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

[ronwagn + 6,290]

On 3/16/2020 at 11:39 PM, Uduak said:

The only reason I'd agree they "are the stupidest people on the face of the earth" is because they've been cutting back production all this while for shale oil producers to increase theirs. 

They were logical in the sense that they need high priced oil to survive over the long term. We don't need any Middle East oil. Canada can supply our heavy oil needs. We need to tariff low ball prices from elsewhere. 

[James Regan + 1,776]

Personally I hope they flood the market and we get back to some real oil business not flooding it with leveraged LTO and get back to the oil industry that everyone had jobs world wide and not some pin cushion robbing market shares at prices manipulated by partners when it suits them.

Produce baby produce 

let’s see who wins this battle but you can rest assured the ride camels not horses.

[Gerry Maddoux + 3,627]

14 hours ago, James Regan said:

let’s see who wins this battle but you can rest assured the ride camels not horses.

Are you sure about that? Saudi Arabia tried this very tactic in 2014 and two years later one of their guys said the kingdom would be bankrupt in three or four years if they persisted in that direction. It seems that MbS doesn't believe the results unless he runs the same experiment himself.

I'm going to go out on a limb here and predict that the winners of this battle will be Americans . . . pretty much the winners of any other battle started by someone else. That's not brag, just fact. And if the "real oil business" was so red hot, why didn't it kick "leveraged LTO" right in the nut sack? 

[James Regan + 1,776]

9 hours ago, Gerry Maddoux said:

Are you sure about that? Saudi Arabia tried this very tactic in 2014 and two years later one of their guys said the kingdom would be bankrupt in three or four years if they persisted in that direction. It seems that MbS doesn't believe the results unless he runs the same experiment himself.

I'm going to go out on a limb here and predict that the winners of this battle will be Americans . . . pretty much the winners of any other battle started by someone else. That's not brag, just fact. And if the "real oil business" was so red hot, why didn't it kick "leveraged LTO" right in the nut sack? 

We will never know how a leveraged industry could do so well in a “free Market” Just your statement is almost an answer.

Regarding battles won best not go there as it’s not a very good subject or end result.

But you guys think you won the oil embargo in the 1970s that was a great bit of spin, OPEC basically cut you some slack , not a win!

Keep on it Gung Ho time will tell.

Edited March 20, 2020 by James Regan

[ronwagn + 6,290]

16 hours ago, James Regan said:

Personally I hope they flood the market and we get back to some real oil business not flooding it with leveraged LTO and get back to the oil industry that everyone had jobs world wide and not some pin cushion robbing market shares at prices manipulated by partners when it suits them.

Produce baby produce 

let’s see who wins this battle but you can rest assured the ride camels not horses.

We don't need to allow them to sell their oil to us at lowball prices. We have all the oil we need with heavy crude from Canada. We need to tariff them. 

[Gerry Maddoux + 3,627]

2 hours ago, James Regan said:

But you guys think you won the oil embargo in the 1970s that was a great bit of spin, OPEC basically cut you some slack , not a win!

I wasn't aware that anyone "won the oil embargo in the 1970s." The Saudis decided on an embargo; we dutifully waited in line at the pumps. One day the Saudis realized that the US was their only ally--much as now. They decided they'd rather be provided with the best defense system in the world rather than have the US leave them to their own big old military--they'd last until about dusk without US defense. 

What in the world made you into this bitter little man? Whatever it was, I'm damn sorry it happened to you. 

[butasha + 123]

37 minutes ago, Gerry Maddoux said:

I wasn't aware that anyone "won the oil embargo in the 1970s." The Saudis decided on an embargo; we dutifully waited in line at the pumps. One day the Saudis realized that the US was their only ally--much as now. They decided they'd rather be provided with the best defense system in the world rather than have the US leave them to their own big old military--they'd last until about dusk without US defense. 

What in the world made you into this bitter little man? Whatever it was, I'm damn sorry it happened to you. 

BTW, the laugh was not intended to reflect the first of your paragraphs.

[James Regan + 1,776]

10 hours ago, Gerry Maddoux said:

Are you sure about that? Saudi Arabia tried this very tactic in 2014 and two years later one of their guys said the kingdom would be bankrupt in three or four years if they persisted in that direction. It seems that MbS doesn't believe the results unless he runs the same experiment himself.

I'm going to go out on a limb here and predict that the winners of this battle will be Americans . . . pretty much the winners of any other battle started by someone else. That's not brag, just fact. And if the "real oil business" was so red hot, why didn't it kick "leveraged LTO" right in the nut sack? 

At least someone is writing and reading through the rampant BS

“Shale executives and their Republican allies are right about one thing – Saudi Arabia can clearly outlast Texas drillers, despite notions of American “energy dominance.” Nick C finger in the chest as normal 👊🏻

Edited March 20, 2020 by James Regan

[0R0 + 6,251]

23 hours ago, ronwagn said:

We don't need to allow them to sell their oil to us at lowball prices. We have all the oil we need with heavy crude from Canada. We need to tariff them. 

There is no problem letting the Saudis do their bit with lower prices. It is bad for the shale industry and will stop new production. Collecting oil and gas from existing wells produces a cash flow. Shutting them in produces nothing. 

Oil is THE major input at the upstream of the economy. Laying a tax there is just plain stupid as it crimps the margins of the downstream economy. If we could obtain oil at minuscule price then we should tap it for as long as it can last. 

[Geoff Guenther + 317]

2 hours ago, 0R0 said:

There is no problem letting the Saudis do their bit with lower prices. It is bad for the shale industry and will stop new production. Collecting oil and gas from existing wells produces a cash flow. Shutting them in produces nothing. 

Oil is THE major input at the upstream of the economy. Laying a tax there is just plain stupid as it crimps the margins of the downstream economy. If we could obtain oil at minuscule price then we should tap it for as long as it can last. 

I agree with both you and Ron. Letting them dump oil is like letting China dump steel - it hurts your businesses. On the other hand there is significant cash flow freed up by buying at such low prices.

I would suggest that the US tax put tariffs on the price of oil below, say, $45 at a rate of 50%. So Saudi oil costing $25 would have an extra $10 cost on it. This can give shale a bit of a lifeline, but more importantly the money collected from the tariff should be put into new energy technologies - of a kind that the US can be a leader in.

Shale will never be as cheap as Middle Eastern oil. All we can do is limit the fallout from our experiment there. The gift that the Saudis and Russians are giving us should be put to good use.

[0R0 + 6,251]

9 minutes ago, Geoff Guenther said:

I agree with both you and Ron. Letting them dump oil is like letting China dump steel - it hurts your businesses. On the other hand there is significant cash flow freed up by buying at such low prices.

I would suggest that the US tax put tariffs on the price of oil below, say, $45 at a rate of 50%. So Saudi oil costing $25 would have an extra $10 cost on it. This can give shale a bit of a lifeline, but more importantly the money collected from the tariff should be put into new energy technologies - of a kind that the US can be a leader in.

Shale will never be as cheap as Middle Eastern oil. All we can do is limit the fallout from our experiment there. The gift that the Saudis and Russians are giving us should be put to good use.

Don't worry about the Saudi oil price. Tanker rates are rising and will act as a tariff. Perhaps not as much as an actual tariff would do, but likely enough to restrict Saudi exports to the US. Their best markets are Europe and China.

US shale is not that much more expensive than ME oil at the vanguard of the technology. What is more important is that ME oil is likely to be depleting faster than US LTO since US Shale can be refracked with substantial output, while ME oil, when it is gone it is forever. Besides which, it is a war zone. The military expenditure is part and parcel of the drilling and lifting costs. And a desperate Iran may very well target Saudi facilities again in order to stop the price war, in which Iran is very much the biggest loser.

ME oil fields have been producing since 1925. There is no way the Aramco number reflects the truth of their costs. Industry numbers put it at  $12/bbl cash costs. Not $4.75. And that does not consider pipeline and port costs etc. not to speak of military expenditure. 

[Tomasz + 1,608]

Art Berman also counted it, and he had decidedly different numbers.  According to im Saudi real breakeven is about 29 $. About 18 if you cut all royalties and other taxes.

 

Quote

 

What are Saudi Aramco's break-even oil prices? Here is data that I integrated from their Nov 2019 IPO prospectus.

Assumption that "shale" is high-cost producer simply not supported by facts. SHOCKER: some shale plays low-cost, others high-cost DOUBLE SHOCKER: most other plays in world are higher-cost (blue=offshore below) Can analysts & journalists stop making stuff up? (of course not!)

 

 

Edited March 22, 2020 by Tomasz

[John Foote + 1,135]

On 3/17/2020 at 11:44 PM, Ward Smith said:

Boeing can't even do it in one place and they've been trying to leave Seattle for quite a while. 

Boeing's issue is complicated. Massive tax breaks for going to South Carolina and easing away from the Union to some degree.

Boeing doesn't advertise it, but that Seattle workforce can kick ass, and the SC one is kicking Boeing's ass. Some airlines won't take SC Dreamliners. The amount of problems with the planes is more in SC, by a lot. Not that southerners are lazy, far from it. But decades of building planes, a lot of skills become tribal.

Odd fact. My father was anti-union most of his life. As a retired Colonel took a hobby job as a pilot instructor on KC-10s. One year Boeing won the contract and was just brutal on the workforce. So the retired Colonel organized the workers and made it a union shop. And he painfully learned don't believe a lot of what you read. Still loved the airframes and planes, although KC-10s weren't really Boeing, a McDonald Douglas airframe.

[El Nikko + 2,145]

 

https://oilprice.com/Energy/Crude-Oil/Trumps-Ultimate-Weapon-To-End-The-Oil-War.html

[El Nikko + 2,145]

14 minutes ago, John Foote said:

Boeing's issue is complicated. Massive tax breaks for going to South Carolina and easing away from the Union to some degree.

Boeing doesn't advertise it, but that Seattle workforce can kick ass, and the SC one is kicking Boeing's ass. Some airlines won't take SC Dreamliners. The amount of problems with the planes is more in SC, by a lot. Not that southerners are lazy, far from it. But decades of building planes, a lot of skills become tribal.

Odd fact. My father was anti-union most of his life. As a retired Colonel took a hobby job as a pilot instructor on KC-10s. One year Boeing won the contract and was just brutal on the workforce. So the retired Colonel organized the workers and made it a union shop. And he painfully learned don't believe a lot of what you read. Still loved the airframes and planes, although KC-10s weren't really Boeing, a McDonald Douglas airframe.

I did my pilots licence in California, in a place near Atwater and Merced where there was an airbase for the B-52s. I think it was called Castle AIrforce base. My instructor (who also very kindly let me stay at his house) was a former Colonel and instructor for B52s. I was an amazing experience, I was so young and a bit shy lol so didn't fully appreciate my time being in the US at 18 but I was just flying mad and all I wanted to do was fly. He let me and his son have a go on the B52 instrument simulator. That was pretty funny because if I remember correctly the hydraulics were set up deliberately to be really hard to fly without proper trim so the wings wouldn't get stressed and between the two of us we couldn't get it off the runway and crashed.

It was so cool to be flying a Cessna 172 around and having KC-135s fly underneath my plane and on my final flight out to Santa Monica we saw a B52 in some kind of emergency dumping fuel.

Saddly both Castle AFB and the airfield I flew from are closed although maybe the latter moved to the former.

Great memories

 

[Ward Smith + 6,615]

1 hour ago, El Nikko said:

I did my pilots licence in California, in a place near Atwater and Merced where there was an airbase for the B-52s. I think it was called Castle AIrforce base. My instructor (who also very kindly let me stay at his house) was a former Colonel and instructor for B52s. I was an amazing experience, I was so young and a bit shy lol so didn't fully appreciate my time being in the US at 18 but I was just flying mad and all I wanted to do was fly. He let me and his son have a go on the B52 instrument simulator. That was pretty funny because if I remember correctly the hydraulics were set up deliberately to be really hard to fly without proper trim so the wings wouldn't get stressed and between the two of us we couldn't get it off the runway and crashed.

It was so cool to be flying a Cessna 172 around and having KC-135s fly underneath my plane and on my final flight out to Santa Monica we saw a B52 in some kind of emergency dumping fuel.

Saddly both Castle AFB and the airfield I flew from are closed although maybe the latter moved to the former.

Great memories

 

My flight instructor was a major, and flew the KC 135. I cut my teeth on the 172, but it was an RG (retractable gear). He taught me in planes he owned and kept getting faster and better planes I'd have to requal in. His real goal was to get me to IFR and fly planes that could handle known ice, high altitude (pressurised) and had great instruments.  I'm not sure I could competently fly a 172 VFR anymore. Beautiful plane though.