Shorting Oil, Hedging Tesla

[SwTslaGrl]

"Japan's industry minister Hiroshige Seko has unveiled a 10 billion dollar public-private initiative to boost liquefied natural gas, or LNG, infrastructure in Asia. Economic growth in the region is expected to drive up demand for the gas 2 and a half times by 2030."
Japan to invest $10 bil. in LNG infrastructure- News - NHK WORLD - English

 

[mspohr]

Further deterioration of oil ...

Oil's Biggest Rigs Head to the Junkyard

Transocean Ltd. is finally sending Pathfinder to its grave, after two years in a Caribbean purgatory that cost about $15,000 a day.


The move by the world’s biggest offshore-rig operator signals just how bleak the future looks for deepwater drilling. Pathfinder is the most famous of six floating rigs the company is scrapping in burials that will add up to a bruising $1.4 billion write-off. Competitors are going the same route, jettisoning more rigs in the third quarter than have ever been trashed in a 90-day stretch, according to Heikkinen Energy Advisors analyst David Smith

 

[ValueAnalyst]

Further deterioration of oil ...

Oil's Biggest Rigs Head to the Junkyard

Transocean Ltd. is finally sending Pathfinder to its grave, after two years in a Caribbean purgatory that cost about $15,000 a day.


The move by the world’s biggest offshore-rig operator signals just how bleak the future looks for deepwater drilling. Pathfinder is the most famous of six floating rigs the company is scrapping in burials that will add up to a bruising $1.4 billion write-off. Competitors are going the same route, jettisoning more rigs in the third quarter than have ever been trashed in a 90-day stretch, according to Heikkinen Energy Advisors analyst David Smith

Scrapping of rigs has been long expected, it's been going on for two years, done by many offshore drillers. This is nothing new.

In addition, this in fact strengthens oil prices by taking out drilling capacity, which lowers future supply...

This is getting embarrassing.

OPEC calls on US shale oil producers to accept 'shared responsibility' of slashing global supply

U.S. shale producers will never join OPEC/NOPEC cuts, and this doesn't need to happen for oil markets to balance.

Just because this is the rhetoric that's put out, does not mean it is needed. It's just strategic rhetoric.

I actually haven't followed the Aramco IPO, not even 1% of what's out there on it. I try to avoid conspiracy theory stuff like the plague.

I simply don't subscribe to the idea that Saudi Arabia is trying to boost oil prices so that it can IPO Aramco. My analysis leads me to believe that oil prices would have increased throughout the remainder of the decade, regardless of whether November 2016 production cuts happened or not.

I think production cuts (and OPEC) serve to prevent extreme drops in oil prices (for example, sub-$40 oil throughout 2016/17), which if not prevented, would lead to extreme spikes just a few years later. Some say, and I agree, that substantial underinvestment in long-cycle oil production throughout the late 90's is what led to the large price spikes of 2007/08.

The damage sub-$50 oil prices did to long-cycle oil investments over the last three years is already historic (just look at the insanely depressed valuation multiples of offshore drillers), and I'm worried about where oil prices will be in 2019/20 and through 2025.

Wall Street plowed money to U.S. shale solely based on wellhead costs, only to find out that shale is in fact unprofitable when full-cycle costs (i.e. land lease, G&A, etc) are considered. The tide, however, is now turning as investors face the reality of very high decline rates of shale plays.

Upcoming increase in oil prices is the primary reason why I think even Tesla is underestimating the future demand for its products, and why I believe today's Manga news are positive: Tesla Might Team With Magna For Model 3 Production In Europe

Check this out: Crudehead on Twitter

Conspiracy theories are detrimental to investment performance.

 

[ValueAnalyst]

As expected, US oil production continues to be revised down. Shale bubble is bursting.

 

[TheTalkingMule]

Lobbyists seem to be pushing GOP members of Congress to open up more of the Atlantic and Arctic for drilling. Is anyone even willing to do any new Arctic discovery/development right now?

I guess it makes sense to just get the rules on the books while it's easy(cheap).

 

[jhm]

Lobbyists seem to be pushing GOP members of Congress to open up more of the Atlantic and Arctic for drilling. Is anyone even willing to do any new Arctic discovery/development right now?

I guess it makes sense to just get the rules on the books while it's easy(cheap).

They'll be asking next for exploration subsidies. The coal and nuclear industries are not too proud to beg for government cheese. Why not O&G too?

 

[SwTslaGrl]

India has big problems with air pollution, the coal-fired power plant ban in New Delhi is just temporary until March. Hopefully they will open up more to foreign investments like Tesla to accelerate transition to sustainable energy..

India power plant halted to ease pollution- News - NHK WORLD - English

 

[ValueAnalyst]

One oil bear argument was that US could not export more than 1.2 mbd "because they couldn't load VLCCs due to shallow waters"

Sounded dumb to me at the time, then US exported close to 2 mbd for two out of last three weeks, and here's a more informed analysis:

Over 5 mbd capacity coming up!

We may witness the remaining ~100 mb "glut" dry up quickly in the coming weeks, not months.

 

[kenliles]

The largest IPO ever doesn't look like a great investment to many

 

[ValueAnalyst]

ValueAnalyst on Twitter

Get used to this term: #PeakShale

 

[ValueAnalyst]

Schlumberger's (SLB) CEO Paal Kibsgaard on Q3 2017 Results - Earnings Call Transcript | Seeking Alpha

Start from "the demand growth outlook for 2018" and read the following six or so paragraphs. The oil supply situation for the next two to three quarters is very dire. Expect higher oil prices for some time.

----------

The demand growth outlook for 2018 is again expected to be north of 1.4 million barrels per day and is further supported by upward revisions in global GDP growth clearly suggesting that the demand side of the oil market equation is on a very solid footing.

Looking closer at the global oil inventory, we also believe that the current situation is more positive than what is reflected by the market. Today global inventory levels are down to 64 days of forward cover and the North American stocks are already down to 2014 levels.

Brent crude which is now in backwardation is seeing faster inventory draws and stocks are already approaching the five year average. In North America land where the E&P companies have added significant CapEx over the past year, the production growth is so far falling short of expectations, driven by supply chain inflation, operational inefficiencies and the need to step out from the Tier 1 acreage. This has led to a moderating investment appetite where the previous pursue to production growth is now being balanced out with an equal focus on generated solid financial returns and operating within cash flow.


This moderation can be seen in the flattening trend of the U.S. land rig count during the third quarter and it is also reflected in our customers’ 2018 activity outlook. The more tempered activity outlook for U.S. land combined with the short cycle nature of the business has an immediate impact on the outlook for production growth, which for 2017 and 2018 has been revised down by 100,000 and 500,000 barrels per day respectively. This clearly has a material impacts on the global supply and demand balance.

From the OPEC side compliance with the stated production cuts has been better than expected. At the same time comments from several of the key OPEC Gulf countries and from Russia suggest that an extension of the existing production cuts beyond the current agreement is a possibility although this may ultimately not be needed.

Looking at the ongoing activity and investment levels in the international markets outside OPEC Gulf and Russia, we have so far seen very limited growth since we reached bottom of the cycle in the first quarter of this year. However, we’re seeing signs in many parts of the world of conventional land and offshore projects now being prepared for FID, and the total number of FIDs this year is double that of 2016.

 

[Intl Professor]

Couldn't decide where this belongs and am aware you experts here probably were ahead of the issue anyway, but thought this was scary:

Mathematics predicts a sixth mass extinction

 

[kenliles]

Couldn't decide where this belongs and am aware you experts here probably were ahead of the issue anyway, but thought this was scary:

Mathematics predicts a sixth mass extinction

yeah- good study; This aligns with some other similar studies using different methods - concluding similar timeframes (about 2100 being tipping point at current rates);
The only issue I have is the leading sentence:
"In the past 540 million years, the Earth has endured five mass extinction events..."
The Earth doesn't endure it- Life on Earth does. Earth doesn't care what we do to ourselves, it'll be just fine-

I hope members followed the recent Neutron Star collision events- An incredible time to have been alive to witness and puts our minuscule existence in proper perspective

Of course- if this is all just too much to take in--
Here's a video you can play to return yourself to sweet oblivion--

 

[Intl Professor]

yeah- good study; This aligns with some other similar studies using different methods - concluding similar timeframes (about 2100 being tipping point at current rates);
The only issue I have is the leading sentence:
"In the past 540 million years, the Earth has endured five mass extinction events..."
The Earth doesn't endure it- Life on Earth does. Earth doesn't care what we do to ourselves, it'll be just fine-

I hope members followed the recent Neutron Star collision events- An incredible time to have been alive to witness and puts our minuscule existence in proper perspective

Of course- if this is all just too much to take in--
Here's a video you can play to return yourself to sweet oblivion--

Agree with criticism of language in article. Also, had problems with the title. It wasn't math alone he used, he consulted empirical studies. It is application of math. That was a teaser which seduced me into reading the article, but I should have known better.

Best, and good morning to you.

 

[Off Shore]

Couldn't decide where this belongs and am aware you experts here probably were ahead of the issue anyway, but thought this was scary:

Mathematics predicts a sixth mass extinction

FWIW many consider that the Sixth began ~10,000 years ago with the extinction of the North American megafauna. Apex predators can be hard on an ecosystem.

 

[Lessmog]

FWIW many consider that the Sixth began ~10,000 years ago with the extinction of the North American megafauna. Apex predators can be hard on an ecosystem.

Yeah, and us ex-apes even more so.

 

[Intl Professor]

Ex what? You speak for yourself only. Ask my ex. And then there's Harvey Weinstein. Thank God we are not all apex.

 

[Lessmog]

FWIW many consider that the Sixth began ~10,000 years ago with the extinction of the North American megafauna. Apex predators can be hard on an ecosystem.

Yeah, and us ex-apes even more so.

Ex what? You speak for yourself only. Ask my ex.

Sorry. I was referring to those of us who have progressed beyond apehood. At least a little.

 

[Intl Professor]

But sir, "My Arms are too short to box with God." Not so good at swinging from limb to limb like Weinstein.

 

[neroden]

FWIW many consider that the Sixth began ~10,000 years ago with the extinction of the North American megafauna. Apex predators can be hard on an ecosystem.

It's very bad to have a social apex predator. For a stable ecosystem, an apex predator has to *control its own population*, which is traditionally achieved by being highly territorial and antisocial. (Think tigers or mountain lions.) Without population control, the apex predator destroys its own food supply and environment, and then dies out.

Which is obviously exactly what humans are doing.

Humans have a way out of this otherwise-inevitable trap because we invented artificial birth control (yay condoms) but there are deranged religious groups which are still trying to wreck everything.