OPEC EXPECTED TO CUT - WHERES THE CUT FROM UNCLE SAM

[James Regan + 1,776]

$30Bbl looming for WTI, quite rightly so Russia pressuring for a US cut in production. Why should OPEC and others take the load while the USA continues with reckless abandon.

Great time for Russian projects to put a well needed roadblock for LTI Over Production.

[BLA + 1,666]

37 minutes ago, James Regan said:

$30Bbl looming for WTI, quite rightly so Russia pressuring for a US cut in production. Why should OPEC and others take the load while the USA continues with reckless abandon.

Great time for Russian projects to put a well needed roadblock for LTI Over Production.

United States is a Free Market Economy

The strongest Economy in the world.

Russia can pressure U.S. to cut production all they want.  Not gonna happen. 

Edited March 5, 2020 by BLA

[Old-Ruffneck + 1,241]

18 minutes ago, James Regan said:

$30Bbl looming for WTI, quite rightly so Russia pressuring for a US cut in production. Why should OPEC and others take the load while the USA continues with reckless abandon.

Great time for Russian projects to put a well needed roadblock for LTI Over Production.

30$bbl on WTI? Hovering around 45$ right now, I doubt 30$'s range is in near future. Might hit 40 before a rebound in next 2 weeks but then is the time to buy, by September it should be back in upper 50's to lower 60's$ range.

[Douglas Buckland + 6,308]

Guys,

The OPEC members are national oil companies, the Russian firms are also essentially national oil companies. That said, cuts can be mandated by the government.

The companies in the US are independent from the government. If the government tried to impose a cut, not only would it be ignored, it would be illegal (price fixing).

You are trying to compare apples to oranges.

[Rasmus Jorgensen + 1,169]

9 minutes ago, Douglas Buckland said:

The companies in the US are independent from the government. If the government tried to impose a cut, not only would it be ignored, it would be illegal (price fixing).

Well, it wouldn't be illegal for the Texas RRC to enforce existing rules flaring... 

[Bob D + 562]

Uncle Sam does not produce a drop of oil James.  You know better!

Edited March 5, 2020 by Bob D

[El Nikko + 2,145]

1 hour ago, James Regan said:

$30Bbl looming for WTI, quite rightly so Russia pressuring for a US cut in production. Why should OPEC and others take the load while the USA continues with reckless abandon.

Great time for Russian projects to put a well needed roadblock for LTI Over Production.

Shale drilling has slowed down significantly in the US from what I can see. I think production is barely growing as well and plenty of people expect it to start falling soonish.

My feeling is a lot of the really easy/fast wells have been drilled and small/medium sized companies are going to have to start drilling wells which take longer, are deeper and cost more to drill.  If so that should help ballance things out...and then there is the lack of investors.

Very grim times yet again.

[Bob D + 562]

Exxon Mobil Corp. is slowing the pace of its flagship shale project in the Permian Basin, one of the first signs that the oil majors are throttling back on production in response to the recent slump in prices.

The U.S. energy giant will cut Permian production growth by about 10% over the next two years, the company said at its analyst day in New York on Thursday, but will stick to its long-term plan to almost triple output from the basin by 2024.

Exxon’s short-term slowdown in the Permian stands in contrast to plans by rival Chevron Corp., which this week increased its output target for the basin to fund as much as $80 billion of dividends and share buybacks over the next five years.

[BLA + 1,666]

5 hours ago, El Nikko said:

Shale drilling has slowed down significantly in the US from what I can see. I think production is barely growing as well and plenty of people expect it to start falling soonish.

My feeling is a lot of the really easy/fast wells have been drilled and small/medium sized companies are going to have to start drilling wells which take longer, are deeper and cost more to drill.  If so that should help ballance things out...and then there is the lack of investors.

Very grim times yet again.

Production held steady at 13 mm bbls/day for last six weeks. Just moved up to 13.1 last week.

Crude exports were a healthy 4.157 mm bbls a day last week.  Doubt it holds up.

Edited March 5, 2020 by BLA

[Bruce Hendrickson + 4]

Could US and multinational oil production companies work through an association to balance output to demand in a fair and equitable manner?   

[Ward Smith + 6,615]

7 minutes ago, Bruce Hendrickson said:

Could US and multinational oil production companies work through an association to balance output to demand in a fair and equitable manner?   

Technically that would violate the monopoly and oligopoly laws setup to break Standard Oil at the turn of the last century. From the perspective of US law, OPEC is completely illegal. 

[wrs + 893]

2 hours ago, BLA said:

Production held syteady a t 13 mm bbls/day for last six weeks. Just moved up to 13.1 last week.

Crude exports were a healthy 4.157 mm bbls a day last week.  Doubt it holds up.

The weekly data isn't real data, it's just a WAG.  The monthly data in the 914 report is based on the actual reported production which for Texas lags by 60 days.  That showed a drop in production for Dec 2019 from Nov 2019 but an increase of 700kbbl/day over Dec 2018.  That is a slowing rate of growth and I am quite sure that you will see a decline in production going forward.  

Today XOM even said they are slowing down for now in the Permian.  They drilled 8 new wells on my section last fall, but have not completed any of them.  They reported 15% lower production in January on the lease compared to December so I think they are planning to ride out the low prices with lower production.

[BLA + 1,666]

5 minutes ago, wrs said:

The weekly data isn't real data, it's just a WAG.  The monthly data in the 914 report is based on the actual reported production which for Texas lags by 60 days.  That showed a drop in production for Dec 2019 from Nov 2019 but an increase of 700kbbl/day over Dec 2018.  That is a slowing rate of growth and I am quite sure that you will see a decline in production going forward.  

Today XOM even said they are slowing down for now in the Permian.  They drilled 8 new wells on my section last fall, but have not completed any of them.  They reported 15% lower production in January on the lease compared to December so I think they are planning to ride out the low prices with lower production.

Makes sense.

Virus may accelerate the consolidation.  Weed out the weak sisters.

After consolidation I see WTI in upper $50s , maybe $60. 

Just have to hope virus ends with coming good weather and does not return this fall.   Still an unknown.

Edited March 5, 2020 by BLA

[El Nikko + 2,145]

41 minutes ago, wrs said:

Today XOM even said they are slowing down for now in the Permian.  They drilled 8 new wells on my section last fall, but have not completed any of them.  They reported 15% lower production in January on the lease compared to December so I think they are planning to ride out the low prices with lower production.

That's similar to what I'm seeing with our clients, small batches of wells being drilled from 3-5 then a break. It's a far cry from a couple of years ago when it was far greater numbers being drilled with multiple rigs at a time.

[Otis11 + 551]

3 hours ago, Bob D said:

Exxon Mobil Corp. is slowing the pace of its flagship shale project in the Permian Basin, one of the first signs that the oil majors are throttling back on production in response to the recent slump in prices.

The U.S. energy giant will cut Permian production growth by about 10% over the next two years, the company said at its analyst day in New York on Thursday, but will stick to its long-term plan to almost triple output from the basin by 2024.

Exxon’s short-term slowdown in the Permian stands in contrast to plans by rival Chevron Corp., which this week increased its output target for the basin to fund as much as $80 billion of dividends and share buybacks over the next five years.

 

1 hour ago, wrs said:

The weekly data isn't real data, it's just a WAG.  The monthly data in the 914 report is based on the actual reported production which for Texas lags by 60 days.  That showed a drop in production for Dec 2019 from Nov 2019 but an increase of 700kbbl/day over Dec 2018.  That is a slowing rate of growth and I am quite sure that you will see a decline in production going forward.  

Today XOM even said they are slowing down for now in the Permian.  They drilled 8 new wells on my section last fall, but have not completed any of them.  They reported 15% lower production in January on the lease compared to December so I think they are planning to ride out the low prices with lower production.

 

42 minutes ago, El Nikko said:

That's similar to what I'm seeing with our clients, small batches of wells being drilled from 3-5 then a break. It's a far cry from a couple of years ago when it was far greater numbers being drilled with multiple rigs at a time.

Yep - what I'm seeing is full steam ahead on long lead items (permitting, right of ways, pads, certain infrastructure, etc), a more measured approach on medium lead items (actually building facilities and some infrastructure), and a significant slow down on short lead items.

Aka, investment moderating from it's highs, but not going away. Majors preparing to be able to turn on the spigot fast when they want, but only bringing on what they want right now - mostly to fulfill contracts as other wells decline. (Also, going to defer the highest capital portions - aka the actual frack - until shortly before pop. But that's again, generally a short lead item.)

It'll be able to ramp relatively quickly though, which will temper the upside moving forward. Might brace for sustained lower end of the recent price range.

[Bob D + 562]

.

Edited March 5, 2020 by Bob D
typo

[Bob D + 562]

1 minute ago, Bob D said:

I buy barrels from Permian producers.  As of last week, EVERY producer I spoke to was going to grow in 2020.  Most had hedges in place through 2020.  

 

[Otis11 + 551]

2 hours ago, Bob D said:

I buy barrels from Permian producers.  As of last week, EVERY producer I spoke to was going to grow in 2020.  Most had hedges in place through 2020.  

This is the 'contracts in place' I mentioned... but every producer? How significant of growth?

I know most had planned that at $60 oil, but have they changed in light of the price impacts they're seeing now? (And what if we stay closer to the $50 or below range? What if we dip toward $40 temporarily? Did they hedge enough?)

Overall I'm seeing the big players hedge their options - stay on track to hit their shareholder commitments in 2023+, but potentially defer some near term production until prices recover a bit.

[ronwagn + 6,290]

9 hours ago, James Regan said:

$30Bbl looming for WTI, quite rightly so Russia pressuring for a US cut in production. Why should OPEC and others take the load while the USA continues with reckless abandon.

Great time for Russian projects to put a well needed roadblock for LTI Over Production.

We use as much as we produce so we have not reason to cut, except to save our industry, we have our own buyers who are benefiting from low prices.  We are going through a worldwide " Black Swan" economic upheaval due to the coronavirus/covid 19 hysteria. It shows that people value their lives over living their lives as usual. That is a valuable lesson that we should learn from.

Is life all about making as much money as possible and having a huge house, expensive vehicles, expensive vacations, and all the other luxuries possible? If I can have greater longevity, more free time, and less of all of the above, that would be my choice. It would probably make for a lot smaller economy, but the people will choose. We are learning about this black swan and many more are possible. What we don't want to do is panic unnecessarily. 

[El Nikko + 2,145]

Looks like Russia isn't going to agree to further cuts

https://www.zerohedge.com/markets/oil-plunges-4-after-russia-rejects-additional-opec-cut

[James Regan + 1,776]

14 hours ago, ronwagn said:

We use as much as we produce so we have not reason to cut, except to save our industry, we have our own buyers who are benefiting from low prices.  We are going through a worldwide " Black Swan" economic upheaval due to the coronavirus/covid 19 hysteria. It shows that people value their lives over living their lives as usual. That is a valuable lesson that we should learn from.

Is life all about making as much money as possible and having a huge house, expensive vehicles, expensive vacations, and all the other luxuries possible? If I can have greater longevity, more free time, and less of all of the above, that would be my choice. It would probably make for a lot smaller economy, but the people will choose. We are learning about this black swan and many more are possible. What we don't want to do is panic unnecessarily. 

The deficit between 13 Million and Russia’s 11million is enough for them to ask the question why should they cut market share when at 40 a Bbl they are making money. It’s been Putin’s goal to put a dent in the US shale play maybe this is his opportunity to take advantage of theBlack  Swan.

They are only discussing and the ass is falling out of the market imagine if we shortly hear not cut from Rússia and Proxies.

Ummmmmmm.....

[James Regan + 1,776]

1 hour ago, El Nikko said:

Looks like Russia isn't going to agree to further cuts

https://www.zerohedge.com/markets/oil-plunges-4-after-russia-rejects-additional-opec-cut

I replied then read your post again, I think this is Putin’s chance to achieve something he has wanted for a while with zero blame, and it’s a temporary glitch but perfect for him to ask the question or send a message, let’s see!

Edited March 6, 2020 by James Regan

[Douglas Buckland + 6,308]

18 minutes ago, James Regan said:

The deficit between 13 Million and Russia’s 11million is enough for them to ask the question why should they cut market share when at 40 a Bbl they are making money. It’s been Putin’s goal to put a dent in the US shale play maybe this is his opportunity to take advantage of theBlack  Swan.

They are only discussing and the ass is falling out of the market imagine if we shortly hear not cut from Rússia and Proxies.

Ummmmmmm.....

Yep Jimmy ol’ Bean, it looks like the drilling business will be backstroking around the toilet bowl for a few more years now....😖

[El Nikko + 2,145]

28 minutes ago, James Regan said:

I replied then read your post again, I think this is Putin’s chance to achieve something he has wanted for a while with zero blame, and it’s a temporary glitch but perfect for him to ask the question or send a message, let’s see!

Yes most likely. I see it as a part of a geopolitical game, I suppose oil has always been used like this but ever since the Syrian war started it really seems like it's been used as a weapon particularly by the Saudis and Russians. The Russians always wait till the eleventh hour before agreeing to anything so maybe there's still time. Saudi needs much higher prices than Russia to ballance social spending (or so they say), so maybe there will some deal hammered out possibly in exchange for Saudi/Qatari agreement on their support for rebels in Syria. I still feel the conflicts in the Middle East are being very overlooked by commentators and the markets, missile attacks on ARAMCO instilations (didn't hit anything important) happened again recently and the markets didn't even blink an eye.

I've got to say I was cautiously optimistic at the beginning of the year now I'm just depressed lol. I would advise anyone thinking about getting in to the oil industry to forget it and run as fast as possible in the opposite direction.

[James Regan + 1,776]

32 minutes ago, Douglas Buckland said:

Yep Jimmy ol’ Bean, it looks like the drilling business will be backstroking around the toilet bowl for a few more years now....😖

Who knows Hoss, maybe we can spread the gloom throughout the sectors and just maybe  something healthy and upright will appear.

We are on the brink of losing a very important wrench from our planets toolbox # dinosaurs 🦕