Energy Sector

[Dalal.Holdings]

 

So the incoming President, Treasury Secretary, and Energy secretary all want cheap energy as the foundation of the economy the next 4 years.

 

Don't worry guys, I'm sure this is bullish oil

 

[SharperDingaan]

Interesting discussion ...

 

Keep in mind that today, much of US shale is owned and/or controlled by the majors; business is a lot more rational that it used to be.

 

Of course there will be more drilling; but in existing fields it will very likely be fewer wells with longer laterals, in manufacturing mode, and with multiple bores from the same pad. Royalty and tax holidays on the new wells, environmental forgiveness if specific metrics are achieved, etc. NG exports ramped up, and multiple gas powered generating stations built to give the rising gas cut a market, end the electricity brownouts, and provide the power should EV develop further.

 

Of course everybody wants new blocks of virgin land; but it doesn't mean they are immediately going to drill beyond delineating what they get. Can't come up with a plan when you don't actually KNOW what you're working with; and even then ... immediate production may not be the optimum approach.

 

Everybody exports/imports various grades of oil; some of it purely because of geography, most of it purely because of production and consumption mismatch. For the most part, the US has too much light and not enough heavy for refining purposes. Trump guarantees a sizeable new gulf coast refinery that processes primary light, and there will be material change.

 

Different PoV.

 

SD

 

 

 

[Dalal.Holdings]

I keep hearing people talk about oil producers are getting more rational, reducing production, etc. But then you actually look at one...Here is OXY:

 

 

So from Q1 22 to Q2 24 (before CrownRock closed) Permian went from 472 to 587 MBOE per day. Total firmwide went from 1079 to 1258 MBOE. Oh, and what did oil prices do over this period? They went down...

 

 

OXY bought CrownRock and took on more debt. Guess what they have to do in order to pay off all the interest/debt costs even if oil prices move down? That's right, they gotta keep the oil flowing.

Edited 7 hours ago by Dalal.Holdings

[SharperDingaan]

Before you post .... you might want to read the press releases.

Occidental bought Crown Rock in December 2023, adding 170 MBOE/day. Your 729 MBOE/day was actually 559 MBOE/day before purchase .... Oxy added just 87 MBOE/day net of depletion over 11 quarters - or basically flat after burning through 2 1/2 years of inventory. Their growth is from consolidation, not new drilling.

https://www.oxy.com/news/news-releases/occidental-to-acquire-crownrock-strengthening-its-u.s.-onshore-portfolio-with-premier-permian-basin-assets/

 

Quite a bit different.

 

SD

[Dalal.Holdings]

30 minutes ago, SharperDingaan said:

Before you post .... you might want to read the press releases.

Occidental bought Crown Rock in December 2023, adding 170 MBOE/day. Your 729 MBOE/day was actually 559 MBOE/day before purchase .... Oxy added just 87 MBOE/day net of depletion over 11 quarters - or basically flat after burning through 2 1/2 years of inventory. Their growth is from consolidation, not new drilling.

https://www.oxy.com/news/news-releases/occidental-to-acquire-crownrock-strengthening-its-u.s.-onshore-portfolio-with-premier-permian-basin-assets/

 

Quite a bit different.

 

SD

I used Q2 figure of 587 MBOE per day for permian as CrownRock deal closed in Q3 of 2024.

That’s a 24% increase in 9 quarters (Q2 24 vs Q1 22) of permian production despite falling oil prices. I would not call that “flat”.

Now let’s get to the meat of my argument and tell me if these guys are so rational why they make more oil when the price of oil goes down?

[mcliu]

Isn't that table consistent with the narrative?

Prices were high Q1 to Q4 of 2022 so they increased production. 472 to 565

As prices declined, production has stayed essentially flat since Q4 2022. 565 to 585