Replies to post #336277 on ERHC Energy Inc (ERHE)

[Krombacher]

I think everyone knows about the Saudi and Russia plan... including all the major oil players.

Shale and fracking companies are almost all leveraged to the hilt and these low oil prices will cause these companies to default, struggle, and go out of business.

Once this competition is removed and many say it'll only be a matter of months... the Saudis and Russians will allow oil to rocket far north of where all this was before this even started.

But since EVERYONE knows this is the plan, companies with strong balance sheets like Total, Shell, and others will not curtail their exploration activities.

But too bad Kosmos doesn't have such a strong balance sheet.

Krombacher

[Julius Erving]

Translation:

OPEC and Russia not finished
Poker game in oil market. What a week this is. And it gets even more exciting. OPEC no longer limits its production. 12 million barrels / day must be pumped up from now on. That is 1.3 million barrels a day more! Saudi Arabia increases its commitment. Are her cards that strong or is this a pure bluff? Russia just goes along and says it will now produce an extra 500,000 barrels / day… Now it is up to SA to increase its commitment, or… ..? Yes, what or?
Make no mistake. This is about market share. Nothing else than that. SA / OPEC feels "screwed", excuse the word. MbSalman ruler SA is now doing something that could turn out very wrong for him. Russia says it can live with USD 40 / Bbl. Is this so? below break-even prices Ural oil:
2014: 98
2016: 70
2018: 54
2019: 49
Russia does not like the current price of 35 USD / Bbl. Russia has a structural fund (national wealth fund; USD 150 billion) with so much money that it can fight the SA for years. But does Putin want that? Probably not, he too has a population that needs to be kept satisfied.
SA has taken care of the following with its action:
- Shale oil producers in the US are partly going bankrupt
- Iran (arch-enemy) even less income. It was already dramatic
- Put Russia in its place
- Status as OPEC at stake

What is going to happen?
The game of poker is approaching the endgame, the turn. Which card is played now? If Russia and OPEC do not reach an agreement quickly, the oil price could move towards USD 25 / Bbl. You have been warned about this. If this happens, SA will have financial problems. MbS will probably exit and will be dropped. Think of the action with journalist Kashoggi, SA image dramatic. And what about ARAMCO stock owners who see their money evaporate in 2 months. MbS position becomes strong with all-in and winnings. But with a few months 25 USD / Bbl, MbS is better off looking for an escape tunnel.