Blogs

WTI Trading - Wednesday, April 17, 2019.

Wednesday, April 17, 2019.   Today, Wednesday, news affecting the US oil market. And yet, many hours before, there was a signal for a short trade. Trade lasted most of the day. From 64.40 to 63.70, or 70 pips.

  Indicator #1, with the same levels and requirements for entry, which is: A crossover from positive to negative territory. The indicator line stayed in negative territory the entire day, and the entry in negative territory was many hours before the news affecting the oil market.   Market manipulation? Well, the SEC will never totally monitor and regulate the oil market, as it is a worldwide market. Also, we see many times each month, the market moving in a definite direction well before the news, as if the major players are well aware of what the news will be. How can this be? I do not have definitive answers but I can only confirm that insider knowledge is a certainty in the US oil market, and therefore, this leads to insider trading.


  Indicator #2 confirms the sell trade. The entire day, the indicator line remains well inside the sell zone, below the red horizontal line, on the indicator window.



  Furthermore, the trailing line on Indicator #2 highlights each down phase of this sell trade.




  On most days, the market will not travel in a straight line. The process of price discovery will always appear complicated, as price moves away from your entry, and comes back, sometimes going in the opposite way, incurring losses and forcing the market participants to lose money.   There is no secret recipe or failsafe solution. Each trade is risky and can only be taken as a play on probabilities.
  Market analysis by Francois Normandeau.
  Wednesday, April 17, 2019..pdf

Niobrara (CO & WY) - update through January 2019

These interactive presentations contain the latest oil & gas production data, from all 10,287 horizontal wells that started production in Colorado and Wyoming since 2009/2010, through January. Originally I planned to do a post on the latest data for North Dakota (through February). Unfortunately, not all data that we rely on has been published yet, which is why I decided to do a post on Colorado & Wyoming instead. The update on North Dakota should follow early next week. Visit ShaleProfile blog to explore the full interactive dashboards Oil production in these 2 states started the year at record production (after revisions), at over 620 thousand bo/d. Both states contributed to growth in the past 12 months; Colorado with ~20%, and Wyoming even at almost 50% (although from a lower base). Production in the Powder River Basin has been mostly responsible for the latter, and is now over 120 thousand bo/d. As is shown in the bottom plot on the ‘Well quality’ tab, well productivity made a big jump in 2017, but has not further increased in 2018, based on preliminary data. The big news in the past week was that Chevron bought Anadarko for 32 billion dollar, which is the biggest producer in this area (see “Top operators”). With ~100 thousand bo/d production here, this area represents about 40% of its total oil production from horizontal wells in the US, with almost all of it coming out of Weld County (CO). The following dashboard, from our analytics service (Professional), shows the location and performance of the ~1,300 horizontal wells that Anadarko currently operates in Weld County, which came online between 2013 and 2017 (click the image to see the high-resolution version). In the top-right corner you will find the performance of these wells, by year, in the familiar flow-rate versus cumulative production plot. The 2014 vintage may end up with the best average recovery, as its newer wells appear to decline more rapidly. This area is very gassy, as you can see on the map, and in the gas oil ratio plot on the bottom-right.   The ‘Advanced Insights’ presentation is displayed below: In this “Ultimate Recovery” graph, the average cumulative production is plotted against the production rate. Wells are grouped by the quarter in which production started. Also here you can see that well performance appears to have peaked (at least temporarily) in early 2017, with newer wells on a slightly lower ultimate recovery trajectory. I performed a comparison of well productivity in the DJ Basin versus the Powder River Basin. The result is presented here in the following screenshot (again from our analytics service), where I’ve selected all the wells in these 2 areas, that began production between 2015 and 2017. In both basins did well productivity increase over these 3 years, but the wells in the Powder River Basin are clearly on a path to a larger oil recovery. More gas is recovered in the DJ Basin. We were again happy to find the WSJ using our subscription service to get insights into tight oil & gas production trends: Frackers, Chasing Fast Oil Output, Are on a Treadmill. As mentioned, we should have a new post on North Dakota early next week. Production data is subject to revisions. For this presentation, I used data gathered from the following sources: Colorado Oil & Gas Conservation Commission Wyoming Oil & Gas Conservation Commission FracFocus.org   Visit our blog to read the full post and use the interactive dashboards to gain more insight http://bit.ly/2G9Hf9S   Follow us on Social Media: Twitter: @ShaleProfile
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shaleprofile

shaleprofile

WTI Trading - Tuesday, April 16, 2019.

Tuesday, April 16, 2019   There is the famous Pump and Dump. Less known is the Dump and Pump, which is what we had today. Quick sell trade, and then, swinging the other way around, going up, for hours and hours. Up trade closed a few minutes before the end of the US session at 5 pm NY time. Details on the next pages.



Indicator #1 clearly gives us a sell signal and then, as it crosses back into positive territory, a buy signal. The long trade lasted for quite some time.



  Indicator #2 shows how we move from negative territory to positive territory.



The Volume Indicator shows us how we had three major periods, related to volume. The first period was early in the US session, and the second period, at 2:30 pm NY time, and the third period, late in the day. Altogether, a down move of 40 pips and a rise of 80 pips.   Prepared on Tuesday, April 16, 2019.. By Francois Normandeau.





  Tuesday, April 16, 2019..pdf

Francois Normandeau

Francois Normandeau

Oil Industry and the Environment: Ways to Make It Greener

More and more companies in the oil industry are now going eco-friendly. Preserving the planet is everyone’s responsibility and oil companies are no exception. In fact, with the governments all around the world raising the bars for lower emissions and the use of renewable sources, keeping up the pace with the global sustainability trend is a must. Luckily, there are quite a few ways oil companies can make their operations greener and less harmful. Here are seven of these that are really worth taking a look at. Reducing freshwater use Water is the element the oil industry simply can’t operate without. It’s used to cool the drills and remove dirt or rock debris. Hundreds of millions of barrels of freshwater end up being used on a daily basis and in order to preserve the environment that number needs to be reduced. Even though up to 95% of the water used in the oil industry is recycled, it’s still very important to rethink the extraction process and reduce freshwater use even more. Relying on solar energy There’s no need to say that oil companies rely on energy to keep their operations running. However, when going green, it’s extremely important to reduce energy use to a minimum. That’s why we see homeowners and small businesses installing solar panels on their roofs. When it comes to the oil industry, companies such as BP are creating investment funds that are to be used on producing clean energy for their operations. Therefore, we can expect to see oil companies connecting with solar producers and relying on solar energy more than ever before. Creating 3D images 3D technology has changed many industries and oil companies can rely on it to make their operations more efficient. The way this works is that they can create 3D images of the oil wells they’re drilling and use those images to make more accurate decisions. Moreover, they can utilize 3D images to eliminate any operational inefficiencies and come up with backup plans for their operations. By doing this, they can still produce the same amounts of oil but using less energy and resources along the way. Reducing gas and fluid leaks The process of drilling can result in gas and fluid leaks and developing methods for managing them is critical. Luckily, the development of new drilling techniques has resulted in both improved waste management and reduction of potential leaks while drilling. More and more oil companies now implement closed-loop systems that allow them to stay in control of their impact on the environment.  Using advanced drilling techniques Not so long ago, oil companies had to drill at big depths in order to collect oil. But now, engineers have come up with techniques that allow these companies to drill smaller holes and still get the same results. Not only this but innovative drilling techniques also help them reduce noise and produce less waste when drilling. The way these new techniques works is that oil wells are being extended horizontally, resulting in less disturbance to the surface. Collecting more data According to some reports, companies in the oil industry only run at 77% of their true potential. This means that if more data is collected and changes are made in their approach, they could essentially reduce their energy use even more. On top of this, they could also end up reducing the amount of waste they produce. By making most of the data they collect, oil companies could also prevent accidents that occur at their rigs and create a safer working environment for their employees. Going paperless Just like with most other industries, a large amount of documentation in the oil industry is printed every day. With the Cloud technology allowing companies to store documents on the web, the amounts of paper oil companies need could easily decrease. By moving from paper to electronic systems, these companies can help save trees and eliminate human errors. Not to mention that they could save time it takes to file papers and help their employees get more work done. The use of smartphones and tablets can help eliminate the need for paper even more. The trend of going green is increasing and we can finally say we’re moving towards a more eco-friendly future. With the implementation of the right techniques and technologies, companies in the oil industry can play their part and help preserve the planet.

Tracey Clayton

Tracey Clayton

 

WTI Trading - Monday, April 15, 2019.

Monday, April 15, 2019.   As is typically the case with US Oil, before a drop, we have an UP move.   The two trades are well defined and managed rather easily, compared with other days.   Volume was rather low, well below the minimal threshold   Details of each indicator, on the following pages.

  Indicator #1 shows how we go from negative territory to positive territory.   The period in positive territory is only the cranking up, so that the market can go down.


  Indicator #2 clearly shows how we go from an UP move to a DOWN move.

  Finally, the Volume Indicator shows that we have not reached the level of volume we have usually, during the US trading session.   Prepared on Monday, April 15, 2019. By Francois Normandeau. Monday, April 15, 2019..pdf

Francois Normandeau

Francois Normandeau

 

WTI Trading - Friday, April 11, 2019.

Friday, April 12, 2019.   A huge buy trade and three quick sell trades. And we finish the day where it all started, at exactly the same level.   My entry for the short trade was based on the fact that WTI almost touched 64.50, then retraced, and went back up again, touching 64.50 for only a minute or so.   The market touched that 64.50 level, it stayed there for very very little time. This is a bearish sign I felt that it was likely to go down,

  As much as the up trade was easy and straightforward, as much as the sell trade I took, was difficult to manage and awkward. It took more time, in order to make less money. Still, an interesting day, after all.   Prepared on Friday, April 12, 2019. By Francois Normandeau.   Friday, April 12, 2019..pdf

Francois Normandeau

Francois Normandeau

 

WTI Trading - Thursday, April 11, 2019.

Thursday, April 11, 2019.   Definitely a down day.   Two signals, for two short trades.

Triggers for each sell trade, according to Indicator #1.   Requirements for entry: a crossover from positive to negative territory.   From the initial entry all the way to the bottom of the second sell trade: 100 pips.   Prepared on Thursday, April 11, 2019. By Francois Normandeau. Thursday, April 11, 2019..pdf
 

WTI Trading - Wednesday, April 10th, 2019.

Wednesday, April 10th, 2019.   A turbulent day on WTI Oil. Only one valid and clear signal for an UP trade.   Our usual requirement for an entry is a crossover from negative to positive territory on Indicator #1. But this took place too frequently, as the bears and bulls struggled to gain the upper hand.   By using Indicator #2, the trend indicator, we were able to identify only one trade, a buy.



We always follow the same rules with the same indicators, and the same guidelines for entry and exit.   This allows us to be more objective, even though a human and personal element is always present.   It requires extreme dedication, concentration, and long term commitment, to succeed as a day trader.   Whatever tool, technique, system, methodology you use, there will always be pitfalls, challenges, drawbacks, and times where you feel you should cease all trading activities and move on to some other endeavor.   Over a 2-year period, only 10% of traders will still be in operation.   Over a 5-year period, only 1% will still be trading actively.   Over a 10-year period, only 2 % will become professional traders, able to derive an income from it.   Over a 15-year period, the remaining 1% will live very well.   The trick is to not quit.   Prepared on Thursday, April 11th, 2019. By Francois Normandeau. Wednesday, April 10th, 2019..pdf
 

WTI Trading - Tuesday, April 9th, 2019.

Tuesday, April 9th, 2019.   A pump and dump day. The pump up, minimal. (indicated by the green vertical lines on the price window and on Indicator #1 window) Followed by a decent move down. (indicated by the red vertical lines on the price window and on Indicator #1 window)   Requirements for entry: Cross over from negative to positive territory, and vice versa, on Indicator #1. Shown further below (next page) in greater detail.


Indicator #1 here below the price window.   EU trading session. We have one crossover, from negative to positive territory, on Indicator #1. Illustrated by the green vertical lines. This is a buy signal.   The buy trade: 25 pips.   Then we have a crossover from positive to negative territory. Illustrated by the red vertical lines. This is a sell signal.   US trading session. Much more volatile, as is very often the case. Overall, Indicator #1 remains in negative territory, except for a minor touch of the neutral line.   The sell trade: 75 pips.   More details on the next pages, with Indicators #2 and #3.


Here are the buy and sell signals given by Indicator #2. This confirms Indicator #1, seen earlier.



Finally, Indicator #3, Volume.   We see a sharp rise in volume as of 9 am NY time. The first black vertical line on the left of the chart. This creates movements of a greater amplitude, both up and down.   Overall, following the indicators we use, gives us confidence. We can carry on with the trades, basing our decisions on criteria we can observe and assess.   Trading with indicators is not the only way to trade. A great percentage of traders use no indicators. If this works for them, fine. I do not hold the absolute truth. I only developed a system which makes sense to me, and which I use in order to trade. I would never force anyone to use indicators. And I would never imply that my system is the best or the only good one (contrary to most folks out there who are happy to give courses and charge 10k and more). And I would never yield and accept to trade any other way than the way I trade. As long as I deal and interact with people who have the same respect, it’s all good…

  Prepared on Tuesday, April 9th, 2019. By Francois Normandeau.   Tuesday, April 9th, 2019..pdf
 

WTI Trading - Monday, April 8th, 2019.

Monday, April 8th, 2019.   Another up day, and reaching a 5-month high.   We use Indicator #2 in order to discard the fake moves.

We had a few moves, three on the upside and one, on the downside. But the move we are interested in is the biggest move of the day. Identified when Indicator #2 goes up, above the green horizontal line, into the buy zone.   The other factor we are looking for is sufficient volume.
For as long as the volume is low, there is no interesting move. As soon as the volume rises to a critical level, identified by the cyan color line, then we know that a move can happen.   Finally, with Indicator #1, we wait for the signal line, to enter extreme overbought or extreme oversold. (lower than the lowest red line or higher than the highest green line)

We have only one trade, during the up move.




  Prepared on Monday, April 8th, 2019. By Francois Normandeau. Monday, April 8th, 2019..pdf

US - update through December 2018

These interactive presentations contain the latest oil & gas production data from 101,165 horizontal wells in 11 US states, through December 2018. Visit ShaleProfile blog to explore the full interactive dashboards Cumulative oil and gas production from these wells reached 10.4 Gbo and 112 Tcf. West Virginia is deselected in most dashboards, as it has a greater reporting lag. Oklahoma is for now only available in our subscription services. Utah, where the Uinta Basin is located, is for the first time included in this update. December production from these ~100 thousand horizontal wells was above 6.5 million bo/d, a y-o-y growth of 1.3 million bo/d (after revisions). This was a similar growth rate as a year earlier. Natural gas production increased to ~60 Bcf/d, growing by about 10 Bcf/d during the year, which also matched the growth in the previous year. The production profiles for these wells can be seen in the ‘Well quality’ tab, where the oil basins are preselected. The average peak production rate grew by 12% in 2018 (635 bo/d vs 565 bo/d). If you group the wells by the quarter in which they began production (using the “Show wells by” selection), you will find that this increase in peak production rate continued throughout 2018. The final tab lists the top operators in these basins. EOG was far in the lead in December, followed by ConocoPhillips, Pioneer Natural Resources and Concho, which are basically sharing the 2nd spot. The ‘Advanced Insights’ presentation is displayed below: This “Ultimate recovery” overview shows the relationship between production rates and cumulative production over time. The oil basins are preselected and the wells are grouped by the year in which production started. The ~1,400 horizontal wells that started producing in the first quarter of 2012, peaked at a rate close to 300 bo/d, have now declined to 20 bo/d, and recovered 150 thousand barrels of oil in the process. The ~1,400 wells that began production 4 years later (Q1 2016), peaked at a rate roughly 50% higher, and are also on track to recover about 50% more oil, before they have fallen to 20 bo/d. A major question now is whether this relationship between initial production, and ultimate recovery will hold up with ever more “child” wells being drilled. Unlike their “parent” wells, they do have nearby producing wells. We will explore this question in more detail in the coming months. If you have questions that cannot be answered by the interactive presentations here, schedule a free demo with us here, or request a 10-day trial. Early next week we will have a new post on North Dakota, which will release February production data by the end of this week.   Production data is subject to revisions. For these presentations, I used data gathered from the sources listed below. FracFocus.org Colorado Oil & Gas Conservation Commission Louisiana Department of Natural Resources. Similar as in Texas, lease/unit production is allocated over wells in order to estimate their individual production histories. Montana Board of Oil and Gas New Mexico Oil Conservation Commission North Dakota Department of Natural Resources Ohio Department of Natural Resources Pennsylvania Department of Environmental Protection Texas Railroad Commission. Individual well production is estimated through the allocation of lease production data over the wells in a lease, and from pending lease production data. Utah Division of Oil, Gas and Mining Automated Geographic Reference Center of Utah. West Virginia Department of Environmental Protection West Virginia Geological & Economical Survey Wyoming Oil & Gas Conservation Commission   Visit our blog to read the full post and use the interactive dashboards to gain more insight http://bit.ly/2G9Hf9S   Follow us on Social Media: Twitter: @ShaleProfile
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WTI Trading - Friday, March 22nd, 2019.

Friday, March 22nd, 2019. Last trading day of the week. Biggest and most profitable move in WTI. From highest to lowest, 150 pips. I managed to make 75 pips, and I am happy with that result.   Red vertical lines, each entry for each short. Blue vertical lines, each close, as maximum value.   Details further below.       Each short, initiated upon confirmation by Indicator #1. Staying in the trade for as long as: a) the indicator line of Indicator #1 is below the black horizontal line which is the neutral line. b) Indicator #2 has not crossed over yet and started to rise.     The decision to stay in the trade or not, must be taken while considering all the available information. Namely: The price action of US Oil; The price line in relation to the trailing Ichimoku line; Indicator #1; Indicator #2; Volume in the bottom window (with 2 sets of Bollinger bands).       There was a release of numbers related to oil rigs count. The numbers seemed to justify a serious down move. There was also talk about the strength of the US Dollar, intraday, today.   I expected a move of perhaps 100 pips, and set my sights on a profit target of 75 pips, so that I can start the trade and leave the trade while there is still momentum on the down side, to avoid getting caught in a short trade while the market settles and price pulls back up, which can happen violently in US OIL.   Therefore, when the total move was 150 pips, my expectations played a trick on me, and I unconsciously set myself up for a more modest gain than could have been achieved, solely with chart analysis, where no expectations are entertained.   This is a weakness I have, where I “decide” where I think the market will go, and at times, because I want to be right, I get caught because the market will go where the market will go, not where I think or where I decide it will go.   Still, a day with 75 pips is better than a day with minus 75 pips, as I experienced in my beginner years.   Another study, keeping only the trailing Ichimoku line, with the entries for each short trade, as soon as the price line re-enters under the trailing Ichimoku line.       If we now identify the sizes of each minor down move, we obtain the following.   Three (3) minor moves of minimum 60 pips each.       I can only realize that the total amount of pips, ideally possible, in the three short trades today, was closer to 180 pips.   I can only recommend the following: That I time more closely entries and exits, in order to attain a higher percentage of all possible pips, and not just a fraction.     Prepared on Friday, March 22nd, 2019. By Francois Normandeau.     Friday, March 22nd, 2019..pdf
 

WTI Trading - Useful links and tools

https://www.oanda.com/forex-trading/analysis/market-hours Useful, in order to see which trading sessions are currently active, worldwide.       https://www.spglobal.com/platts/en/market-insights/latest-news Live news related to the commodities markets, including US Oil.       https://www.trademetria.com/trading-journal-features Trading journal, can be used with the following brokers: Ally Invest Binance Bitfinex Collective2 Colmex Pro cTrader Das Trader Degiro Edgewater Markets eOption Etrade Fidelity Forex.com Fusion FX Blue Gain Capital Haywood Manager Hold Brothers Gray Box IG Infinity Futures Interactive Brokers (Tradelog format) JTrader (Dukascopy) Lightspeed MB Trading Meta Trader 4 HTML File Meta Trader 5 HTML File Motivewave Multicharts Ninja Trader Prop Reports - Detailed Format Questrade Rithmic Trader Robinhood Schwab Sierra Charts Sterling Trader Suretrader Tastyworks TC2000 TD Ameritrade & ThinkorSwim Tefs Tradedirect365 Tradestation (Xls format) TradeZero Pro - Real Tradezero Pro - Simulator Tradovate TT Desktop xStation X_Trader
 

WTI Trading - March 21st, 2019.

After yesterday’s huge 100 pips upswing (upon Wednesday’s oil numbers release, which confirmed a bigger draw on oil reserves, than previously thought, hence a diminished supply, resulting in a hike in market price), today was a proper consolidation day. In the WTI universe, a consolidation day will be where all the market forces will seemingly conspire together, trying their very best to not profit from a huge move, but instead, profit from the losses of all retail traders, specially the inexperienced ones. This will most appropriately be done via “excessive churning” where every spike results in a bull trap and every drop is in the end a bear trap. The “return to mean” where price gyrates within a certain range, will be at times, violent, and most definitely merciless.   After this lengthy personal comment, let’s see how today went. Above, the buy and sell trades, here primarily based on Indicator #1, whenever the signal line crosses from negative to positive, or vice versa.   Details in the next charts (close ups).         As seen above, one would have to pay attention minute by minute, all through the day, or whenever in a trading period, and certainly, whenever a trade is initiated. To trade this type of churning market, in US Oil, and not pay attention, not be very rigorous and utterly disciplined, would result in a huge risk and highly probable loss of capital.   When comparing the entries based on Indicator #1 and the entries given by the trailing Ichimoku line, very often, using an entry with the Ichimoku trailing line gives more optimal entries.     Prepared on Thursday, March 21st, 2019. By Francois Normandeau.     Thursday, March 21st, 2019..pdf
 

WTI Trading - March 20th, 2019.

Wednesday, March 20th. WTI - M1   3 trades w/ clear entries and exits.   Entry: when Indicator #1 and Indicator #2 have crossed from (+) to (-), or vice versa. See below for close up of the crossover, for the short trade and the long trade.   Short trade: 50 pips Long trade #1: 100 pips Long trade #2: 20 pips Total: 170 pips.       Close up of the crossover, from (+) to (-), and from (-) to (+).   Indicators #1 and #2 both cross into negative territory, this is the signal for a short trade.   Indicators #1 and #2 both cross into positive territory, this is the signal for a long trade.   We close the short trade when the price line crosses the trailing Ichimoku line. The same, for the long trade.   Close up for the close of each trade, on the next image.       Each close is illustrated by the “T” symbol here on the chart above.   We can add a higher level of accuracy, by analyzing the second aspect of Indicator #2, the trailing line.   See in the next image, further below.       Here, by adding the second component of Indicator #2, the trailing line, and using the crossover, where the signal line crosses the trailing line (as a condition for the close of the trade), we obtain two closes, earlier than before and more profitable as well, specially in the case of the huge up trade of 100 pips.   We can refine this even further and use the levels of Indicator #1.   There are two key levels on Indicator #1, a line at -25 and a line at -75. The -25 horizontal line (in green) is the confirmation of a long trade (a Buy). The -75 horizontal line (in red) is the confirmation of a short trade (a Sell). When the indicator line (of Indicator #1) leaves the buy zone (green line) going below it, this indicates that the main long trade is over. When the indicator line (of Indicator #1) leaves the sell zone (red line) going above it, this indicates that the main short trade is over.   Details of each line, on charts further below.       Indicator line of Indicator #1 enters the sell zone (goes below the red horizontal line). This is a confirmation of a short trade. Trade ends when the indicator line goes back above the red horizontal line.       Indicator line of Indicator #1 enters the buy zone (goes above the green horizontal line). This is a confirmation of a long trade. Trade ends when the indicator line goes back below  the green horizontal line.     Prepared on March 20th, 2019. By Francois Normandeau. Wednesday, March 20th..pdf
 

WTI Trading - Tuesday, March 19th, 2019.

Quick description of the trades I had today. Up move, during the EU session. Down move, during the US session. Target each time is 50 pips.   Whenever Indicator #1 switches from (+) to (-), or vice versa, and that it is confirmed by Indicator #2, then we know that we have either a down move or an up move. As illustrated here above. Profit target is 50 pips away. We go out at +45 pips.         Prepared on Tuesday, March 19th, 2019. By Francois Normandeau. Tuesday, March 19th, 2019..pdf
 

Achieving High IRR's Financing Oil Deals

TODAY'S INVESTMENT GOAL:   How to achieve high Internal Rates of Return, (IRR), with a properly structured transaction based on existing oil and gas production … without the market risk of most oil and gas investments.  Can this be done?   Requirements to achieve the strategy and returns for discussion: Buy production at a reasonable discount Evaluate the production as to the operator’s capability to deliver what is purchased Hedge the acquired oil/gas to eliminate market risk   Requirement #1   Acquire production at a discount   The niche is the small to medium sized producer that has found development capital difficult to raise due to banking reserve requirements after the oil/gas price crash of 2014-2018.  Deal with producers that have existing PDP production that can be leveraged and provide the capital to improve it.   The oil is ‘rented’ for a term under a delivery schedule obviating the risks of onerous working interest structures, joint venture follies, drilling and equipment issues and any assortment of the usual risks.  The investor is not an oil company…   Oil Company Benefits:  Not an interest bearing loan, a footnote to the balance sheet Non-recourse Zero equity take-out, the company parts with none to the investor   Requirement #2                          Evaluate the operator’s capability to deliver The existing production is evaluated by a major engineering firm.  They deliver a comprehensive report regarding the ability of the oil company to meet their delivery obligations for the length of the term. The amount of oil purchased varies based on the capital needs of the company.  Oil/Gas is delivered on a stated monthly schedule, that matches the decline curve of the production.  The investor becomes part of the division order to secure repatriation of the invested amount, satisfying the delivery contract. Requirement #3 Hedge the acquisition to avoid market risk The desire is to avoid all market risk… a put is purchased on every barrel of oil bought, matching exactly with the delivery schedule.    What are the risks?       1. Market: Risk Factor – NONE Eliminated due to hedging      2. Counter party on the hedge: Risk Factor – MINIMAL  Reduced by using top credit firms.      3.  Delivery: Risk Factor – MINIMAL Reduced by quality engineering during due diligence.     4.  Environmental and Title: Risk Factor – NONE One of the top oil and gas law practices in the country prepares the review of title and environmental risks.     5.  Character: Risk Factor – MINIMAL Extensive background and credit record of the operator and producer is performed and evaluated.  In Conclusion: Investor Benefits:   The capability to have a high IRR, (much higher than most oil companies make historically). The investor has no downside market risk and can structure the transaction so they have upside profit potential. The investor has no operating expense, is not subject to being over-operated, has no equipment, will never get a cash call. The returns available via this structure are generous as to IRR’s, much higher than other investments with similar risk profiles.  
 

WTI Trading - Monday, March 18th, 2019.

Inverse of the Pump and Dump. First, the Dump move, with light volume. Still, we have a signal for a Sell trade. Whenever the price average line crosses the trailing Ichimoku, this signals the end of the trade. Indicator #1 enters the Sell zone, and Indicator #2 confirms, as it goes from positive to negative territory. Later on, following the Dump, we have the Pump. While little volume at first, during the first leg of the up move. There is a second Buy signal, with much more volume. Entry for the Buy at 58.37. Exit at 59.00. 62 pips profit.         Close-up of the Dump (before the Pump). Even though Indicator #1 has entered the max Sell zone, Indicator #2 remains timid and Indicator #3 (Volume) is not validating a huge Sell move.         Close-up of the Up move, following the down swing. The most profitable portion of the Buy trade is when Indicator #1 enters the max Buy zone and Indicator #2 is fully in positive territory. Volume has picked up significantly. Trade ends when average price line crosses the trailing Ichimoku and when Indicator #1 leaves the Buy zone and when Indicator #2 does a crossover.       Prepared by Francois Normandeau. March 18th, 2019. Monday, March 18th, 2019..pdf

Eagle Ford - update through December 2018

This interactive presentation contains the latest oil & gas production data from all 22,067 horizontal wells in the Eagle Ford region, that started producing since 2008, through December. Visit ShaleProfile blog to explore the full interactive dashboards December oil production, close to 1.3 million bo/d, barely changed y-o-y. Just over 1,800 new horizontal wells were able to counter the ~45% decline in legacy production in 2018. Gas production hovered last year just below 6 Bcf/d. Initial well performance in the 2 main formations (Eagle Ford & Austin Chalk) was basically unchanged in 2018, as the bottom graph in ‘Well quality’ tab reveals. The over 3,500 horizontal wells that started since 2017 are on a path to recover 150 thousand barrels of oil in the first 2 years on production, on average, in addition to about 0.7 Bcf of natural gas. The leading operator in this basin, EOG, has been increasing output throughout 2018, and exited the year at twice the rate than the number 2, ConocoPhillips (see “Top operators”).   The ‘Advanced Insights’ presentation is displayed below: In this “Ultimate Recovery” overview, the relationship between production rates and cumulative production is revealed. Wells are grouped by the quarter in which production started. You can see here that the bulk of the wells that began production since 2011 are going to recover on average between 150 and 200 thousand barrels of oil, before hitting a production rate of 10 bo/d. This does however also include a significant number of gas wells. Filtering on well type (oil/gas) is a subscriber-only feature. The 4th tab ranks operators by the average cumulative oil production in the first 2 years. Of the larger operators (>100 operated horizontal wells), Devon, ConocoPhillips and Encana are showing the best results according to this metric. If you missed our briefing on all the major tight oil basins on enelyst last Tuesday, you can still read the full update by entering our channel here: ShaleProfile channel on enelyst. Registering is free: enelyst registration page. Early next week we will have a post on all the 11 states that we publicly cover in the US (Oklahoma is currently for subscribers only).   Production data is subject to revisions, especially for the last few months. For this presentation, I used data gathered from the following sources: Texas RRC. Production data is provided on lease level. Individual well production data is estimated from a range of data sources, including regular well tests, and pending lease reports. FracFocus.org   Visit our blog to read the full post and use the interactive dashboards to gain more insight http://bit.ly/2HZjpQa   Follow us on Social Media: Twitter: @ShaleProfile
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Friday, March 15th, 2019.

Classic Pump and Dump. First, the UP move, with light volume. Still, we have a signal for a BUY trade. Whenever the price average line crosses the trailing Ichimoku, this signals the end of the trade. Then, Indicator #1 enters the Sell zone, and Indicator #2 confirms, as it goes from positive to negative territory. Volumes picks up. Indicator #1 enters the max Sell zone. Short trade closes when the price average line crosses the trailing Ichimoku.       Close-up of the Pump (before the Dump). Even though Indicator #1 has entered the max Buy zone, Indicator #2 remains timid and Indicator #3 (Volume) is not validating a huge UP move.       Close-up of the Down move, following the upswing. The most profitable portion of the Sell trade is when Indicator #1 enters the max Sell zone and Indicator #2 is fully in negative territory. Volume has picked up significantly. Trade ends when average price line crosses the trailing Ichimoku and when Indicator #1 leaves the Sell zone and when Indicator #2 does a crossover.
  Prepared by Francois Normandeau. March 15th, 2019. Friday, March 15th, 2019..pdf