other prior 13d forms, Mr. Moore
agreed with management.
To correct this error: The amount of shares beneficially owned by
Mr Moore at the time was 5,423,373 which was stated at the end of the
filing, but was mistakenly stated as a lower amount earlier in the same
filing. This problem arose from Mr. Moores prior 13d(s) where he
mistakenly omitted a 50,000 share purchase at .03 per share made by
Jay B. Moore on 06/04/2012. All filings should show that Jay Moore
owns 648,675 shares, as Jay has not bought any more shares since that
date.
I think this has the potential to really be a winner in the next year or so.. But have we hit bottom?
Experts: Fracking Industry Likely to Crash Due to OPEC Decision to Keep Oil Production High
November 30, 2014 |
Increased production by the U.S. oil industry and a recent decision by the Organization of Petroleum Exporting Countries to maintain current levels of production could result in a crash in the domestic shale oil industry. A glut of oil, resulting in a drop in market prices, might make investment in new fracking operations unprofitable, energy industry insiders say.
The recent fall in the price of oil is only partially about supply and demand. Instead, it's about how OPEC is responding to the threat that U.S. oil production, particularly cost-intensive fracking, poses to its preeminence in global oil markets.
Oil tycoon Leonid Fedun told Bloomberg News that OPEC’s policy on crude oil production will ensure the U.S. fracking boom will eventually crash. Fedun, a billionaire board member of Lukoil, Russia’s second biggest oil producer, said OPEC's objective is “cleaning up the American marginal market,” and that when it's successful the price of oil will once again rise.
“The shale boom is on par with the dot-com boom,” said Fedun. “The strong players will remain, the weak ones will vanish.”
At a meeting in Vienna on Friday, the 12 OPEC nations agreed to keep output targets unchanged at 30 million barrels a day despite a 35% slump in prices since June. Strong competition from North American oil producers, especially U.S. shale fields, has caused a surge in supply. A decrease in global demand is also behind the falling prices.
While fracking operations in the U.S. will add about 1 million barrels of oil a day in 2014, American oil producers might become victims of their own success. Should the price of a barrel of oil, which stands near $70 a barrel today, drop any further, it could threaten financing for shale exploration and trigger rapid market consolidation. Much of the recent increase in fracking is funded with borrowed money.
"I think the lending to companies that are going to drill that kind of well is going to stop. Right now," Philip Verleger, an economist and energy industry consultant told USA Today. "There's going to be no more cash into these companies from the outside."
While it's hard to pinpoint how much it costs to produce a barrel of fracked oil in the U.S., Norwegian oil consultancy Rystad Energy says it costs an average of $62 a barrel in much of the U.S. Oil extraction in the Arctic costs $78 a barrel on average and Canada's oil sands oil costs $74 a barrel. The prices vary by region and company, so some companies may actually have much higher costs, which means they might be producing oil at a loss. By contrast, it costs less than $30 a barrel to produce oil in the Middle East.
Industry analysts are already lowering expectations for U.S. energy markets, with some forecasting oil will drop to $68 a barrel by early 2015.
Oil futures are at their lowest in four years. U.S. oil producers are only continuing to thrive at the moment because they already have previous arrangements to sell their oil at $90 or above. Fedun says those arrangements are due to expire soon, which will lead to an industry crash.
The decision by OPEC shows that rival oil-producing nations aren’t fazed by new competition from the U.S. and are willing to wait out a short-term plunge in oil prices.
“There’s a price decline. That does not mean that we should really rush and do something,” OPEC secretary general Abdallah Salem el-Badri told BBC News. “We don’t want to panic. We want to see the market, how the market behaves, because the decline of the price does not reflect a fundamental change.”
This news seems to be a mixed blessing for environmentalists concerned about the damage caused by hydraulic fracturing, with OPEC as an unlikely ally. Roughly a third of U.S. fracking operations would be too cost prohibitive to continue, say economists. Further, if oil sands production has dubious prospects, it could possibly put a halt to the Keystone XL pipeline even after congressional Republicans approve it in 2015.
However, environmentalists also note that when oil prices fall, people and businesses may consume more oil-based energy products like diesel, jet fuel and gasoline.
"If oil is high, people will burn less; that's a good a thing," Jackie Savitz, vice president for U.S. Oceans at Oceana told NPR. More importantly, Savitz said, is that the U.S. government continue to invest in the transition to renewable energy as such policies could have a real impact on future oil production and energy prices.
Seems like something is out of balance here?
Not IMO...
I think the power of profit sharing deposits will keep December strong..
Analysts: Low Oil Price A Positive For US Econ; Boost Spending
By Alex Alexandrov
WASHINGTON (MNI) - The decrease in the price of oil is a net positive for the U.S. economy, boosting consumer spending while restraining inflation, according to analysts interviewed by MNI.
At the time of writing, Brent crude was trading at $78.06 per barrel. The price of Brent was $84 per barrel at the end of October, down 25% from nearly $112 in June, according to the U.S. Energy Information Administration.
The sharp drop is the result of a convergence of a number of market forces, according to oil market analysts.
"The world economy is in a bit of a slump, but the big factor has been the sustained increase in production from the United States," Dan Kish, senior vice president for Policy at the Institute for Energy Research, told MNI. "This is a classic economic model where supply has increased but demand is static."
James Williams, president of energy consulting firm WTRG said in a phone interview that, "We have seen gasoline and diesel prices decrease, which leads to lower transportation costs."
"Hence, we should see a decline in food prices and more money in consumers' pockets," he added.
Federal Reserve officials also judge the fall in oil prices, and the knock-on effect on gasoline prices, as a positive for the economy.
According to the minutes of the October meeting of the Federal Open Market Committee, "Many participants judged that the recent significant decline in energy prices would provide a boost to consumer spending over the near term, with several of them noting that the drop in gasoline prices would benefit lower-income households in particular."
According to Chris Christopher, director of Consumer Economics at IHS, "Lower prices are helping boost spending just when the U.S. economy needs it the most."
He wrote separately in a research note published last week that, "we are forecasting 2014 holiday sales to rise 4.2% above last year." Holiday retail sales in 2013 were $579.29 billion.
"Lower- and middle-income households in general, who spend a higher proportion of income on gasoline, are likely to see significant relief from the fall in pump prices," Christopher and Doug Handler, chief U.S. economist at IHS, wrote in another research note published Tuesday.
"In part because of this distribution, most of the windfall will be spent rather than saved or used to pare down debt," they said.
All the economists interviewed by MNI said cheap oil positively affects U.S. GDP.
"When you lower the cost of energy, you spur GDP," Kish said.
"The high oil price has definitely been a drag on economic growth coming out of the recession," Williams said. However, he added a cautionary note.
"Oil and gas drilling activity is labor and capital intensive, and we are eventually going to see a slower rate of growth," Williams said.
It remains to be seen if oil prices will continue to decline and how long they will stay at such low levels.
"The key to how low oil prices will go will depend on the outcome of the upcoming OPEC meeting," Virendra Chauhan, an oil analyst with research consultancy Energy Aspects, told MNI in a phone interview.
The next meeting of the 12-member OPEC is on November 27 in Vienna, Austria.
"They know they need to cut production, but whether they can reach a collective agreement to do that remains to be seen," Chauhan said. "Some of the more cash-strapped members won't just let the price drop without a response. I suspect there will be some action, but how that works is anyone's guess."
"Oil prices are going to stay where they are," IHS' Christopher told MNI. "Prices are going to start creeping up around 2016 from their current levels because global economic growth is going to be stronger."
Oil Price Plunge Tells Morgan Stanley OPEC Action Is More Likely
By Grant Smith Nov 19, 2014 10:56 AM ET
OPEC is becoming more likely to curb oil supply when it meets next week because of the scale of this year’s price rout, according to Morgan Stanley.
Brent crude, the global benchmark, slumped 31 percent since rising to its 2014 peak on June 19. A 15-to-20 percent move normally prompts the Organization of Petroleum Exporting Countries to adjust supply limits, Adam Longson, a commodity analyst for the bank in New York, said in a report today. The firm now assigns a two-in-three chance OPEC will cut output or enforce stricter supply limits, he said, without giving prior estimates for those two scenarios.
“The market has hit price levels and timelines that are consistent with prior reductions in the quota,” he said. “We now see a greater possibility of OPEC action.”
Crude futures sank into a bear market last month amid signs leading OPEC members such as Saudi Arabia will refrain from paring a supply glut generated by booming U.S. shale output. Oil analysts surveyed by Bloomberg News this week were evenly split over whether OPEC will cut production or keep targets unchanged at next week’s conference.
Brent crude futures traded at $78.79 a barrel on the ICE Futures Europe exchange in London at 3:53 p.m. local time, having dropped to a four-year low of $76.76 on Nov. 14.
Three Scenarios
Morgan Stanley assigned an equal 33-percent likelihood that OPEC will cut its target to 29.5 million barrels a day, announce tighter compliance with the current 30-million limit, or take no action. A quota cut would spark a rally, a pledge of compliance cause a temporary “modest rally,” while no action would trigger a sell-off, Longson said. The group’s 12 members pumped 30.97 million barrels a day last month, according to data compiled by Bloomberg.
Citigroup Inc. is among banks taking the opposite view. The bank considers OPEC action on Nov. 27 a “remote possibility” because so many members are unwilling to cut their supply, and Saudi Arabia won’t implement the required reductions alone.
Even without an accord at next week’s gathering, OPEC is likely to cut production in 2015 as the group’s own forecasts show declining demand for its crude, Longson said. OPEC projects it will need to provide an average of 29.2 million barrels a day in 2015, according to its Monthly Oil Market Report on Nov. 12.
If the group refuses to pare supply at all, prices may collapse to $35 or $40 a barrel, Morgan Stanley’s Longson predicted.
My gut feeling is that oil has bottomed...
Falling Oil Prices Make Fracking Less Lucrative
November 04, 2014 3:23 AM ET Jeff Brady 2010
Oil prices are down than more than 25 percent since June and are staying low for now. Drivers may appreciate that, but for oil companies, it's making some of the most controversial methods of producing oil less profitable — and in a few cases, unprofitable.
Most of the world's oil is selling for about $80 to $85 a barrel now. But not all oil is created equal. In the Middle East, it's cheaper to produce, at a cost of less than $30 a barrel on average, according to the Norwegian firm Rystad Energy.
But in the Arctic, producing a barrel costs $78 on average. From Canada's oil sands, it's an average of $74 a barrel. And because those are averages, some companies have costs that are higher — which means there could be drillers currently producing crude at a loss.
Here in the U.S., the oil drilling boom is due largely to technologies like hydraulic fracturing, or fracking, used to force oil from shale formations deep underground. Producing this oil, Rystad figures, costs an average of $62 a barrel.
"What is really interesting for the U.S. drillers and producers is how long they are going to continue the high activity levels that they have, now that prices are going down," says Per Magnus Nysveen, head of analysis at Rystad.
Already, some companies are rethinking their plans.
Saudi Arabia's oil minister, Ali Al-Naimi, shown in Kuwait last month, has played down the drop in oil prices. The country continues to pump oil at high levels, saying it wants to preserve its market share. But this has also contributed to a 25 percent drop in oil prices since June.
U.S. Secretary of State John Kerry speaks with Saudi King Abdullah bin Abdul Aziz al-Saud as the Saudi ambassador to the United States, Adel al-Jubeir, listens before a meeting at the Royal Palace in Jiddah, Saudi Arabia, on Sept. 11.
"We will drill fewer wells in a lower-price environment," says Steven Pruett, president and chief executive officer of Elevation Resources in Midland, Texas. With less profit, Pruett says, there's less money to invest in future prospects.
Workers drill for oil in the Bakken shale formation outside Watford City, N.D., an area experiencing an oil boom.
But he also says this isn't a crisis situation for most companies.
"We do not foresee a scenario where prices get so low that we can't cover the cash cost of lifting the barrel," says Pruett. If prices collapsed to 2008 levels, when oil was fetching less than $35 dollars a barrel, drillers might be forced to take more drastic steps like shutting down production. But few are predicting crude will fall that much.
Despite The Dip, Exploration Goes On
You might think a slowdown would be good news to environmental groups concerned about the environmental damage associated with drilling for and burning fossil fuels. But it's more complicated than that.
"If oil is high people will burn less — that's a good a thing," says Jackie Savitz, vice president for U.S. Oceans at Oceana. And if oil prices are low, she says, then companies might drill less, and she thinks that could be good, too.
More important, she says, is that the government create policies that speed the country's transition to renewable energy.
Such policies may affect production in the future, but for now, it's the market that determines if drilling will happen. And the lure of billions of dollars in future profits is hard for energy companies to ignore. Even with lower prices, they are still exploring high-cost environments like the Arctic.
There are a few reasons why companies can justify the cost. Oil prices may rise again, for example, and costs tend to go down after new technologies and forms of production have been around awhile. On top of that, global crude demand continues to rise.
"And that's the reason why companies are making these investments, because they're long-term investments in projects that are expected to provide very large quantities of oil and natural gas for the U.S. economy and for the global economy," says Erik Milito, director of Upstream and Industry Operations for the American Petroleum Institute.
Still, U.S. companies have to keep a close eye on their competitors abroad that can produce oil much more cheaply. That's why, when OPEC meets later this month, a lot of people in the oil business will be watching to see if the cartel will push prices up or down.
Too me... it looks like we go to 94 or 95...
Well... Starting to pay now...
OK.. Got these i's dotted and t's crosses...
Mark that off the complaint list.
Let's look at what changed...