Energy Sector

[SharperDingaan]

2 hours ago, Dalal.Holdings said:

"Production is coming down"

 

"Below the cost of production"

 

So many claims with no real citations or evidence

 

Production coming down. Ongoing US shale depletion continues, and no new production added.

 

Cost of production. At USD 50/bbl it's around the cash cost for most, including interest on bank debt. Add overhead, and most will be forced to  produce at a loss to raise the cash to pay interest. 

 

P&L takes a hit, and lots of 2P reserves get sold at distress prices. If you have the Balance Sheet, you buy versus drill.

 

SD

[Dalal.Holdings]

“No new production added”

 

[citation needed]

 

Here’s my citation:

 

https://www.eia.gov/dnav/pet/hist/leafhandler.ashx?n=pet&s=mcrfpus2&f=m

 

Lol, U.S. production at all time highs…

 

 

Edited June 2, 2025 by Dalal.Holdings

[Dalal.Holdings]

Oil bulls every time: "production is coming down",

 

Reality:

 

[SharperDingaan]

And the trend for the last how many months has been? .... flat. With rigs drilling ... new additions pretty much equal to depletion.

 

But now the rigs count is down every week ... and the declines are getting bigger.

 

SD

[Dalal.Holdings]

You have all time high U.S. production at the same time OPEC is flooding & China transitioning its auto industry from gasoline…

 

People in the oil patch can say “rigs are down” or “production is going down” or “just wait a few more months” all they want. I don’t care what they’re saying. Only what they’re doing.

[SharperDingaan]

Quite agree.

 

One of our o/g coys is buying back its stock for cancellation at less than 50% of bv/share, booking a healthy accounting gain on every purchase, and will have bought back 10% of its float by the end of October. Not possible unless everyone thinks the prospects are utter sh1te!, and it is foolish to dissuade them 

 

The other will have reduced its div payout ratio to around 70% sometime in Q4, when a material expansion comes on line. The big capital spend is over, but everyone is convinced that with the current payout ratio the dividend is about to  be cut. Terrible waste to dissuade them otherwise 

 

SD

[Sweet]

8 hours ago, Dalal.Holdings said:

Oil bulls every time: "production is coming down",

 

Reality:

 

 

6 hours ago, Dalal.Holdings said:

You have all time high U.S. production at the same time OPEC is flooding & China transitioning its auto industry from gasoline…

 

People in the oil patch can say “rigs are down” or “production is going down” or “just wait a few more months” all they want. I don’t care what they’re saying. Only what they’re doing.

Always been that way since I’ve been observing or participating in owning shares in this industry - which is 10 ish years now.

 

It’s always the same crap, producers have found religion, rigs are down, US growth over etc etc.  I think production is up 1.5 million bpd since I sold out my last shares.

 

I haven’t checked in on Eric Nuttall or HFIResearch in a year or two, but I bet they are repeating the same bs talking points.

 

With exception of a handful of companies, most of the O&G plays are run for the benefit of the board or the founders, not the shareholders.

 

You’re out of you mind buying this industry unless it’s in the depths of a serious recession and everything is down 60%+.
 

Just a horrible area to invest.

 

Edited June 2, 2025 by Sweet

[Dalal.Holdings]

11 minutes ago, Sweet said:

 

Always been that way since I’ve been observing or participating in owning shares in this industry - which is 10 ish years now.

 

It’s always the same crap, producers have found religion, rigs are down, US growth over etc etc.  I think production is up 1.5 million bpd since I sold out my last shares.

 

I haven’t checked in on Eric Nuttall or HFIResearch in a year or two, but I bet they are repeating the same bs talking points.

 

With exception of a handful of companies, most of the O&G plays are run for the benefit of the board or the founders, not the shareholders.

 

You’re out of you mind buying this industry unless it’s in the depths of a serious recession and everything is down 60%+.
 

Just a horrible area to invest.

 

Yep, I agree

[Blake Hampton]

The Fallacy Of U.S. Oil Dominance

[SafetyinNumbers]

H/t to @nwoodman for posting this article by Adam Waterous on the Strathcona Resources board

 

https://macleans.ca/economy/want-to-bulletproof-the-economy-build-more-pipelines/

 

[Blake Hampton]

Lol:

 

[SharperDingaan]

If you were sitting on the fence re energy investment you have run out of time. The Israelis struck Iran earlier this evening and WTI is up 12%.

 

Were you also sitting on names that were also being heavily shorted (OBE), tomorrow morning is going to feel like Xmas . GLTA.

 

SD

 

 

Edited June 13, 2025 by SharperDingaan

[Marco Van Basten]

30 minutes ago, SharperDingaan said:

If you were sitting on the fence re energy investment you have run out of time. The Israelis struck Iran earlier this evening and WTI is up 12%.

 

Were you also sitting on names that were also being heavily shorted (OBE), tomorrow morning is going to feel like Xmas . GLTA.

 

SD

 

 

I don't know if that's right.  Oil was at $80 in January and $80+ in July of 2024.  OBE was at $9 in April of 2024.  Time will tell what will happen to oil prices and oil stocks.  Sure, stock will be up tomorrow, however where it will be in 5 years' time?  

[rossef2]

Every chance this spikes then goes back down again in a few days as has happened in the past.

[SharperDingaan]

Those price spikes are the opportunity. That 10% run up and fall back, is a 20% round trip gain in maybe a month. It will run a lot higher when the retaliation occurs, and this is the land of an eye for an eye.

 

Also keep in mind that IV is value per share. Rising as either value is increasing or the share count is dropping. Look at the OBE share count 

 

It's just not the COBF way.

 

SD

Edited June 13, 2025 by SharperDingaan

[lnofeisone]

4 hours ago, rossef2 said:

Every chance this spikes then goes back down again in a few days as has happened in the past.

that's how I'm treating it. i'm selling some some o&g names and buying month out puts. 

[SharperDingaan]

You might want to read the Al Jazeera press. Do targeted assassinations and some of your people will go the same way. There are public ones and the private ... heads on platters delivered via an Uber Eat.

 

It doesn't end well, and oil prices are going higher.

 

SD

 

Edited June 13, 2025 by SharperDingaan

[Pelagic]

This bit will probably be forgotten due to last night's strikes but I think Trump's singular focus on low oil prices is interesting. WTI has been what low 60s, even some time spent in the high 50s, after Liberation Day and it moved up to around $65 - not even a 10% move and he's telling Chris Wright this. Who knows how things shake out with Iran's exports but for comparison Libya's production went offline last year and oil only spiked like $4 so the folks calling for $100+ on events in the ME should be taken with a grain of salt.

 

 

 

[Sweet]

You have to laugh, war with Iran is the oil traders wet dream and XOP is up 1.4% on the day.

[Gregmal]

Yup, still waiting for the "oil = inflation" crowd to start up again. $75-85 oil is like the 4.50% 10 year....so much hooting and hollering. And proof of rampant inflation couldn't be more stark than.....20 year's ago's oil prices...Outside of TVs, I can't really find much that UNCH or lower from 10, 15, 20 years ago....except oil....but it's proof of inflation LMFAO

 

We already saw how this shit played out with Ukraine a few years ago. 

Edited June 13, 2025 by Gregmal

[SharperDingaan]

Many ways this could go. Everyone's pipelines and loading facilities are much easier targets, and once blown - it's either take Iranian crude or pay higher prices. Blow up Iranian oil facilities, and pay the price spike until the others flood the market ... assuming Iran DID NOT damage their infrastructure. All good.

 

Trump has already had his low prices. Devalue your currency 10% and that same product now costs you 10% more. Drill baby drill just gets re-branded at a much higher price than $50/bbl.

 

SD

 

 

 

Edited June 14, 2025 by SharperDingaan

[Spekulatius]

Lol from X:

 

[SharperDingaan]

Very apt! Just keep in mind that Canadian o/g deleveraged a long time ago, and for the most part buybacks are just replacing drilling. No need to drill when you can buy 2PNPV(10) at cents on the dollar, and a bonus if that 2PNPV(10) is via your own stock bought back at 30-50% under BV.

 

Buy back a share with a BV of $12 for $8, and equity goes up by $4/share. Intrinsic value measured as 2PNPV(10)/share-count rises, and debt/equity metrics improve. Pay down too much debt and you're no longer at your optimal WACC (many a Canadian o/g company).

 

Best thing for the Canadian oil patch would be a spike in oil prices. The additional CF would flood into the new infrastructure projects being discussed (new pipe, new rail, CCS, port expansion, upgraded grid, nukes, etc.), so as to bring them to market quicker.

 

SD  

Edited June 15, 2025 by SharperDingaan

[Dalal.Holdings]

On 6/13/2025 at 6:03 AM, SharperDingaan said:

Those price spikes are the opportunity. That 10% run up and fall back, is a 20% round trip gain in maybe a month. It will run a lot higher when the retaliation occurs, and this is the land of an eye for an eye.

 

 

So will oil bulls sell out on the run up and lock in profits? From what I've seen, every time there is a geopolitical event that spikes energy prices, oil bulls say "ha ha" and sit on their investments (maybe even buy more) only to later see oil fall further...

 

In fact, I bet a lot of oil bulls are underwater and even with the spike tomorrow will remain underwater on their cost basis (e.g. those who followed Warren into OXY in the $60s)

[Dalal.Holdings]

On 6/14/2025 at 7:06 PM, SharperDingaan said:

Best thing for the Canadian oil patch would be a spike in oil prices. The additional CF would flood into the new infrastructure projects being discussed (new pipe, new rail, CCS, port expansion, upgraded grid, nukes, etc.), so as to bring them to market quicker.

 

SD  

 

I don't see how that's "best thing for Canadian oil patch". This is usually how these things go:

 

Spike in Oil Prices --> Oil boys in USA & Canada Drill baby Drill --> Geopolitical situation calms down --> Oil in oversupply --> Prices tank

 

Of course, every oil bull/wildcatter wants to believe the geopolitical situation will never calm down and will delude themselves into thinking so (which only creates more supply)