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OPEC Hints It May Act to Stop Oil Price Slide
Oil Price 09/18/2014
Oil prices may have gone as low as OPEC is willing to tolerate.
After several months of price declines, the secretary-general of the Organization of Petroleum Exporting Countries (OPEC) says the group may cut its production target for 2015 because of an abundance of supply.
The oil cartel accounts for around 40 percent of the world’s oil supply, and although its influence has diminished in recent years as oil output has risen — from the United States in particular — the organization can still significantly impact the price of crude if it wants to.
With weak demand and a flood of American oil hitting the markets, prices have dropped to their lowest levels in over two years.
And it appears that the price slide has gone too far for OPEC. OPEC’s Secretary-General Abdalla El-Badri said the group could slash its production target — the collective output of the 12-member group — to 29.5 million barrels per day (bpd) in 2015, down 500,000 bpd from its previous target.
“Our production will be maybe 29.5 million barrels per day in 2015, not 30 million barrels,” at OPEC headquarters in Vienna on Sept. 16. But he added, “This is an outlook, not a decision.”
WTI and Brent prices have each dropped about 13 percent since June. Investors have been bearish on crude due to weak demand and a global supply that is expected to continue to climb. Saudi Arabia didn’t make much news when it cut back by 400,000 bpd in August.
But El-Badri’s statement hinting at an official revision in OPEC’s production target woke up oil traders. The two benchmarks clawed back immediately after his comments — WTI gained almost $2 to just below $95 per barrel in intraday trading, or a more than 2 percent increase. Brent jumped by 1.22 percent, closing in on the $100 per barrel mark.
That’s because the statement is the first indication in quite some time that OPEC would officially move to stop a continued slide in prices.
[Hear: Peak Oil Update: Delayed but Not Forgotten!]
What is more intriguing is the exact price level that triggered concern on behalf of OPEC’s leaders. Once upon a time, oil trading around $100 per barrel was extremely expensive. But OPEC has become used to Brent crude trading well above those levels, which it has done almost constantly since early 2011.
Why have OPEC’s expectations changed? Part of the reason is that the marginal cost of producing a barrel of oil is rising. As easy-to-get oil depletes, oil companies are left with more expensive oil, so the cost of production rises.
But for OPEC, it has more to do with balancing their budgets. The biggest change since the era of lower prices was the Arab Spring, which led to substantial unrest. In response, oil producing countries in the Middle East decided to significantly increase social spending in order to keep their populaces happy. Now, need a much higher price to balance their books.
Before that point — throughout most of 2010, for example – Brent was only selling for between $70 and $85 per barrel. That is around 15 to 30 percent lower than today’s prices. But at the time, OPEC was entirely content with those levels. They repeatedly left the group’s production target steady, even during what seemed like a period of relatively cheap prices (by today’s standards).
And that is just it. Today, $100 per barrel is considered “cheap.” But four years ago, the group aimed for oil to stay between $70 and $80 per barrel. When Brent hit $82, Kuwait’s oil minister said that was “fantastic.”
That means there could be a permanent floor beneath oil prices at somewhere in the mid-$90 per barrel range. OPEC’s members cannot sustain prices any lower than that, so it will slash production in order to avoid ever going back to the days of oil selling between $70 and $80 per barrel.
By Nick Cunningham of Oilprice.com
MATERIAL FACT ( English Translation )
SALE OF IPEX LAB - UPDATES ON THE STRATEGIC
DIVESTMENT PROGRAM
Rio de Janeiro, September 18th, 2014 - HRT Participações em Petróleo S.A. (the "Company" or "HRT") (BM&FBOVESPA: HRTP3, TSX-V: HRP), continuing with the initiatives to divest non-strategic assets and reduce corporate costs, which began in 2013, hereby announces that has entered, on September 17th, into a Purchase and Sale Agreement with Eurofins Scientific Group ("Eurofins"), to sell its subsidiary Integrated Petroleum Expertise Company - Serviços em Petróleo Ltda ("IPEX").
The purchase and sale transaction between HRT and Innolab do Brasil Ltda ("Innolab"), Brazilian subsidiary of Eurofins, is expected to be concluded within ten days and is conditioned on compliance with certain contractual requirements.
In addition to the transfer of HRT’s entire interest in the capital stock of IPEX to Innolab, the transaction also involves the transfer of all IPEX’s equipment, agreements and employees.
"We are satisfied with the execution of this agreement, given that the sale of IPEX will reduce corporate costs related to laboratory maintenance. It also continues the program, initiated in 2013, to divest non-core assets, enabling HRT to become increasingly focused on its core business, pursuing new opportunities to invest in production assets, as well as prioritizing new partnerships in exploration assets," declared Milton Franke, HRT’s CEO.
Eurofins is a global leader in bio-analytical services, offering a wide range of tests and trials for food, pharmaceuticals and agroscience, as well as environmental analyses. Eurofins has over 200 laboratories in more than 36 countries.
Clique here for the Material Fact.
For additional information, please contact HRT`s Investor Relations Department.
With "new opportunities", Itaú BBA raises target price HRT
RIO DE JANEIRO -The influential financial InfoMoney electronic magazine published today the report Itaú BBA, the investment arm of Brazil's largest private bank, which raised its recommendation of HRT (HRTP3). In addition, a new target price was established for the company. In a report signed by analysts Paula Kovarsky, Diego Mendes and Pablo Castelo, "Oil, Gas & Petrochemicals," team raised the HRT shares to "market perform" and established new target price, which rose from 12 reais in 2014 to 13 reais, 2015 the bank justifies the update is related to the ability of the company to cut costs and build a more solid cash position, allowing the company to find new opportunities. Since February, HRT has as substantial shareholder businessman Nelson Tanure that put a focus on the production of mature oil fields, leaving the farm which is very costly for a medium sized company.
Paulo Roberto Cunha BLACK GOLD BLOG
That was a different situation unique to HRT due to it's cash position and the fact they were buying a producing oil property. HRT also paid the loan off before it was due. Call HRT's IR for an explanation.
011 55 21 2105-9700 and ask for Tainah.
At the moment HRT has no debts, but with it's current oil production and an increase in it's share of Polvo production when it obtains the complete ownership of the field it will be able to obtain even more financing from institutions.
dias55:
You are right about ANP having approved the HRT Rosneft deal. According to IR there is still a lot of work having to be done before Rosneft starts drilling.
I was also told they are looking at several properties before committing themselves to purchase any of them. As a production company they are able to borrow money, when they were strictly an exploration company they could not.
They hope to be announcing a Namibian farmin agreement by the end of this year or early next year with one of the many companies they are having meetings with.
HRT along with my other oil stocks have been declining lately. Some say it is caused by the poor economic situation in the EU. I have been taking advantage of the situation by adding to my core holdings.
The ANP approval process is ridiculously slow , once the new deal between Rosneft and HRT regarding Solimoes Basin plus the purchased of the remaining 40% in Polvo is approved. I would expect to see HRT recover in price. If the two morons on SH would lay off constantly calling HRT a P.O.S and saying they are gradually selling their shares this would help. Their negativity is certainly not helping the share price, and working against their best interests as sellers of HRT shares.
It is not unusual for buyers to try to drive a share down but not sellers.
Big Oil and the Real Politics of America
"ExxonMobil to become Rosneft's strategic partner instead of BP."
That was the headline back in 2011. It looks odd today, this announcement of a marriage between Exxon, the US's largest oil company, and Rosneft, Russia's oil behemoth. You might even think, considering all the anti-Russian rhetoric now spewing out of the Obama administration, that Washington might intervene to block or hold up the project.
No way. The economics of oil always trumps politics. And Exxon gets what Exxon wants—regardless of what even the president of the United States may think…
To BP's chagrin, three years ago ExxonMobil beat out the British heavyweight in a multibillion-dollar courtship, signing an agreement with Rosneft to explore for oil in the Russian portions of the Arctic Ocean. ExxonMobil's offer was just too tasty to refuse. The company agreed to give Rosneft options in its hydrocarbon assets in the Gulf of Mexico and Texas. BP, which had merely offered a stock swap, couldn't match it.
Vladimir Putin was impressed with the scale of the investment. "It's scary to utter such huge figures," he said at the time. (Quite a statement, coming from a man believed by many to be the richest human on the planet.)
Initially, Putin estimated the deal to be worth $200-300 billion. But after adding in the cost of infrastructure, construction of facilities, and overall development eventually needed, he upped his guess to $500 billion. While those numbers are definitely sensationalized, there's no question that this is an exploration and production (E&P) undertaking of historic proportions. Understandably so, because the stakes are high. It's estimated that there are over 200 billion barrels of oil equivalent (boe) in just the Russian portion of the Arctic.
In 2013, ExxonMobil and Rosneft advanced their strategic agreement by announcing: the formation of joint ventures for the Kara Sea and Black Sea projects; laying out the foundations for joint ventures in seven additional exploration licenses in the Arctic and West Siberia; and the next phase of planning for a liquefied natural gas (LNG) development in the Russian far east. With regard to the Kara and Black Sea projects, Rosneft will own 66.67% and ExxonMobil will own 33.33% of the JV companies. The estimated exploration cost for the two projects was $3.2 billion, most of which ExxonMobil will finance.
Fast forward to the present, and now Rosneft and ExxonMobil have begun drilling the Kara Sea—with estimated reserves (according to Rosneft CEO Igor Sechin) equal to the Gulf of Mexico's.
That's in the middle of an international sanctions war with Russia. Does ExxonMobil care? Not in the slightest. Former Exxon CEO Lee Raymond summarized it best by saying, "I'm not a US company, and I don't make decisions based on what's good for the US," when asked if his company was planning on building more refineries to protect the US against possible gasoline shortages.
ExxonMobil's decisions are designed to maximize shareholder wealth. Sometimes this complements US governmental objectives, but sometimes it goes totally against them. Doesn't matter. As long as ExxonMobil needs to replenish its reserves—which is always—it will operate wherever it pleases (or lobby the government until it can). ExxonMobil runs its own brand of foreign policy.
THE FDA ( the US Food and Drug Administration Dept. ) is bought and paid for by Monsanto. This dept. allows growth hormones like rBST to be injected in cows every two weeks to increase milk production by 25%, this hormone is band in 27 countries because of it's link to the creation of cancer. Because of this the importation of American milk and cheese is not allowed in Canada and Europe.
Canadian cattle are fed grass and hay, for the most part US cattle are fed corn because it is so cheap, but this not a natural food for cattle and is hard on their digestive system, subsequently the cattle become sick from eating corn so they are fed antibiotics. I could go on and on about other foods like the bad effects on people from eating GMO crops, corn being the main one.
Because of what is allowed by the FDA the instances of cancer is higher in the US and the life expectance has been falling relative to other Western Countries. If you do a search on the internet you will find it very shocking what the FDA allows to take place in the American food industry. AS THEY SAY ONLY IN AMERICA!!
Canadians need not worry about their food supply because Canada along with many other countries has band a list of things that they deem harmful to be use to increase the food supply to the determent of the health of it's citizens, which the FDA allows to be used in the US.
Offshore Drilling in costs in Brazil
Quote from Offshore Magazine 01/01/2007
“Due to the complexity of the subsalt play, there are many challenges to overcome: the salt layer can be mechanically unstable, wells can lose circulation, and can encounter lava flows beneath the salt in the rift section or volcanic flows that pre-date the formation of the saltcap. Thus, drilling is very expensive. A normal well costs $35 million. Subsalt well costs will rise to between $100 million to $150 million, but it is worth it, because ‘the prize’ will be much greater.” Since these costs are based on over 7 years ago HRT's estimated costs would be considered very reasonable. Considering the increase in costs since then.
No more $300 lunches at IPEX's parent company HRT has made sure of that.
Ogo your other statements are unwarranted at this time unless they are proven.
Brazil has some of the best security regulations in the world, where else would you get to vote on a R/S and be made aware of anyone, corporation or institution holding 5% or more of a company's shares.
HRT evaluates funding for investment
05/09/2014 at 05:00
HRT evaluates funding for investment
Share:
By André Ramalho | Do Rio
HRT Oil signaled that can go to the market to raise funds to invest in the project that aims to stretch the life of the Polvo field in the Campos Basin. The company's president, Milton Franke, said the oil company is considering funding to fund planned investments in the first perforations, which should require, initially, about $ 60 million.
The idea of HRT is drilling, at first, two producing wells in 2015 According to Franke, the first well is expected to cost $ 35 million. Investment already planned for the second is $ 25 million.
The company's plan is to dedicate the next few months, the first intervention in the area, such as the installation of subsea equipment. The commencement of drilling is planned for the beginning of 2015 Initially, the company plans to re-enter abandoned wells.
The financing plan for the recovery project Octopus, he said, is still being discussed. The company ended the first quarter with free cash of R $ 365 million position. The oil, however, still need to shell out the amount for the purchase of share of Maersk, 40% in the field. The company does not comment on the amounts involved in the negotiation, but, for comparison, 60% of bought cost BP $ 135 million in December last year.
The company's plans also include the intention to use part of the cash to purchase mature assets already in production in Brazil. HRT evaluates camps on land or at sea, preferably in the Campos Basin.
The Polvo field, the only active production of oil, is the main source of cash for the company. This month, the company expects to sell the fourth load of oil produced in the area, operated by the company since the beginning of the year. The expectation is to sell 550,000 barrels. In June, the oil had already shipped 595,000 barrels, which earned him a net income of R $ 138 million in the second quarter.
The lifespan of Octopus, according to Franke, should run out in two to three years. With the recovery project, the goal is to keep the production on the field over 10 thousand barrels per day and extend the life of the area for another ten or fifteen years. According to HRT, Octopus produced on average 10,400 bpd in the second quarter, down 14% YoY.
Black Gold is Set to Soar
Profiting From the Rising Cost of Oil
By Chad Shoop, Editor of Pure Income
All the talk about oil these days would lead you to suspect that we are overflowing in abundance, with enough of the black gold lying around the U.S. to significantly reduce our dependence on Middle Eastern and European oil. This happy talk has even sparked discussion of oil independence for Americans — but this couldn’t be farther from the truth.
Indeed, U.S. oil production is on the rise and very well may continue that way into the latter part of this decade, but it is still far short of providing enough oil for the U.S. to become independent of foreign supplies.
While analysts and the talking heads continue to tout American oil independence, the everyday people of America are missing out on a key fact. One that tells us much more about the direction of oil prices, instead of filling your dreams with false hopes …
Oil discoveries have fallen off a cliff. In 2013, the world had one of its lowest years on record for proven oil discoveries. We discovered only half as much oil as we consumed — and this downward trend is on pace to continue this year into next as companies focus on building cash flows instead of exploration.
There is no doubt this is a product of the environment we’re in — both skepticism in the stock market and the rising price of oil.
Since the recession, investors who have been hesitant to invest in the shaky stock market for the long haul have focused on short-term rewards — increasing earnings, growing cash flows and improving balance sheets, leaving behind more long-term prospects like oil reserves.
But the other key reason exploration is declining is because of the price of oil.
In order for companies to continue to scour the globe in search of new reserves, they need the price of oil significantly higher than it is exchanging hands at today — and therein lies our profit opportunity.
The Growing Cost of Deeper Oil
The global oil market is currently sitting pretty with a surplus of reserves, but given the rate of consumption, this can quickly change. The current pace of production is less than half of consumption growth — presenting us with a growing gap that chips away from our global reserves each year.
Given the situation, America and the world will eventually have to rely on oil that comes from new discoveries — the same discoveries that have hit record lows lately. And these newfound sources are likely to be unconventional shale oil, oil sands or even ultra-deep water wells.
That means it is becoming increasingly more expensive to find and produce oil each year. Jeff Opdyke, our Investment Director, has been asserting this for years to his Sovereign Investor monthly subscribers — even as the pundits were claiming oil would fall to $50 a barrel. Jeff argues against cheap oil because of the cost of drilling in these increasingly expensive resources — some of which are 6,000 feet below sea level and cost over half a billion dollars to build and operate. These extensive costs have caused oil companies to hesitate about spending money, but as our reserves continue to deplete, they will soon have no choice but to spend these exploration costs in order to meet global demand – meaning the price of oil is destined to climb higher.
Wall Street knows this. It’s why they have seemingly put a floor in the price of oil. Granted, this floor can be breached on a temporary basis, but it will only last a day or two before the price of oil rallies again. This has held true for three and a half years now — and we can expect it to stay true for many years to come as oil continues to tear away from that floor.
With the price of Brent crude sitting around $102, I am confident that we will see a bounce higher any day now.
A Little Bit of Everything
And going forward, I think we will see oil test the $150 price mark more often than the $100 floor, with the occasional spikes towards $200 as the oil discovery cliff catches up to consumption growth.
Even the U.S. Energy Information Administration (EIA) believes the risk of oil is to the upside. They have a low-range price of oil at $75 by 2040. Its high range … is $237 per barrel. Considering the price of oil was $110 when they made these determinations, this range represents a 30% swing to the downside or a 110% curve to the upside — the type of risk/reward I like to find.
While I ordinarily prefer to pick stocks as opposed to exchange-traded funds (ETF), I believe this is an opportunity that will benefit the entire industry, so you don’t necessarily have to try and pick a winner. The easiest way to ride this bounce higher is by investing in the iShares U.S. Oil and Gas Exploration and Production ETF (NYSE: IEO).
I know this ETF also has some exposure to the gas side, but all of the large players these days have exposure to that. The point is, IEO gives you exposure to some of the largest players in the oil business — ConocoPhillips, Phillips 66, Marathon Oil and Anadarko Petroleum, just to name a few —so you can feel secure that you as an investor are getting diversified exposure to a variety of different companies.
This ETF dropped about 10% alongside the fall in the price of oil, but rebounded quickly. Instead of deterring you, let this speak to the fact that this sort of investment follows wherever oil is going.
Which means that, as the price of oil rallies from its $100 floor, IEO will surge higher as well.
Regards,
Chad Shoop
Editor, Pure Income
Special Report of Valor Economico (Real Time)
SPECIAL: Milton Franke, HRT, says the company is today 'pacified'
Claudia Schüffner
From Rio
A year and three months after the departure of the founder Márcio Mello presidency of HRT, the company wants to show that it is leaner and, say, humble under the direction of Milton Franke. The grandiose plans to find very light oil in the Amazon and equal volumes of the pre-salt in Namibia led to the intention of using the cash of R $ 365 million to buy mature assets already in production. "Our strategy, when we had to rethink HRT, was to be a more balanced company with exploration and production," explains Franke. "HRT today is a buyer of assets of production while seeking partners in Africa".
For acquisitions in Brazil, the target fields are on land or at sea, preferably in the Campos Basin (RJ), to make operational synergies. Despite the coveted license operator A in Brazil, which enables to operate in deep waters, HRT does not care to be the new area operator. For anyone not understanding the change in direction, Franke makes a point of stressing that HRT "has appetite but not as strong" as before.
While not go shopping, HRT has plans to extend the life of your single field into production, which is already mature and whose reserves must be exhausted in two years. Other reservoirs were identified in the concession area and the plan now is to drill new production wells. To reduce spending, the initial idea is to access a well drilled five years ago. Estimated that HRT may lower spending on drilling for $ 25 million, with an estimated cost of $ 5 million for each intervention in the wells, which increase the yield. Drilling a well can cost in the region of $ 60 million to $ 100 million.
"This program already exists and is a success. Polvo [the Polvo field in theCampos Basin] have extended life, since other reserves have been identified. This was the way [to increase the productive life of the field] adopted in the North Sea and certainly serves to Brazil, "he says.
Eduardo Jacome, director of management and investor relations HRT, do the math and comes to a gross revenue of R $ 2.5 billion when he mentions the opportunities that HRT has to grow to achieve triple current production to the track 30 barrels. That will only come, obviously, with the acquisition of assets that enable this level of production.
HRT operates the Polvo field seven months ago and, thanks to him, produced 10,093 barrels of oil per day in June, which guaranteed a net income of R $ 138 million in the second quarter. The company made??a profit of £ 11 million in the interval when the same quarter last year posted a loss of £ 645.2 million. This removed some of the pressure of being an exploitative company much risk, high costs and no production.
The company is awaiting approval from the National Petroleum Agency (ANP) to complete the acquisition of 40% of Maersk in Polvo field, which will make the owner of 100%. The purchase price has not been disclosed, but will be known when the deal is completed, according to Chief Financial Officer Ricardo Dourado Bottas. For comparison, 60% of bought cost BP $ 135 million in December last year.
With an almost zen style compared to the exuberance of his predecessor, Franke explains the projects that, in his words, are making the HRT a company more "hands on" lean and "pacified", since he assumed the presidency on 13 May 2013 Since then, the shares were up 71%.
One of economies Franke mention is the removal of the car and driver for the company's president. The luxurious floor in a building now occupied high standard of beachfront on Atlantic Avenue in Copacabana, will be exchanged for a new office in Botafogo, also in the South Zone of Rio, but that can be considered a more modest neighborhood compared with the current site. Meetings there came to be in Portuguese, another change.
The number of employees, which was600 in 2011, now stands at 150 The President said that will be even less, somewhere between 40-60, as part of moves to the payroll of the Russian Rosneft, which took over operation of areas in the Solimões Basin, the Amazon after buying 6% that gave him control, going on to have 51% of HRT O & G Exploration and Production of Oil. The idea is to keep enough to continue operating Polvo field and keep the blocks in Namibia, the latter in charge of the Houston-based staff. For the campaign in Africa, after drilling three wells, only one of which had traces of oil, the company continues to seek partners to share investments and keep ra concession.
Also for sale, Ipex today has only 8 of the 28 employees before. This company has a laboratory for chemical analysis and was created by Marcio Mello to provide geological, geophysical and geochemical services. The Ipex had several oil companies as clients, but they were when it was incorporated by HRT, which was a competitor.
Franke lists the critical moments experienced last year to say that understands the turmoil, but now the time is another. Remember that there were conflicts on the board, supervisory board, and between shareholders and administrators, not to mention dissatisfied with the performance of the company investors who came to have all councilors resigning after a tense meeting on the eve of last Christmas. Were also resolved all pending litigation involving the former directors and officers.
The calmer weather was intended to Nelson Tanure, the controversial businessman who became the largest individual shareholder company, with 19.25% of the capital, after the American Discovery Fund, one of the original shareholders sold all shares that had the company, performing a millionaire injury. Tanure invited to the council's former director-general of the ANP, Haroldo Lima, and former Senator PMDB-MG and former communications minister under Lula, Helio Costa, the directors of the highest profile board of HRT.
HRT, PetroReconcavo May Team Up to Buy Petrobras Fields: Exame
2014-08-28 16:36:25.908 GMT
By Karen Eeuwens
Aug. 28 (Bloomberg) -- Nelson Tanure, HRT’s biggest
shareholder, and Daniel Dantas, shareholder of PetroReconcavo,
are in talks to buy oil fields Petrobras is selling in Bahia
state, Exame magazine reports, without saying where it got the
information.
* Cos. considering making joint bids for mature fields, where
production is slowing
* HRT didn’t comment, according to Exame; PetroReconcavo
couldn’t be reached for comment, Exame says
}
To contact the reporter on this story:
Karen Eeuwens in Sao Paulo at +55-11-2395-9064 or
keeuwens@bloomberg.net
To contact the editor responsible for this story:
Giulia Camillo at +55-11-2395-9177 or
gcamillo@bloomberg.net
Thoughts
"Success in business is the result of hard work, dedication, determination, enthusiasm, courage and fearlessness – and in its path it glosses over deceptions and frustrations. There are those who deal only with the vision of glamour, but certainly, in my opinion, of every five small, medium or large companies that emerge, only one – just one – achieves true success. For this reason, I am an admirer of John Marks Templeton (USA) for whom in short the best deal that exists in the market is the one that the market considers the worst."
"The future is almost always a cause for celebration, because yesterday is no longer and tomorrow is the natural symbol of hope, the driving force of our projection of development. I believe that all of us in one way or another want to build a future of work, progress, health, peace and happiness. It is the greatest dream of humanity. "
"Our country, with the size of its economy, its territory, its population, its geography and natural resources, such as mining and oil, with its agribusiness and industrial capacity, with its geopolitical and environmental importance, obviously stands out as one of the major world powers. However, it still requires key reforms, such as tax reform, to meet its infrastructure and development needs. This journey is viscerally linked to the education of our population."
Nelson Tanure
HRT Ownership Breakdown
Last Update on August 22, 2014
Shareholders Common Shares Participation
JG Petrochem Participações Ltda.... 5,725,171.. 19.25%
Aventti Strategic Partners... 1,911,190.. 6.42%
Morgan Stanley ... 1,911,190.. 5.67%
Other Shareholders ... 20,426,269.. 68.66%
Total ...29,748,450.. 100.00%
Big Oil has been very successful at developing sophisticated technology to access oil in some pretty remote areas.
Consider the technological skill necessary to drill several miles below the seabed at staggering depths, or the processing equipment needed to transform viscous bitumen into usable fuel – these are impressive feats of engineering and science.
But after years of spending billions of dollars on these challenges, the world’s largest oil companies are running into a serious problem: Many of their projects are not profitable and won’t be anytime soon.
The Carbon Tracker Initiative (CTI) has put together an impressive report that outlines the biggest and riskiest oil projects around the world being pursued by the oil majors. Many of them will not even break even unless oil prices rise by $30 to $40 dollars per barrel above the current price, which is around $100.
So, why then, are they putting shareholders’ money at risk by chasing such costly projects?
CTI’s research identified a list of the costliest projects being pursued by the oil majors, which can be loosely grouped into five regions around the world. These projects are unprofitable, yet oil companies continue to pour money into them.
1. Canadian Oil Sands. Canada holds 173.6 billion barrels of oil, the third largest total in the world. But 98 percent of those reserves (170 billion barrels) are in the form of heavy bitumen, or oil sands. Oil sands are a semi-solid mixture of sand and viscous petroleum, and working with them is more similar to open-pit mining than traditional oil drilling. Once the oil sands are extracted, they need to be upgraded and refined in order for the oil to be able to flow through a pipeline. The effort means that Canada’s oil sands are some of the most expensive projects — not to mention dirtiest — in the world. The CTI report says that the world’s six most expensive projects being pursued by Big Oil are all located in Alberta’s oil sands. ConocoPhillips’ Foster Creek project tops the list, with a whopping breakeven price of $159 per barrel.
2. Offshore West Africa. After the oil sands, a slew of projects under consideration off the coast of Nigeria and the Ivory Coast are next in line as the world’s most expensive. They are in deep water (up to 5,000 feet) and ultra-deepwater (deeper than 5,000 feet). As such, they are expensive. But it’s more than just technical challenges that put a high price on West African drilling. Security threats, from piracy to sabotage, add additional layers of expense. French oil giant Total is considering drilling a well near the Ivory Coast, but it has a breakeven price of $127 per barrel. ExxonMobil and Shell are contemplating spending billions in Nigerian waters, with similar cost figures.
3. Offshore Brazil. Brazil offers a much safer environment to work in, with little threat from gangs or pirates. But Brazil’s pre-salt is one of the most technically challenging areas in which to operate. The oil is located beneath a thick layer of salt, which itself is located thousands of feet below the surface of the sea. Brazilian state-owned oil company Petrobras is doing much of the heavy lifting, but BP and Shell are also looking at pouring money into Brazilian ultra-deepwater projects, with breakeven prices above $120 per barrel.
4. The Arctic. The far north offers oil companies a different set of challenges than most other places. A lack of infrastructure, severe cold, sea ice, and harsh storms can hinder development and inflate costs. Royal Dutch Shell found this out the hard way after spending several years and nearly $6 billion to drill in the Arctic, with little success. CTI assessed other Arctic projects, such as BP’s Liberty prospect, and Chevron and ConocoPhillips’ Amauligak project, each in the Beaufort Sea. Both projects have breakeven prices between $109 and $113 per barrel.
5. Gulf of Mexico. In much more hospitable climes, like the Gulf of Mexico, companies can drill for oil profitably. The Gulf of Mexico accounts for 16 percent of total oil production in the United States. But costs are rising there, and not all projects are profitable, given current price levels. Shell made a 2013 discovery of oil near the Yucatan, but it was located in the “lower tertiary” reservoirs buried extra deep. As other wells mature, the lower tertiary offers one of the last frontiers for oil exploration. But drilling that deep is expensive, and Shell’s project has a breakeven price hovering around $99 per barrel.
By. Nick Cunningham of Oilprice.com
Rosneft Feels Bite of Sanctions, Requests Kremlin’s Help
http://oilprice.com/Energy/Energy-General/Rosneft-Feels-Bite-of-Sanctions-Requests-Kremlins-Help.html
Robnhood:
Gusgo sure has a lot of aliases buggati, GusGold and now bankcapital
He sure can carry on quite a conversation with himself on HRT's SH discussion board. You and his aliases can take credit for making the site what it is today. As sad as that is.
Oil ‘super spike’ is coming: Dan Dicker
By Pras Subramanian
August 20, 2014 7:56 AM
Yahoo Finance
Another bad day for traders bullish on energy as WTI crude oil slid 2%, hitting its lowest level since January. Across the pond Brent crude traded at its lowest level in almost 14th months.
From the heady days of mid-2008 when it traded at nearly $150 a barrel, crude oil has had quite a rocky ride. After sliding down to the $30s and rallying back around $120, crude has settled in around the $90 to $110 range for the past two years.
Commodity traders and analysts have wondered why oil hasn’t gone higher. Geopolitical tensions abound across the world; the Middle East seemingly hasn’t been this unstable in years.
In fact, some believe the commodity could actually go lower. Blake Morrow posits that with North American production rising, vehicles becoming more efficient, and crude oil’s inability to rally with global equities, all signs point to a bearish future for oil.
Dan Dicker, president of MercBloc and author of Oil’s Endless Bid says much has changed in the past few years, other factors also explain why oil has stagnated recently:
•Investment banks, particularly Morgan Stanley, Goldman Sachs, and JPMorgan have not only left oil trading but have also abandoned the oil marketing business, which used to bring a steady supply of new players to the energy market.
•Individual oil traders (including Dicker himself) have disappeared as well. Dicker speculates around 3,000 traders have left the industry.
•Remaining funds are trend and algorithmic firms with long-term positions already established.
•The big alpha players remaining in the oil trading business are physical commodity, private firms like Glencore, Vitol, and Trifugura among others.
Dicker believes these changes have all but killed immediate speculative activity, which has been good for consumers in the short term, but will be bad for the prospects of cheaper oil in the long term. Without the liquidity provided by these players in the energy market, a crude oil ‘super-spike’ could be in the cards.
The demise of offshore oil drilling could also be a catalyst in Dicker’s mind, not to mention oil supplies going offline in places like Libya, and decreasing in countries like Iran and Iraq. This is leading to an upcoming oil supply crisis he says, and ultimately with liquidity not what it once was, and with the cost of oil now making it prohibitive to develop new sources, ultimately the fundamentals will have to matter again.
“When you have an oil price that’s hanging around $95, you won't see a $10 spike, you’ll see a $40 spike, because that’s what will be necessary to get these guys (oil exploration and production companies) ginned up” in order to produce more crude supply.
Click on link to watch video.
http://finance.yahoo.com/news/oil--super-spike--is-coming--dan-dicker-194657769.html
RE:RE:RE:RE:RE:RE:HRT Is Going To DA MOON
Hood,
This is the only known picture of northsun..the moderator on IHUB
http://www.pakistanisinkuwait.net/Gallery/data/media/10/strange_babybigeyes3.jpg
This is how sick HRT's SH discussion board has become, it has been completely destroyed by robnhood and. buggati aka GusGold. What a shame that relevant discussion about HRt cannot take place on SH because of these two individuals.
http://www.stockhouse.com/companies/bullboard/v.hrp/hrt-participacoes-em-petroleo-sa?postid=22863187
Robnhood and baggati aka GusGold are having a nervous breakdown on HRT's SH discussion board.
All of the above would like to create havoc on IH like they have done on SH.
ClipDapper:
You have describe Robn very well, he/she has done a lot of damage to the integrity of SH's HRT discussion board. Making it impossible to engage in normal dialogue on the site.
Robn is trying to do the same on IH.
ClipDipper:
For some reason you have become the center of attention on SH.
http://www.stockhouse.com/companies/bullboard/v.hrp/hrt-participacoes-em-petroleo-sa?postid=22857962
http://www.stockhouse.com/companies/bullboard/v.hrp/hrt-participacoes-em-petroleo-sa?postid=22859038
http://www.stockhouse.com/companies/bullboard/v.hrp/hrt-participacoes-em-petroleo-sa?postid=22859518
Robinhood for the sake of others on this discussion board would you kindly explain why you think this would be the case in Brazil and not in Canada and the US.
OGO:
Judging from your posts you would have preferred the 30 to 1 R/S. Call me a pumper if you want but I was very strongly against that proposed split. I did everything I could to stop that from happening. The resulting 10 for one 1 is far better for the company's shareholders.
Ogo tell us what are you really trying to say when you say "Smell a rat?"
I think any wild filiations in the share prices has to with the small float. Although more acceptable then a 30 to 1 R/S in my opinion a 5 to 1 R/S instead of the 10 for 1 would be the more preferable.
I saw nothing in the presentation that would cause such trading action.
As I stated before I am bullish on HRT and I am anxiously awaiting for the rewards I feel patient investors will receive.
They would do so to make sure the deal was secure as they did with the 60% they bought with money bowered from Credit Suisse and later paid back.
Robinhood:
I feel you have got it all wrong and that dias55 has got it right the deal between HRT and Maersk is completed just subject to ANP approval which will be forthcoming. I feel this is another example robnhood of your misunderstanding of the Brazilian process oil and gas companies have to go through. I feel your post was quite meaningless.
I feel if you really think the company should be called North Nut's Folly as you stated in a post on SH I feel you should submit it to the company. I feel they will get a laugh out of your suggestion.
I feel very good this morning and about the prospects for HRT. l feel you robnhood should feel the same way and reflect that in your posts on SH instead of being so negative about the company.
I know you hate my feelys but this is the way I feel and I feel I could not help but express myself in this way.
As I said I feel, feel, feel real good!!
My read on the situation is that neither Aventii or JGP wants to own 50% of HRT shares and that Aventii is not JGP in sheep's clothing. I feel it is not in Nelson Tenure's character to set up another company to gain shareholder control instead I feel he would use JGP to do so. There is no reason for him to do otherwise. My fight with management was the extent of the R/S that is all it was, I now agree with the removal of the poison pill.
I feel very good about the prospects for HRT and it' shareholders. I hold shares in seven oil companies some of which I have done extremely well in and now paying me excellent dividends. My success in oil company investments is due to having patient with them and relying on management and luck to work in the favor of the company's shareholders.
I feel HRT's initial plan is to become the second largest oil and gas company in Brazil onto becoming the largest and with the involvement of Nelson Tanure this is very achievable.
Ogo give our intelligence a break that drilling rig HRT and it's farm in partner Gulf Oil used in Namibia was a leased rig and not theirs to sell.
The drilling rigs they sold were used in the Solimoes Basin and were part of the recently made deal with Rosneft regarding Solimoes.
There are lots of used aircraft for sale in the world at a discount so any company in the Oil and Gas business wanting to get out of the air graft business has to sell their planes at a discount.
It was HRT Participacoes em Petroleo SA IPEX unit that had a $300 lunch that got HRT very upset and was one of causes for the company to force lay offs in IPEX and forcing the unit to clamp down on expenditures which have caused the unit to loss $3 million a year.
TKM.T is down $5.10 as I type this post one of the negative effects of a tight float.
Robnhood both you and buggati aka GusGold came up with name suggestions on SH so it appears to me you are not fully against it. Fortunately for me I sold the shares I received in HRT Participacoes em Petroleo SA for the UNX shares I had for $8.18, because of it's name, since I didn't want to own shares in a company that I could not pronounce it's name or fully remember properly.
After it fell dramatically I was drawn back into it after reading an article about it's speculative potential. At which time I started with a small position paying $1.25 a share. Right now my average price per share is about .45 before it was at about .40 but because I sold 50,000 shares that I had bought at 15 to 16 cents I raised my average up to about .45 all in CAD funds. My selling was because I felt I should lighten up my position when the company announced their intentions of having a sever R/S.
The fact that Aventti bought 6.41% of HRT shares is encouraging, hopefully it is a sign of good things to come.
For those who may be interested robnhood and buggati aka GusGold HRT name suggestions can be found on this SH link.
http://www.stockhouse.com/companies/bullboard/v.hrp/hrt-participacoes-em-petroleo-sa
A small float can also work against shareholders in a company especially one as small as HRT's float would have been if the 30 to R/S took place. Any perceived bad news coming out Namibian off shore drilling or Solimoes Basin drilling could really dry up the bidding on HRT shares, unless a shareholder was willing to almost give away his or her shares. I actually saw that happen to a stock I once owned and fortunately sold before it's R/S took place the shares tanked big time on news released by the company.
Forward splits or stock dividends reduces the cost base for each share, which has proven very rewarding to shareholders. Reverse splits of course increases the cost base of each share for shareholders who bought shares prior to the R/S. Historically in most cases proven not in the best interest of shareholders.
I sold the HRT shares I received for my UNX shares for $8.18 a share, whoever bought my shares if he or she still holds the shares in order for that individual to break even the new HRT shares have to go up to $81.80 if it was a 30 to 1 R/S as proposed by the management of HRT the shares would have to go up to $245.40.
The company that ogo mentions in his post TKM.O that is currently doing well has been in operation since 1997 it has been as high as $139 adjusted for R/S even though it has gone up about $11 since last Thursday to $26.15 it has along ways to go before any long term shareholders in the company break even.
My many years in the stock market is what made me so uptight about HRT's R/S proposal ( remember it was a 60 to 1 R/S split originally planned for HRT GDS shares ). I felt strongly a R/S of 30 to 1 would be very bad for shareholders. So I did everything I could to prevent that from happening, in spite of being told it was a waste of time by posters on SH and IH. I have accepted the 10 for 1 R/S even though I feel a 5 for 1 would have been in the best interests of HRT shareholders.
NEWS RELEASE
ACQUISITION OF MATERIAL EQUITY INTEREST
Rio de Janeiro, August 8, 2014 - HRT Participações em Petróleo S.A.(the "Company" or "HRT") (BM&FBOVESPA: HRTP3, TSX-V: HRP), in compliance with the provisions of Article 12 of CVM Instruction 358/02, announces that it received yesterday a letter from Aventti Strategic Partners LLP ("Aventti") informing that, on August 6, 2014, it reached a total amount of 1,906,190 common shares issued by HRT (on a post-reverse split basis or 19,061,900 pre-reverse split basis), equivalent to 6.41% of the total capital stock of the Company.
Aventti announces that such increase in the equity interest does not represent the purpose of altering the control composition or managing structure of the Company at this moment, and that does not hold nor acknowledge linked people as holder of convertible debentures into shares, subscription bonus, rights to subscribe to shares and stock options issued by the Company, as well as it states that has not entered into any contract or agreement regulating the right to vote or purchase and sale of securities issued by HRT.
For additional information, please contact HRT`s Investor Relations Department.
Ph: +55 21 2105-9700 | Fax: +55 21 2105-9713
Av. Atlântica 1130 | 10º andar | Copacabana | Rio de Janeiro | RJ | Zip: 22021-000
email: ri@hrt.com.br | website: www.hrt.com.br/ir
IR Contacts
Eduardo Jácome
ri@hrt.com.br
Sandra Calcado
sandra.calcado@hrt.com.br
Tainah Costa
tainah.costa@hrt.com.br
From HRT Investor Relations
Hello XXXX
We really appreciate your suggestion!
We will forward the suggestion to HRT’s officers.
Thank you very much,
Tainah Costa Ungierowicz
Relações com Investidores
The company's name needs to be changed HRT Participacoes em Petroleo SA is hard to remember and to pass on to other investors. Other oil companies in the world have simplified their names such as Petrobras Brazilian, Rosneft Russian, Statoil Norwegian, Petrofina Belgian, Total French, it is time HRT did the same.
I contacted IR of HRT today regarding my feeling about the name HRT Participacoes em Petroleo SA.
I feel the fact it turned out that it was going to be a 10 to 1 R/S instead of a 30 to 1 R/S is a big factor in the better performance of HRT. If it was 5 to 1 in my opinion the performance would have been even better.
Historically R/S are not favorable to the shareholders of companies. I feel the current rise in HRT is a result of the improved outlook for the company, and would have taken place without a R/S, with an even better performance in the stock price if the R/S was not going to take place.
The jury is still out as to how the stock will continue to perform due to it's much lower liquidity as a result of it's R/S. Which I stated in my last post is to low making it very unattractive to institutions and many individual investors.
I feel the lack of HRT GDS share price performance is a reflection of a low float ( due to the R/S ) creating low liquidity resulting in disinterest in HRT shares by institutions and individual investors.
Thankfully the planned 30 to 1 R/S was defeated, admittedly 10 to 1 is better, ideally 5 to 1 R/S would have been the best way to go, if you are to have a R/S in the case of HRT,
Renzo and I fought hard against the 30 to 1 R/S and other company proposals. We may have had or no effect on the resulting outcome regarding the R/S, but we both worked hard together fighting for what we thought was best for the company and it's shareholders.
I personally am not pleased with the results of our efforts, I had hoped to have achieved more.
2Q14 Earnings Results Schedule
HRT announces its 2Q14 earnings results schedule.
2Q14 Earnings Release: August 14, 2014 (Thursday), after São Paulo Stock Exchange trading hours.
Conference Call: August 15, 2014 (Friday).
Conference Call in English
10:00 a.m. (NY Time)
Toll Free (USA): +1 888 700-0802
Password: HRT
Webcast: 10:00 a.m. (NY Time) http://webcast.neo1.net/Cover.aspx?PlatformId=GMGUJdJRDEtTrPvnItcXTA%3D%3D
The Conference Call will be held in Portuguese with simultaneous translation into English.
The presentation will be available for download on HRT's website a few minutes prior to the conference call.
Quiet Period
In order to ensure equitable disclosure of information and in accordance with corporate governance best practices, HRT is in quiet until the disclosure of its results for the second quarter of 2014. During this time, it will not comment on its results.
For further information, please contact the Investor Relations department.
IR Contacts
Eduardo Jácome
ri@hrt.com.br
Sandra Calcado
sandra.calcado@hrt.com.br
Tainah Costa
tainah.costa@hrt.com.br
Tainah told me that due to the up coming release of HRT's 4th Quarter earnings report on Aug. 14th they are in a quiet period, so they cannot release any information at this time.
I spoke to Tainah Costa one of the IR personnel of HRT today asking if any changes have occurred in the ownership of HRT since the figures below were last up dated. She said there have been no changes, if there had been. HRT is reguired by Brazilian Securities Regulations that a company report any changes in the amount of shares held by those individuals or companies holding 5% or more of it's outstanding shares.
Shareholders---- Common Shares---- Participation
JG Petrochem Participações Ltda. 57,272,013---- 19.25%
Morgan Stanley 15,476,159---- 5.20%
Goldman Sachs International 14,894,563----- 5.01%
Other Shareholders 209,824,563----- 70.54%
Total 297,824,563- 100.00%