Energy Sector

[SharperDingaan]

Good day for shopping ...

 

Keep in mind that it is not logical for OPEC+ to be raising output (411K bpd) into what will very likely be a lower demand environment (post tariffs), unless there is a sizeable new buyer (US SPR?) and/or a sanctioned source of crude (Iran) that is about to have a mishap. The two-day DJ loss is approaching 3,000 points ... and Orange Boy needs a distraction; and he will really need one, when Q1 reporting and the post tariffs unemployment numbers show up. Clock is ticking.

 

All looks good, and if you happen to buy a dividend payer .... 12% cash yields are available 

 

SD 

 

[yesman182]

3 minutes ago, SharperDingaan said:

unless there is a sizeable new buyer (US SPR?)

I thought the US might fill the SPR with Russia oil if they end the war. Seems like a way to extend an olive branch, not sure how other opec nations would feel about that. 

[Spekulatius]

Ironically with the price for crude crashing, the prices at the pump have gone up quite a bit. Looks like refiners should OK then.

[dipod]

35 minutes ago, SharperDingaan said:

Good day for shopping ...

 

Keep in mind that it is not logical for OPEC+ to be raising output (411K bpd) into what will very likely be a lower demand environment (post tariffs), unless there is a sizeable new buyer (US SPR?) and/or a sanctioned source of crude (Iran) that is about to have a mishap. The two-day DJ loss is approaching 3,000 points ... and Orange Boy needs a distraction; and he will really need one, when Q1 reporting and the post tariffs unemployment numbers show up. Clock is ticking.

 

All looks good, and if you happen to buy a dividend payer .... 12% cash yields are available 

 

SD 

 

12 percent cash yields?

[SharperDingaan]

2 hours ago, yesman182 said:

I thought the US might fill the SPR with Russia oil if they end the war. Seems like a way to extend an olive branch, not sure how other opec nations would feel about that. 

 

Should Iran's oil production loading and infrastructure facilities experience extended downtime, there will be more than enough 'supply makeup' to go around. Of course if you don't release that production .... maybe your US defence experiences a 'technical difficulty' ... at a time when you very much need it. No different to the mob boss burning your house ... then demanding cash before he brings in the fire brigade.

 

SD

 

 

Edited April 4, 2025 by SharperDingaan

[sleepydragon]

4 minutes ago, dipod said:

12 percent cash yields?

That’s what i lost in 2 days

[SharperDingaan]

1 hour ago, dipod said:

12 percent cash yields?

 

CJ.TO  but do your own DD. Pays 6c/month.

Per full disclosure, we have averaged into a good chunk of it over the last two days.

 

End of public service announcements 

 

SD

 

 

Edited April 4, 2025 by SharperDingaan

[dipod]

13 minutes ago, SharperDingaan said:

 

CJ.TO  but do your own DD diligence. Pays 6c/month.

Per full disclosure, we have averaged into a good chunk of it over the last two days.

 

End of public service announcements 

 

SD

 

 

Thank you

[Spekulatius]

Is anyone interested in SLB? I checked them out recently and it seems they transform their business in a favorable manner leading to better FCF conversion.

 

I never owned this stock but have followed it forever a bit.

[sholland]

2 hours ago, dipod said:

12 percent cash yields?

TSE:TAL 

no position. Do your own due diligence.  Have owned in the past.

[Stuart D]

11 hours ago, Spekulatius said:

Ironically with the price for crude crashing, the prices at the pump have gone up quite a bit. Looks like refiners should OK then.

Will be interesting to see if names like PBF print cash in Q2.

[Blake Hampton]

@KPO check out CRLFF (shoutout @SharperDingaan) and PARXF (technically out of Colombia but trades in Canada).

 

Edited April 5, 2025 by Blake Hampton

[KPO]

1 minute ago, Blake Hampton said:

@KPO check out CRLFF (shoutout @SharperDingaan) and PARXF (technically out of Columbia but trades in Canada).

Appreciate it. Btw, I agree with much of what you’re saying in terms of a basic O&G thesis, and as such typically have a core position (5-10% exposure) as a hedge, mostly in my IRAs. 

[james22]

This shift away from the de-growth fervor that was popular for over a decade was the overriding topic at the RealClear Energy Future Forum Monday.

 

Panels of experts in engineering, data centers, mining, oil and gas, and the electricity grid discussed how this change of views has impacted various aspects of the world’s energy picture.

 

“I think we’ve gone from scarcity to abundance — from the green gospel of scarcity and its Trinitarian ESG god — to the promised land of abundance guided by the values of affordability and reliability,” David DesRosiers, conference co-chair and founder of the RealClear Foundation, said.

 

Mark Mills, conference co-chair and director of the National Center for Energy Analytics, discussed the role of increasing energy demand as a result of the growth of data centers and artificial intelligence.

 

While many tech companies, such as Microsoft, embraced net-zero goals, Mills explained that the energy demands of data centers forced companies to contend with the reality that although fashionable in some circles, intermittent wind and solar power are not adequate.

 

“Eventually, reality rears its ugly head, and we recalibrate around what reality permits,” Mills said.

 

https://justthenews.com/politics-policy/energy/world-moving-away-green-gospel-scarcity-and-embracing-energy-abundance

[Phoenix01]

 

[Phoenix01]

 

[Phoenix01]

Question - what happens to the price of an essential commodity that is trading below its cost of production?

Answer - either the price goes up or there is a shortage

 

At the current prices, the global inventories are drying up

[Gamecock-YT]

7 hours ago, Phoenix01 said:

either the price goes up or there is a shortage

 

I think the latter necessitates the former

[Spekulatius]

17 hours ago, Phoenix01 said:

Question - what happens to the price of an essential commodity that is trading below its cost of production?

Answer - either the price goes up or there is a shortage

 

At the current prices, the global inventories are drying up

Or there is plenty of inventory above and below the ground. Also, cost of production where? There is a cost curve and for most of the production , the market price is still above the cost of production. Cost of production is always a curve, not a fixed value. It’s not quite that simple.

Edited June 1, 2025 by Spekulatius

[Blake Hampton]

I would say long-term, oil’s a cinch.

Short-term, $50 a barrel looks likely.

[SharperDingaan]

Keep in mind that the USD has devalued by quite a bit of late. Were one to use $62/bbl as the Permian, pre-Trump, pre-devaluation base; assuming 10% USD devaluation, that $50 bbl is actually a $45.45/bbl (50/1.1) pre-devaluation. A 27% like-to-like decline.  

 

The good news is that at $50/bbl US drilling is essentially shut down, US production rapidly declines, and quite a few US producers will go to the wall. Available for pick-up at distressed prices before oil prices are run up again.

 

SD  

[Blake Hampton]

18 minutes ago, SharperDingaan said:

Keep in mind that the USD has devalued by quite a bit of late. Were one to use $62/bbl as the Permian, pre-Trump, pre-devaluation base; assuming 10% USD devaluation, that $50 bbl is actually a $45.45/bbl (50/1.1) pre-devaluation. A 27% like-to-like decline.  

 

The good news is that at $50/bbl US drilling is essentially shut down, US production rapidly declines, and quite a few US producers will go to the wall. Available for pick-up at distressed prices before oil prices are run up again.

 

SD  

 

I like your thinking.

[Dalal.Holdings]

"Production is coming down"

 

"Below the cost of production"

 

So many claims with no real citations or evidence

[Blake Hampton]

27 minutes ago, Dalal.Holdings said:

"Production is coming down"

 

"Below the cost of production"

 

So many claims with no real citations or evidence

 

Basically everyone in the energy industry is saying that the Permian is currently plateauing; all the other large U.S. basins have been in open decline for years now. Also, reserves being discovered are tiny relative to current production, and decline rates are extreme.

 

Rystad's full-cycle breakeven is calculated around $63 a barrel but...

 

An interesting blog that I read points out how they think "true" full-cycle breakeven is actually around $90 a barrel when you consider both debt and the costs surrounding well clean up.

 

I'm too tired to find actual sources right now.

 

Edited June 2, 2025 by Blake Hampton

[Dalal.Holdings]

I don’t care about what they are saying. Only what they are doing.