Saudi ARAMCO earnings conference call. Said will continue production increases. Cost $2.80 bbl to lift oil. Upstream capex $4.75 bbl.

[BLA + 1,666]

Saudi continues "Scorched Earth" strategy.

Doesn't matter now, price drop regardless of Saudi Aramco or Russia actions. 

IT'S A RACE TO FILL UP THE SPARE STORAGE CAPACITY. 

WHEN THE STORAGE IS FULL THAT'S WHEN IT GETS REALLY NASTY. 

Then the shutdowns and bankruptcies begin.

* China had about 180 mm bbl extra storage capacity beginning of the year.      Probably less than half that now.

* U.S. has a good amount of storage. 

* Tankers are being used as floating storage.  

SPARE STORAGE IS FILLING UP FAST 

https://www.saudiaramco.com/en/investors/investors#

ITS ALL ABOUT THE DEMAND DESTRUCTION.  COULD SEE OVER 10MM BBLS/DAY EXTRA SUPPLY. 

How long does CV last.  Nobody knows.  Pharmaceutical companies already talking contingency plans if CV doesn't end by summer or comes back in Fall. 

My guess this ends by July, but there will be a lot of damage done. More hope than logic.  

Prices will come back but by how much. Possible new lower trading range.  Even if Russia and Saudi make up will OPEC+ ever be able to effect price again.  Will OPEC be taken seriously ? Can they put the genie back in the bottle.

 

Edited March 17, 2020 by BLA

[Justin Hicks + 162]

Got a link to the call?

[wrs + 893]

What a joke, sure it's $2.80/bbl in LOE but that's not all in. Again, they are liars of the highest order and if you believe them then that's your problem.  They are down 25% from the IPO.  

So let's see, a year of production at $25/bbl gives you $91B in revenue assuming 10mbbl/day which is all I think they will be able to maintain.  So how are they going to pay a $75B dividend?  Same way as every other oil company, borrow.  These guys are the stupidest people on the face of the earth.  They are acting entirely on emotion.

[wrs + 893]

LOL, look at this, India is going to spend their free cash buying up the KSA cheap oil.  These stupid turds are going to be flushed down the toilet with their dumbass strategy.  

https://in.reuters.com/article/india-oil-strategic-reserve-exclusive/exclusive-india-plans-to-top-up-strategic-tanks-with-cheap-saudi-uae-oil-sources-idINKBN2132B8

Pretty soon they are going to realize they are just giving away their resource.  What utter imbeciles.  The only way this makes sense is if oil was never going to be used again but that seems very, very, doubtful.

[BLA + 1,666]

 

13 hours ago, wrs said:

What a joke, sure it's $2.80/bbl in LOE but that's not all in. Again, they are liars of the highest order and if you believe them then that's your problem.  They are down 25% from the IPO.  

So let's see, a year of production at $25/bbl gives you $91B in revenue assuming 10mbbl/day which is all I think they will be able to maintain.  So how are they going to pay a $75B dividend?  Same way as every other oil company, borrow.  These guys are the stupidest people on the face of the earth.  They are acting entirely on emotion.

There income last year 2019 was $88 Billion.  That was with avg oil price $64 bbl.  They gave $73 Billion dividend.  

1. Income is different than cash flow.  

2. Aramco does not own the reserves now.  They pay  government  a royalties for access to Lift oil. 

3. They are now paying income tax, whereas before it all just went in one lump sum to govt.

Lot of financial manipulation.  

It's all the same Saudi Kingdom they just call it different things now so the can float public shares. It's different now.  It used to be where wealth funds, Aramco and Royal Government were basically all the same.  Had to change that.

As part of the IPO offering Aramco guaranteed $75 Billion annual dividend for 5 years. 

If need be they will have to lower tax rate or royalty rates in the interim.

 

Edited March 17, 2020 by BLA

[Ward Smith + 6,615]

3 hours ago, wrs said:

What a joke, sure it's $2.80/bbl in LOE but that's not all in. Again, they are liars of the highest order and if you believe them then that's your problem.  They are down 25% from the IPO.  

So let's see, a year of production at $25/bbl gives you $91B in revenue assuming 10mbbl/day which is all I think they will be able to maintain.  So how are they going to pay a $75B dividend?  Same way as every other oil company, borrow.  These guys are the stupidest people on the face of the earth.  They are acting entirely on emotion.

 

2 hours ago, wrs said:

LOL, look at this, India is going to spend their free cash buying up the KSA cheap oil.  These stupid turds are going to be flushed down the toilet with their dumbass strategy.  

https://in.reuters.com/article/india-oil-strategic-reserve-exclusive/exclusive-india-plans-to-top-up-strategic-tanks-with-cheap-saudi-uae-oil-sources-idINKBN2132B8

Pretty soon they are going to realize they are just giving away their resource.  What utter imbeciles.  The only way this makes sense is if oil was never going to be used again but that seems very, very, doubtful.

To clarify, I believe you're saying KSA is stupid, not India, who I think are reasonably smart to copy what Trump is doing and filling their strategic reserve.

[BLA + 1,666]

4 hours ago, Justin Hicks said:

Got a link to the call?

https://www.saudiaramco.com/en/investors/investors#

[BLA + 1,666]

12 hours ago, wrs said:

LOL, look at this, India is going to spend their free cash buying up the KSA cheap oil.  These stupid turds are going to be flushed down the toilet with their dumbass strategy.  

https://in.reuters.com/article/india-oil-strategic-reserve-exclusive/exclusive-india-plans-to-top-up-strategic-tanks-with-cheap-saudi-uae-oil-sources-idINKBN2132B8

Pretty soon they are going to realize they are just giving away their resource.  What utter imbeciles.  The only way this makes sense is if oil was never going to be used again but that seems very, very, doubtful.

World is running out of storage !

India was offered oil at a price it can't refuse. 

Relax it's only about 15 to 18 mm bbls

It's not even a market share war now.  It's a race to sell into what limited storage is available. 

Where does oil price go when storage full ? 

$10  ? 

Edited March 17, 2020 by BLA

[Rob Kramer + 696]

Demand destruction at the same time as demand creation. Everyone who was not using much wont mind using more. People in Canada here are filling every container they have. Cheapest I've hear so far was 58c/L .... a NORMAL LOW price is 1.13$ . 1.50$ is high . Boating season is gonna be awesome . Also over seen average CAPEX cuts of 30% multiple dividend slashes and average estimate decline of 10% yoy. NG and oil . AECO seems to be rallying as condensate usually pays the NG companies Bill's.

[wrs + 893]

1 hour ago, Ward Smith said:

 

To clarify, I believe you're saying KSA is stupid, not India, who I think are reasonably smart to copy what Trump is doing and filling their strategic reserve.

Yes, KSA.  India is calling their bluff.  Once storage fills up KSA will choke on their oil.

[wrs + 893]

17 minutes ago, Rob Kramer said:

Demand destruction at the same time as demand creation. Everyone who was not using much wont mind using more. People in Canada here are filling every container they have. Cheapest I've hear so far was 58c/L .... a NORMAL LOW price is 1.13$ . 1.50$ is high . Boating season is gonna be awesome . Also over seen average CAPEX cuts of 30% multiple dividend slashes and average estimate decline of 10% yoy. NG and oil . AECO seems to be rallying as condensate usually pays the NG companies Bill's.

You think they will let you out of your house to use the boat?  Trump just said to avoid gatherings of more than 10 people.  My boat holds more than that.  LOL!

[Ward Smith + 6,615]

16 minutes ago, Rob Kramer said:

Demand destruction at the same time as demand creation. Everyone who was not using much wont mind using more. People in Canada here are filling every container they have. Cheapest I've hear so far was 58c/L .... a NORMAL LOW price is 1.13$ . 1.50$ is high . Boating season is gonna be awesome . Also over seen average CAPEX cuts of 30% multiple dividend slashes and average estimate decline of 10% yoy. NG and oil . AECO seems to be rallying as condensate usually pays the NG companies Bill's.

I just got off the phone with a friend in Alberta. He said everyone he knows in a service company there is getting layoff notices right now. $8 WCS doesn't make any sense to anyone, especially when you consider what they're paying for diluent, which accounts for 1/3 of that WCS barrel. 

[Rob Kramer + 696]

3 minutes ago, wrs said:

You think they will let you out of your house to use the boat?  Trump just said to avoid gatherings of more than 10 people.  My boat holds more than that.  LOL!

Sorry beaches ! I'm PWC guy 😛 17' Kawasaki stx15-f. 36hours .... hoping to make it 100 ! Usually use 40L in 4hr but the throttle is 10% or 100% lol 

[BenFranklin'sSpectacles + 762]

6 hours ago, BLA said:

Saudi continues "Scorched Earth" strategy.

Doesn't matter, now price drop regardless of Saudi Aramco actions. 

Nobody can compete with those costs. 

IT'S A RACE TO FILL UP THE SPARE STORAGE CAPACITY. 

WHEN THE STORAGE IS FULL THAT'S WHEN IT GETS REALLY NASTY. 

Then the shutdowns and bankruptcies begin.

* China had about 180 mm bbl extra storage capacity beginning of the year.

* U.S. has a good amount of storage. 

* Tankers are being used as floating storage.  

SPARE STORAGE IS FILLING UP FAST 

https://www.saudiaramco.com/en/investors/investors#

ITS ALL ABOUT THE DEMAND DESTRUCTION.  COULD SEE EXCESS OF 10 MM BBLS/DAY excess of supply.

How long does CV last.  Nobody knows.  Pharmaceutical companies already talking contingency plans if CV doesn't end by summer or comes back in Fall. 

I guess this ends by July but there will be a lot of damage done. Just a wild guess.

Have to wonder what effect of High Yield debt defaults have with U.S. financial institutions. 

The US apparently has 77MMb, and you're claiming china has 180MMb.  That's just the strategic reserves of two countries though.  How much spare storage is there in the world?  Strategic reserves, private crude storage tanks, floating tankers, people filling up their tanks - all of it.  If there was a compelling reason to store oil, how much could we collectively handle? 

[BLA + 1,666]

38 minutes ago, BenFranklin'sSpectacles said:

The US apparently has 77MMb, and you're claiming china has 180MMb.  That's just the strategic reserves of two countries though.  How much spare storage is there in the world?  Strategic reserves, private crude storage tanks, floating tankers, people filling up their tanks - all of it.  If there was a compelling reason to store oil, how much could we collectively handle? 

China had a 180 million THE BEGINNING OF THE YEAR.  That's likely cut in half, maybe more by now. 

When China first refused deliveries in February the oil was diverted to South Korea . Their storage is now full. 

U.S. 77 million will start filling in two weeks.  The producers will be fighting each other to sell to SPR.  The 77 million is only about 6 days U.S. production. 

Filling up fast .  

Where does U.S. demand go.  U.S. is shutting down EVERYTHING.  How does this affect U.S. import of crude and product.  How does this affect export of crude and product.

Crazy mixed up world. 

Edited March 16, 2020 by BLA

[Rob Kramer + 696]

Even 2 nascar races canceled... that's TONS of fuel destruction. 700hp x 40 cars running wide open. Plus all the fans and trucking travel. Race teams and campers .... shoulda ran it and filmed via drones.

[Ward Smith + 6,615]

5 minutes ago, Rob Kramer said:

shoulda ran it and filmed via drones.

That actually sounds like fun. Unfortunately the drones probably can't keep up at those speeds. I've got one of the fastest and I don't think it can stay above 60 more than a couple minutes. Maybe great big ones with jet engines… folks would probably watch the drones more than the cars.  

[Gerry Maddoux + 3,627]

Moderna vaccinated their first patient yesterday. If their vaccine works, and it likely will because it's a messenger RNA vaccine, then most large pharmaceutical labs will join in a wartime effort to vaccinate everyone. 

And then we'll have a post-wartime recovery: the economy will be starved and it's off to the races. 

By then, KSA will be more in the hole, financially, providing one of the 6,000 or so royal princes hasn't assassinated MbS. If they don't plug him, someone else probably will. It'll take about three to six months to find our place on the page and we'll once again have a semi-orderly situation.

I would desperately hope that the president excludes China from our orbit. In other words, we make our own iPhones, even if we have to pay more. We make our own medical supplies. No drug made in China is allowed in. When Chairman Mao wrote the "Little Red Book" in 1950, he specifically stated that he wanted China to be self-sufficient and enclosed. We're 70 years late but we should take him up on that--he had a helluva point.

[BLA + 1,666]

16 minutes ago, Gerry Maddoux said:

Moderna vaccinated their first patient yesterday. If their vaccine works, and it likely will because it's a messenger RNA vaccine, then most large pharmaceutical labs will join in a wartime effort to vaccinate everyone. 

And then we'll have a post-wartime recovery: the economy will be starved and it's off to the races. 

By then, KSA will be more in the hole, financially, providing one of the 6,000 or so royal princes hasn't assassinated MbS. If they don't plug him, someone else probably will. It'll take about three to six months to find our place on the page and we'll once again have a semi-orderly situation.

I would desperately hope that the president excludes China from our orbit. In other words, we make our own iPhones, even if we have to pay more. We make our own medical supplies. No drug made in China is allowed in. When Chairman Mao wrote the "Little Red Book" in 1950, he specifically stated that he wanted China to be self-sufficient and enclosed. We're 70 years late but we should take him up on that--he had a helluva point.

Vaccine will take another year to complete testing even if expedited.

I like your idea of being unengaged with China.

Apple wanted to sell their Apple iPhones manufactured in China to people in India. India said OK if you want to pay a 20% tariff.  Apple is building a mega factory in India right now.

Companies like Apple and Nike have to mfg in China if they want access to their consumers.

U.S. should do the same.

It's not just the cheap labor.  The biggest factor is the manufactures use transfer pricing loophole to pay zero U.S. corporate income taxes.  The only way to stop that is the use of tariffs.

Unless they can designate it a national security issue and force their return. 

[0R0 + 6,251]

3 hours ago, Rob Kramer said:

Even 2 nascar races canceled... that's TONS of fuel destruction. 700hp x 40 cars running wide open. Plus all the fans and trucking travel. Race teams and campers .... shoulda ran it and filmed via drones.

Had a road team member of one competing group test positive so they cancelled thinking there must be others infected in other crews. 

[0R0 + 6,251]

2 hours ago, BLA said:

Vaccine will take another year to complete testing even if expedited.

I like your idea of being unengaged with China.

Apple wanted to sell their Apple iPhones manufactured in China to people in India. India said OK if you want to pay a 20% tariff.  Apple is building a mega factory in India right now.

Companies like Apple and Nike have to mfg in China if they want access to their consumers.

U.S. should do the same.

It's not just the cheap labor.  The biggest factor is the manufactures use transfer pricing loophole to pay zero U.S. corporate income taxes.  The only way to stop that is the use of tariffs.

Unless they can designate it a national security issue and force their return. 

It is entirely fine for Apple and Nike to produce in China for the China market. They just need to move production to other regional locations outside China for the US and other markets. But it takes a large investment to produce in the US, you need to train people how to do manufacturing work. Foxcon can do it, but were unwilling so far due to cost. That is why their buildings in Wisconsin are still mostly empty. There is also the matter of attitude. Younger workers have never had a manufacturing job and look down on it as a career as well as a stable source of income because of the history of manufacturing employment in the US. Finally, the worker skills issue is even worse when it comes to using large scale intricate automation. They need vocational school and remedial math and science for the year before, sometimes even college grads can't do the job without the vocational training. 

 

[RichieRich216 + 454]

12 hours ago, BLA said:

Saudi continues "Scorched Earth" strategy.

Doesn't matter, now price drop regardless of Saudi Aramco actions. 

Nobody can compete with those costs. 

IT'S A RACE TO FILL UP THE SPARE STORAGE CAPACITY. 

WHEN THE STORAGE IS FULL THAT'S WHEN IT GETS REALLY NASTY. 

Then the shutdowns and bankruptcies begin.

* China had about 180 mm bbl extra storage capacity beginning of the year.

* U.S. has a good amount of storage. 

* Tankers are being used as floating storage.  

SPARE STORAGE IS FILLING UP FAST 

https://www.saudiaramco.com/en/investors/investors#

ITS ALL ABOUT THE DEMAND DESTRUCTION.  COULD SEE OF 10 MM BBLS/DAY EXYRA SUPPLY. 

How long does CV last.  Nobody knows.  Pharmaceutical companies already talking contingency plans if CV doesn't end by summer or comes back in Fall. 

I guess this ends by July but there will be a lot of damage done. Just a wild guess.

Have to wonder what effect of High Yield debt defaults have with U.S. financial institutions. 

This more by the Saudi’s is more about keeping face then business! Let them and Russia race to the bottom, who cares! Russia is consistently lying about everything they do and if anyone really believes they can go 2-3 years at $25.00 a  barrel well I can find you a bridge to nowhere to buy. The Saudi’s has placed everything on building the eutopia like the UAE did with massive build of islands and other draws so when there no longer a producer of a oil have something else to draw in revenue. They should have started there exit as major suppliers 20 years ago.

[Gerry Maddoux + 3,627]

2 hours ago, BLA said:

Vaccine will take another year to complete testing even if expedited.

With respect, I don't think that old calculus applies, any longer. This is a global crisis, and it's literally unheard of for human trials to begin yesterday, only a couple of months after this monster showed its might. And yet they did. 

Let's see: I'm 75, a skier and mountain-climber, but with only one functioning lung. I'm in about the highest risk category possible. If someone offered me a vaccine that was only modestly proven, but asked that I sign a disclaimer, do you think I'd ponder long before doing it?

At the end of the Spanish flu, a Pasteur devotee reasoned that survivors of the flu would have plenty of antibodies to the flu, so they began drawing blood and separating out the red blood cells. From that came the term "convalescent serum," which saved countless lives. Of course, today we have many more regulatory hurdles to jump on the road to a new vaccine.

Trump is fully aware that if he doesn't get this corralled, and get the economy moving again, he's history. I have a feeling we're going to see some new moves.

[BLA + 1,666]

On 3/16/2020 at 11:02 PM, RichieRich216 said:

This more by the Saudi’s is more about keeping face then business! Let them and Russia race to the bottom, who cares! Russia is consistently lying about everything they do and if anyone really believes they can go 2-3 years at $25.00 a  barrel well I can find you a bridge to nowhere to buy. The Saudi’s has placed everything on building the eutopia like the UAE did with massive build of islands and other draws so when there no longer a producer of a oil have something else to draw in revenue. They should have started there exit as major suppliers 20 years ago.

MBS has the Salafists on one side and the angry royals and young population on the other side.

Way in over his head.  

His older brother ABS, now energy minister,  is known as a hot head and stubborn arrogant trouble maker.  Those two are the best they could find to run their oil kingdom ?

Edited March 19, 2020 by BLA

[BLA + 1,666]

53 minutes ago, Gerry Maddoux said:

With respect, I don't think that old calculus applies, any longer. This is a global crisis, and it's literally unheard of for human trials to begin yesterday, only a couple of months after this monster showed its might. And yet they did. 

Let's see: I'm 75, a skier and mountain-climber, but with only one functioning lung. I'm in about the highest risk category possible. If someone offered me a vaccine that was only modestly proven, but asked that I sign a disclaimer, do you think I'd ponder long before doing it?

At the end of the Spanish flu, a Pasteur devotee reasoned that survivors of the flu would have plenty of antibodies to the flu, so they began drawing blood and separating out the red blood cells. From that came the term "convalescent serum," which saved countless lives. Of course, today we have many more regulatory hurdles to jump on the road to a new vaccine.

Trump is fully aware that if he doesn't get this corralled, and get the economy moving again, he's history. I have a feeling we're going to see some new moves.

Let's hope you are correct.

I think Team Trump hopes that the current lockdown for two weeks shows a plateau and downturn in infections. This along with the the stimulus packages (  $50 Billion Emergency Declaration , Congressional bill going to vote and a third stimulus/tax cut) will supercharge the economy.

Lot of money being thrown at the economy.  THE COUNTRY WON'T BUY IN UNTIL THEY FEEL THE VIRUS IS WAINING.   When people perceive an  end to the virus is in sight the U.S. economy and market will take off.  

After China completely shut down Wuhan they started to see a decline in infections after just one week. I'm very skeptical of Chinese reports but it looks like they have gained control of the virus. 

Hope for the best.  Stay healthy.