One Last Warning For The U.S. Shale Patch

36 minutes ago, Old-Ruffneck said:

The author of this story must be investor. Depending on what side of the street your on, consumer or investor it is good/bad news. Since I am a heavy consumer, good news for me.

https://oilprice.com/Energy/Crude-Oil/One-Last-Warning-For-The-US-Shale-Patch.html

Keep pumpin' baby!!

I think Mr. Berman is right.  The market remains oversupplied, and demand is falling off.  I don't see how prices can stabilize with that kind of downward pressure.

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3 minutes ago, Oil_Engineer said:

I think Mr. Berman is right.  The market remains oversupplied, and demand is falling off.  I don't see how prices can stabilize with that kind of downward pressure.

So if your a consumer, all good with price pressure downward. If your an investor, well not so good...…..

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(edited)

22 hours ago, Oil_Engineer said:

I think Mr. Berman is right.  The market remains oversupplied, and demand is falling off.  I don't see how prices can stabilize with that kind of downward pressure.

Look at Authors clients.  (1) E & P Shale Companies and (2) Capital Investment Funds.

Everyone has an agenda.

If oil starts trading like other commodities and settles at say $50 bbl he's out  of a  job.  

.

 

Edited by JJCar
typo
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(edited)

What's wrong with Free Markets ?

What Does Art want Continental's Harold Hamm (Trumps pal) to do ? ..  .  .  .  . Bring back his previous idea to organize US producers into a Cartel.  Harold wanted to call it "Cowboyistan" 

Edited by JJCar
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You certainly are fixated on Harold.. So you may as well get your facts straight.

The divorce settlment from Sue Ann was for $974 million, yes the check cashed, he didn't fight the settlement, he's the one that offered the one time take it or leave it deal.

There is no trophy wife, the affair was presumably with the housekeeper in Enid.

Sue Ann got the ranch in California, the house in Enid and the mansion in Nichol's Hills.

Hamm hasn't been "desperate" in forty years. Like him or hate him he's a shrewd businessman who goes after what he wants.

I don't particularly care for some of his practices, but can't fault the man's tenacity

54ac62f5ecad0451666e9a33-1136-604.png

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(edited)

Hamm recently stated $70 oil is the sweet spot.  Hess Oil said with new technology and methods in regard to new wells they now (2018 forward) achieve 55% return with oil at $50 (nice return) at the same BAKKEN oil field Hamm drills.

Saudi's want $85 for bbl when it costs them $4.00.  

The larger Oil companies including independents using digital technology and cube drilling are making great money.  The oil industry is in to digital / technology transformation.  

There will be a huge consolidation in the industry.  There will be a lot of casualties in the Shale operator fallout.  Better to be ahead of it than behind it. 

 

Edited by JJCar
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5 hours ago, Old-Ruffneck said:

So if your a consumer, all good with price pressure downward. If your an investor, well not so good...…..

A good investor can work the market no matter which way it is going.

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17 hours ago, Oil_Engineer said:

A good investor can work the market no matter which way it is going.

that's the difference between a Trader and an Invester.  

If one is looking for a stock to throw into their retirement fund and forget about it, I would  NOT suggest small/misize shale Co's. If not in them stay I believe you should get out  . . .  

Go with the consolidators.  Those that have the capital to invest in the latest technology,  cube drilling methodology and digitization.

Edited by JJCar
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(edited)

18 hours ago, Justin Hicks said:

 

54ac62f5ecad0451666e9a33-1136-604.png

You shouldn't be putting someone's personal check online. Do you have authorization ?

 

Edited by JJCar
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5 hours ago, JJCar said:

Hamm was desperate at the time.  He traded in his wife of 30 years for a new young trophy wife and was going thru a divorce.  He settled with his ex wife, giving her $1 Billion settlement JUST BEFORE THE PRICE OF OIL (along with Continental stock price) crashed.  He tried to stop the settlement .  I don't know if he was successful.

not sure what that has to do with free markets? I might be missing something.  Hamm filed for divorce a bazillion years ago (90s maybe?), later to be rescinded. I don't know the particulars of the alleged (proven? idk) affair. I'm just suggesting that their relationship was troubled for many years--not sure how desperate he was. 

Still not sure where we're  going with this but... Sue Anne was a lawyer, you know, with decades of experience in the oil and gas industry.

She later privately funded a campaign to unseat the judge that presided over her divorce case--and was successful I might add.  A woman scorned and all.....

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(edited)

 

Oil should be a lot less  . . .  and Consumers should be paying $2.00 gal at the pump. 

Edited by JJCar
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8 hours ago, JJCar said:

Look at Authors clients.  (1) Shale Companies and (2) Investment Funds. 

Everyone has an agenda.

you may want to do basic research before embarrassing yourself with accusations like this.

Art Berman was vocal about issues of shale industry (lack of profitability being the main one) for many years.

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8 hours ago, Oil_Engineer said:

I think Mr. Berman is right.  The market remains oversupplied, and demand is falling off.  I don't see how prices can stabilize with that kind of downward pressure. 

Art changed his view on oversupply in light of new info on storage withdrawal. http://www.artberman.com/u-s-no-longer-over-supplied-with-oil-good-news-bad-news/

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(edited)

4 hours ago, DanilKa said:

you may want to do basic research before embarrassing yourself with accusations like this.

Art Berman was vocal about issues of shale industry (lack of profitability being the main one) for many years.

What's your point.  The Shale operators made tons of money from 2008 thru 2014. Most plowed the cash back into expanding their business . They issued bonds and took bank loans when borrowing was very inexpensive.  Then the bottom fell out of the pricing. 

Things change.  Shale industry matures.  Competition reduces product price.  Its Economics 101. OPEC price gauging is on its last leg.

As Art's  bio states, he consults to Capital Investment Funds and E & P Shale Companies. Rather than trying to artifically prop up prices by coordinating Shale companies to pull back production or in a sense demonstrate cartel like behavior, he should advise his clients as to what is happening in the US Shale Industry.

The Investment Firms which he recommended to buy certain Shale stocks should be advised to sell the weak sisters and buy the consolidators.

The E & P Shale Companies he has advised should be told (1) If you are too small, capital constrained or can't afford to implement multi-rig Pads, cube drilling and oilfeild digitization you should merge or sell out while you can. (2) If you are a large independent you should make sure you use the latest technology and methods to be able to make a good return on $45 to $55 oil.

Honestly, how do you organize all the numerous Shale Companies to simultaneously cut back production. The U.S. is a capitalist market driven economy.  Size now matters.  Cutting capital expenditures now to squeeze out a few dividends is not going to cut it for very long.

Art warns "  . . . . Last Chance".  Its already too late for that .

Sell weak ones  . . .  buy consolidators.

 

Edited by JJCar
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11 hours ago, Old-Ruffneck said:

Bizarrely, I suddenly seem to find myself now on the low side of estimates for Brent average price for this year.

Does an average of $70 Brent for 2019 sound familiar to anyone here? ...  Do the words ad nauseum comments ring a bell?

 

"Analysts are making fairly aggressive calls for 2019 average Brent price of $74 and $83 in 2020. I hope those calls are right but I am less optimistic. That is because the world remains over-supplied with oil."

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13 hours ago, Oil_Engineer said:

I think Mr. Berman is right.  The market remains oversupplied, and demand is falling off.  I don't see how prices can stabilize with that kind of downward pressure.

Mr. Berman has a perfect track record of being 100% wrong for the last 10 years.  Think I will take whatever he says and throw it over my left shoulder as far as possible. 

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11 hours ago, JJCar said:

Justin how did you get a copy of the check ?

Are you dating Sue Ann ?

 

Just trying to help you out... Like I said, if you want to throw around info about Harold, you may as well get your facts correct.

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12 hours ago, DanilKa said:

you may want to do basic research before embarrassing yourself with accusations like this.

Art Berman was vocal about issues of shale industry (lack of profitability being the main one) for many years.

Art is a friend of mine and had, continues to have, the balls to question the shale phenomena for nearly two decades. He pegged the shale gas disaster, and IT's grossly exaggerated reserve estimates,  in the early 90's to a tee. 

Those of us that are concerned about how the shale oil industry can make good on all of its promises of abundance, when it is deeply in debt and cannot make a profit, have been surprised at the amount of money thrown at shale oil over the past 6-7 years and how much it has continued to grow by credit/debt. Art is old hand like myself and never in my career have I seen an oil "play" so woefully unprofitable last so long; most of the time by now an admission of economic failure occurs, folks stop spending their own money and move on to the next idea. The shale oil phenomena is different, of course, because very few are spending their own money. Its all OPM. Art has admitted he was wrong about the timing of shale decline, as I have, and others; does that mean it will never happen? 

No, of course not. Folks have a twisted view of what peak oil means. It means that the world is running out of affordable oil and affordable production may not be able to meet demand. That is exactly what is occurring. Shale oil is expensive to extract and nobody can make money at it. 

Art's agenda is to help bring awareness to a potential problem in our country and in our world. If one wishes  to rag him, contact him personally, it's easy, and use your own name. That is the honorable thing to do.

Thank you, Daniel, and for the comment on how integrated companies like XOM and CVX have a leg up on independents in the Permian. Like everything else in our society these days the debate about how this shale thing is going to work, economically, in the long run has turned very divisive and folks get to name calling, and labeling, and saying really stupid things in the comfort of their own home, behind a keyboard. Sadly I don't think a lot of these people have even seen a drilling rig, much less have ever written a check to be IN the oil business. Art has. 

 

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(edited)

16 hours ago, Mike Shellman said:

Art is a friend of mine and had, continues to have, the balls to question the shale phenomena for nearly two decades. He pegged the shale gas disaster, and IT's grossly exaggerated reserve estimates,  in the early 90's to a tee. 

 

 

Things change,  When shale oil industry started Oil was $100 bbl.  Bank loan rates were the lowest. Things changed. 

Edited by JJCar
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9 hours ago, Wastral said:

Mr. Berman has a perfect track record of being 100% wrong for the last 10 years.  Think I will take whatever he says and throw it over my left shoulder as far as possible. 

I doubt that is true.  It is all conjecture until you offer facts to support your statement.

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7 hours ago, Oil_Engineer said:

I doubt that is true.  It is all conjecture until you offer facts to support your statement.

You wish to invest your money around a statistical error, fine, as long as its not my money!

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As majors take over the tight oil production in the US, they may reduce completion rates to bring capital investment more in line with free cash flow, if they do so the current debt in the tight oil industry can be paid back and the industry may be profitable in the future, but much depends on future oil prices.  If the expansion of the BEV fleet continues at its current pace we may see oil prices peak in 2025 at $85/b and then decline, under that scenario tight oil may never become profitable.

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44 minutes ago, D Coyne said:

As majors take over the tight oil production in the US, they may reduce completion rates to bring capital investment more in line with free cash flow, if they do so the current debt in the tight oil industry can be paid back and the industry may be profitable in the future, but much depends on future oil prices.  If the expansion of the BEV fleet continues at its current pace we may see oil prices peak in 2025 at $85/b and then decline, under that scenario tight oil may never become profitable.

Last I checked, India has a Billion people who do not drive currently and so does China.  No, they cannot afford electric vehicles other than mopeds and golf carts of which they sell by the million by the way...  Of course they still need to get their power from somewhere... 

Solar/wind are not the solution in China that is for damned sure, China lives under clouds most of the time just like N. Europe.  Wind certainly is NOT for India.  Solar.... possible, but no grid, so they will not be going BEV either and this is true for all of SE Asia with another 0.5Billion people who are all coming into the modern age. 

Then there is that pesky fact that Africa's population is doubling and they all want to drive too.  Africa is becoming a heck of a lot less 3rd world and large areas of all of the nations are downright 2nd world now.  Africa's urbanization is BOOMING and that fertility rate of 5 children per woman....  Grid for BEV, Africa?  Are you kidding?

  BEV will not work for Central America or South America either as they neither have the solar(other than Mexico of course, but its Mexico), nor wind, let alone a stable enough grid to handle crappy power sources.   Argentina has wind/solar.... but this is Argen-freakin-tina we are talking about....  When you look up the word inept, there is no description, just a picture of the countries outline...

USA:  Driven be economics and BEV are not.  Europe: Also driven by economics, but they have no oil/NG, along with the fact they have a VERY high urbanization percentage and SHORT driving distances even if they DO want to go somewhere, so BEV in Europe, is the #1 Goal as it is tied to geopolitics.  Of course.... The electric GRID cannot handle it as they have already demonstrated with Germany's 75% solar capacity, but providing only 6% of their  energy "problem child".  So, even if they do go BEV, the power MUST come from somewhere and the only truly VIABLE option is Natural Gas, Nuclear, Coal, and Oil. 

No, peak demand will not happen in my lifetime.  Maybe my Grandchildrens lifetime.... Of course I don't have a grandkid yet...

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2 hours ago, D Coyne said:

As majors take over the tight oil production in the US, 

 

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