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Continental Resource's Hamm wants shale to cut production. . . He can't compete with peers.

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(edited)

Remember Harry Hamm of Continental Resource's.  He was Trump's first choice for Energy Secretary . Turned it down. 

You know where Trump got the, " $70 is a fair price for oil".  Yup, from Harry.

Now Harry announced in his speech at Enercom last week that he wants shale to cut production in U.S.  This goes against every free market principle.

HARRY WANTS TO PROP UP OIL PRICES WITH PRODUCTION QUOTA'S. LIKE THEY DO IN SOCIALIST COUNTRIES.

Why ?

BECAUSE HARRY CAN'T COMPETE.

* HESS OIL'S ACREAGE IS RIGHT NEXT TO HARRY'S IN THE BAKKEN. 

* HESS NOW GETS A 55% RETURN ON $50 WTI

* HARRY LOSES MONEY AT $50 WTI

HARRY HAMM CANT COMPETE !

Continental Resources (ticker: CLR) will soon make a great acquisition for HESS.

 

Edited by SKEP

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Not saying your wrong, but could you tell us WHY Hess can make a 55% return on $50/bbl WTI while Continental loses money at the same price?

The assumption is that since the acreage borders each other that the geology and access to resources and technology is the same.

As I stated earlier, I am not disagreeing with you, just trying to figure out the disparity.

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12 hours ago, SKEP said:

Remember Harry Hamm of Continental Resource's.  He was Trump's first choice for Energy Secretary .  I'm told he and Trump pal around down in Palm Beach .

You know where Trump got the, " $70 is a fair price for oil".  Yup, from Harry.

Now Harry wants shale to cut production in U.S.  This goes against every free market principle.

HARRY WANTS TO PROP UP OIL PRICES WITH PRODUCTION QUOTA'S. LIKE THEY DO IN SOCIALIST COUNTRIES.

Why ?

BECAUSE HARRY CAN'T COMPETE.

* HESS OIL'S ACREAGE IS RIGHT NEXT TO HARRY'S IN THE BAKKEN. 

* HESS GETS A 55% RETURN ON $50 WTI

* HARRY LOSES MONEY AT $50 WTI

HARRY HAMM CANT COMPETE !

HARRY'S Continental Resource's will lose another 50% of share value in my opinion.

Will soon make a great acquisition for HESS Oil . 

BUY Hess . . . . . Short Continental Resources in my opinion.

If Trump caves to Harry and Khalid al- fahlih he deserves to lose 2020.

https://oilprice.com/Energy/Crude-Oil/Shale-Pioneer-Hamm-Calls-For-Production-Slowdown.html

Dude look at the market. Look at the economy, let the price drop below break even and guess what no market.

US Shale is on a knife edge and finally over the past few months people are seeing through the fog.

Free market will kill the Shale Patch.

You probably believe diamonds are rare also!

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The Railroad Commission of Texas can legally restrict production of oil in Texas. If it restricted Texas production to about 75%, I'm sure oil companies worldwide would appreciate it (except Texans)

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(edited)

On 8/15/2019 at 2:59 AM, James Regan said:

Dude look at the market. Look at the economy, let the price drop below break even and guess what no market.

US Shale is on a knife edge and finally over the past few months people are seeing through the fog.

Free market will kill the Shale Patch.

You probably believe diamonds are rare also!

Dude Jamie,

Buy a book on "Intro to Economics" .  Make sure you it's not a Saudi Economics book.  Saudi economics require a Cartel to prosper and support an elite royal class. 

I've explained basic economic principles to you time and again.  Apparently nothing anyone can do is going to get you to understand free markets.  I supposedly you grew up I Saudi Arabia, so if true free market economics is foreign to you. 

Actually, read Adams Smith's "Wealth of Nations".  He's a Brit. 

Come back when you can discuss economics with an unbiased open mind.

PS you seem very fond of the picture of you on a rig, the percentage of women on this blog is quite small. What gives ?

Edited by SKEP
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12 hours ago, SKEP said:

Dude Jamie,

Buy a book on "Intro to Economics" .  Make sure you it's not a Saudi economics book.  Saudi economics require a Cartel to prosper and support an elite royal class.

I've told you many times and not going to try to get you to understand free markets.  I understand you grew up on Saudi Arabia so free market economics is foreign to you. 

Actually, read Adams Smith's "Wealth of Nations".  He's a Brit. 

Come back when you can discuss economics with an unbiased open mind.

Skippy,

I will read it again it’s been a while. To be honest I enjoy your banter, you should ease of the throttle a little as you can burn out quick.

Your obviously a bright chap and have a passion for what you do and believe.

But you should believe this that very soon the US shale patch is going to take a very heavy dive, this business is ruthless, some of us see it in action and the focus is slowly but surely leaning away from Shale, you will be thanking our OPEC  brothers soon enough.

Have a good evening, I’ve got a rig to run.

👊🏻👊🏻

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(edited)

On 8/15/2019 at 9:36 PM, James Regan said:

Skippy,

I will read it again it’s been a while. To be honest I enjoy your banter, you should ease of the throttle a little as you can burn out quick.

Your obviously a bright chap and have a passion for what you do and believe.

But you should believe this that very soon the US shale patch is going to take a very heavy dive, this business is ruthless, some of us see it in action and the focus is slowly but surely leaning away from Shale, you will be thanking our OPEC  brothers soon enough.

Have a good evening, I’ve got a rig to run.

👊🏻👊🏻

Jamie

I have been predicting , to use your word a "dive", in the US Shale industry forever.  I agree.

The herd needs to be culled.  Consolidation is healthy. There will be some dislocation and moderation of production ( like we're seeing now) during the transition. Shale Industry will be all the better for it. U.S. Shale and Gulf of Mexico oil will lead the industry for at least next ten years.

Don't forget U.S. Gulf of Mexico is setting new records.  GOM growth rate greater than shale, albeit from a smaller base.

There might be some temporary spikes down on price.  My guess is after U.S. consolidation  that prices will stabilize around where they are now   $55 to $65 for a while.  Then the it will all depend on how fast electric or hydrogen cars ramp, as well as, how fast supply grows.  When producers realize that future prices will continue down going forward there will be an urgency to pump and sell while the going is good.

There has been massive disproportionate tranfer of wealth from U.S.  to China and the OPEC countries.  All this while U.S. has spent $ TRILLIONS fighting everyone else's wars.  All this while Saudi Arabia and China have built their infrastructure and industry. All this while U.S. roads, bridges, airports and schools fall into disrepair. 

Time for that to change. It might have made sense 40 years ago, but not today. The world has changed .  . .  .  . the U.S. hasn't yet.

The U.S. can not continue to be the world's patsy.  U.S. can't be the only one to pay for Europe's defense ($30 Billion), pay to protect Mideast shipping lanes ($100 Billion), pay for South Korean and Japanese protection ($18 Billion) all this while these countries hinderthe sale of US products sold to them while exploiting US Consumer markets.

You probably won't believe me when I tell you I don't like Trump. Didn't vote for him.  But he is right on this one.

I'll repeat myself one last time. . .  Shale producers that managed and (1) reinvested all their cashflow based on an assumption of $100 WTI PRICE FOREVER, (2) GAVE OUT  RIDICULOUSLY HIGH ROYALTY AGREEMENTS, (3) OVER LEVERAGED PILING UP DEBT IN AN EXPAND AT ANY COST STRATEGY can not survive. They should have been gone two years ago.

US Shale will come out of transition stronger and even more efficient .  . . with even lower breakeven prices. This is all just natural economic life cycle that we've seen with most all industries.  Don't deny it, embrace it. 

Look at Harold Hamm, considered one of the pioneers of the Shale industry.  He's as guilty as the rest, $5 Billion in Debt. 

I have said in print that a couple of hundred producers will go under, merge or be bought . .  .  .  But at lower prices from here.  

Also, Saudis are not U.S. friend. Both the UAE and Saudis are getting cozy with China.  Can ya blame them ? U.S. doesn't need their oil . . China does. Saudis reluctant to leave U.S. side. They need US Investment Banks and Military support .  MBS stuck in a predicament. 

Saudis and UAE were begging Trump to retaliate against Iran.  You took umbrage when I said a desperate KSA due to dropping oil prices could start a war or fake another attack.  I didn't say they would FIGHT a war . .   but they could START a war. They expect U.S. to FIGHT THEIR WAR. Now that they realize Trump is not Bush, Clinton or Obama they are moving toward China's camp. Let them be China's fair weather friend.

This forum is a good platform for debate.  However, our discussions continue to rehash the same positions. It's going around in circles.  It's getting tired.  

So don't mind me if I don't respond to your posts anymore.  Nothing personal.

Like I said let's wait and watch. It won't be long now till one of our sides is proven right.

Edited by SKEP
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(edited)

22 hours ago, Douglas Buckland said:

Not saying your wrong, but could you tell us WHY Hess can make a 55% return on $50/bbl WTI while Continental loses money at the same price?

The assumption is that since the acreage borders each other that the geology and access to resources and technology is the same.

As I stated earlier, I am not disagreeing with you, just trying to figure out the disparity.

Doug I listened to their 2018 year-end or first quarter  earnings conference call about three or four months ago where they stated they are now getting 55% return.  They said wells using new technology in 2018 produced 55% return at $50 WTI. They said pre 2018 wells produced 15% return.  They mentioned some of the tech but don't remember what exactly.

Most companies keep their earnings conference calls online for at least one year.  If you go to their website and look under Investors Section you probably can find and play the call. 

It was either Q1 or 2018 year earnings report.

Edited by SKEP

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51 minutes ago, SKEP said:

I have been predicting , to use your word a "dive", in the US Shale industry forever.  I agree.

The herd needs to be culled.  Consolidation is healthy. There will be some dislocation and moderation of production ( like we're seeing now) during the transition. U.S. Shale and Gulf of Mexico oil will lead the industry for at least next ten years.

There has been massive disproportionate tranfer of wealth from U.S.  to China and the OPEC countries.  All this while U.S. has spent $ TRILLION fighting everyone else's wars.  All this while Saudi Arabia and China have built their infrastructure and industry. All this while U.S. roads, bridges, airports and schools fall into disrepair. 

Time for that to change. 

You probably won't believe me when I tell you I don't like Trump. Didn't vote for him.  But he is right on this one.

I'll repeat myself one last time. . .  Shale producers that managed and reinvested all their cashflow based on $100 WTI PRICE FOREVER, (2) GAVE RIDICULOUSLY HIGH ROYALTY AGREEMENTS, (3) OVER LEVERAGED PILING UP DEBT can not survive. They should have been gone two years ago.

Look at Harold Hamm, considered one of the pioneers of the Shale industry.  He's as guilty as the rest, $5 Billion in Debt. 

I have said in print that a couple of hundred producers will go under, merge or be bought . .  .  .  But at lower prices from here.  

Also, Saudis are not U.S. friend. Both the UAE and Saudis are getting cozy with China.  Can ya blame them ? U.S. doesn't need their oil . . China does. 

Saudis and UAE were begging Trump to retaliate against Iran.  You took umbridge when I said a desperate KSA due to dropping oil prices could start a war.  I didn't say they would FIGHT a war . .   but they could START a war. They expected U.S. to FIGHT THEIR WAR. Now that they realize Trump is not Bush, Clinton or Obama they are moving toward China's camp. Let them be China's fair weather friend.

^ Good analysis

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2 hours ago, Tom Kirkman said:

^ Good analysis

"US doesn't need their oil...China does."

This is correct in the 'here and now', but if the shale oil miracle fails drastically in the near future (and there have been recent indications that cracks are forming...lower production reported, rig count rown, etc...), this will no longer be an accurate comment.

That said, is it wise, at this point, for the US to put all of its eggs in the shale oil basket...or is this a train wreck waiting to happen?

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22 hours ago, Danlxyz said:

The Railroad Commission of Texas can legally restrict production of oil in Texas. If it restricted Texas production to about 75%, I'm sure oil companies worldwide would appreciate it (except Texans)

All the RRC really needs to do is enforce existing regulations to stop flaring. This combined with the contraction of capital that is happening will actually make US Shale a much more competetive beast. 

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20 hours ago, SKEP said:

This forum is a good platform for debate.  However, our discussions continue to rehash the same positions. It's going around in circles.  It's getting tired.  

So don't mind me if I don't respond to your posts anymore.  Nothing personal.

Skippy 

Sorry your tired, maybe if you took a break from trying to push your rating up by posting the same topics which are now have you going round in circles, yes it is tiresome.

You are being a little childish are you a millennial, I would take umbrage but I'm not thin skinned been too long working in this business and have been all round the world, "and other places too"... :)

de·bate
/dəˈbāt/
 
  1. 1. 
    a formal discussion on a particular topic in a public meeting or legislative assembly, in which opposing arguments are put forward.
    synonyms: discussion, exchange of views, discourse, parley;

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(edited)

On 8/15/2019 at 6:33 AM, Danlxyz said:

The Railroad Commission of Texas can legally restrict production of oil in Texas. If it restricted Texas production to about 75%, I'm sure oil companies worldwide would appreciate it (except Texans)

The top two beneficiaries of a RRC cut to 75% would be OPEC (Saudi Arabia) and Russia.  

Foolish.

OPEC + controls almost 50% of world oil market.  Let them cut to 75% . . . . . That would take 12.5 mm bbls/day of the market.  Your problem solved !

Don't fall for poor Saudi Arabia trying to help save the oil industry. ARAMCO first half 2019 production avg 10 mm bbls/day.  SAME AS 2018.  

Second half of 2018 OPEC went on a production frenzy.  They pick October high production to base their cuts on near the peak production period , only 200k off the very peak in November. The Saudi oil storage in country and around the world was overflowing.  Saudis didn't decrease exports or sales , they increased it.  Then when their storage started to decrease , in May they say they will increase production "for the Saudi summer air conditioning season".  LOL.  Not one oil analyst called them out on this farce.  All KAF (Khalid al-Falih) smoke and mirrors.  

On the conference call ARAMCO profits were down in 2019, NOT BECAUSE OF DECREASED PRODUCTION VOLUME, BUT DUE TO DECREASE BRENT AVERAGE SELLING PRICE.

OIL Analyst are lazy.  They just take Khalid al-Falih propaganda as the truth and parrot his comments to the naive investment public.  What a cushy job. A joke. 

OPEC + thinks they can talk up oil prices by cutting 1.2 mm bbls/day of oil from a peak production month. First, who believes they even get 50% compliance. Trump sanctions have taken many times bbls of OPEC feeble efforts.

Even with that cut it would not stop the drop in oil prices.  While shale has lead the growth new SUPPLY is growing world wide.

Even with the cut it would not stop the growth of electric vehicles.  About 73% of oil used for transportation. Thus DEMAND drop will accelerate with inflection point around 2025.

There are probably 30 to 40 years left in the oil industry .  . . .  .  but only 8 to 10 GOOD YEARS LEFT (relatively speaking)

Edited by SKEP
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9 hours ago, SKEP said:

There are probably 30 to 40 years left in the oil industry .  . . .  .  but only 8 to 10 GOOD YEARS LEFT. 

SKEP - Seriously now (line in sand drawn and olive branch offered)

Please explain why you feel there is only 30-40 years left, I'm genuinely interested.

Also your correlation vs the 8-10 years left, how did you get this number?

And what do you consider "good years" based on what?

IMO the oil industry is not had good years since 2014 and will never return to what it was, the whole model has changed from Exploration to Production, you may be referring to fiscal policies and cut backs that gives the impression that the business is healthy. We can't only base this on the fat cats at the top, we need to consider the "Industry" as a whole.

Very interesting your last line in the post, to me anyway.

James

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On 8/16/2019 at 3:42 PM, Rasmus Jorgensen said:

All the RRC really needs to do is enforce existing regulations to stop flaring. This combined with the contraction of capital that is happening will actually make US Shale a much more competetive beast. 

Less waste of future resources and less air pollution (no flaring) and stronger US companies? This idea is too smart for the corrupt idiots that run our governments.

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14 hours ago, SKEP said:

 

There are probably 30 to 40 years left in the oil industry .  . . .  .  but only 8 to 10 GOOD YEARS LEFT. 

I would like to hear further explanation of 8-10 good years left as well.  Is that regarding current output?  Stable rig count over that time frame? Continuous workforce numbers?  Have you factored in a democratic president/control of both house and senate?  Being out in the patch, that would be great, I could have everything paid off and start saving.  I am optimistic, a company we serviced for is stacking one of the 2 rigs they operate in the Permian and not resuming frac on wells drilled til January...cause they are BROKE!! Middle of August and burned thru their budget already...just one company, sure, but others have to be wiser for that long term.  I also believe no one is pouring finds into infrastructure on something they plan on going away in the short term. Guess that is why I am now out on Oxy location.

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(edited)

3 hours ago, cbrasher1 said:

I would like to hear further explanation of 8-10 good years left as well.  Is that regarding current output?  Stable rig count over that time frame? Continuous workforce numbers?  Have you factored in a democratic president/control of both house and senate?  Being out in the patch, that would be great, I could have everything paid off and start saving.  I am optimistic, a company we serviced for is stacking one of the 2 rigs they operate in the Permian and not resuming frac on wells drilled til January...cause they are BROKE!! Middle of August and burned thru their budget already...just one company, sure, but others have to be wiser for that long term.  I also believe no one is pouring finds into infrastructure on something they plan on going away in the short term. Guess that is why I am now out on Oxy location.

@cbrasher1 Let’s not concentrate on one region we are Discussing the Oil Industry, we must consider all aspects Land, shallow water, deep water, ultra deep water, arctic.

World Shale oil is not the whole Industry it’s certainly a player but only accounts for +/- 1/10 of total world oil production. So we have 90% of Conventional oil to consider and multiple industry systems and regions to put on the table.

 

 

Edited by James Regan

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There are some very good points made above. Shale oil will find its niche. The Gulf of Mexico is turning out some great wells. I'm personally exceptionally impressed with Ring Energy. They bought the San Andres formation from Arena and drill down one mile, then place a one-mile lateral. They frack lightly and go on line. Total cost: $2.2M. That's not much more than a conventional well. So far they don't have those huge IP decline curves, probably because the shale formation they chose is about 200 feet thick, saturated, and fractures like a dream. So even in the shale world there are some really good examples of cost-cutting and common sense. These wells look as if they'll pay out in about 18 months. Any discussion about shale always seems to take for granted that the technology we have today will be the technology of tomorrow. That isn't the case. For example, CO2 in saline infusion may be a great boon. But I'm right there with you guys: the Shale Revolution is not the whole answer. At the Enercom Conference that was referenced by someone above, one man after another got up and showed a slide that his company was #1 in net mineral acres, royalties, rigs and so forth. Nobody said much of anything about their bottom line. in today's world, I just don't think a shale driller can consistently (year after year) make money at these prices . . . even Hess. I think the large drillers and operators can make money from their petrochemical plants and refineries--both of which do best when the well-head price of oil is low. Now it may be that this whole shale thing comes down to just very large operators--those with plants and refineries--running the show, and if so, that's the marketplace for you. Call me a simpleton but I kind of hate to see that. When the Aubrey McClendon, Tom Ward, Scott Sheffield and Harold Hamm types were out there trying new things, the guys at Chevron, Exxon and Occidental were chuckling about it over drinks in one of several Petroleum Clubs. They kept laughing as the shale boys more or less caused the Saudis to ruin their knickers. Even when the Saudis tried to drown out the shale industry, these crazy guys found a way to innovate. I'm slow to laugh at a guy like Harold Hamm. When this all began, the Gulf of Mexico was not in a good place. Then Deepwater Horizon came along, put the gulf farther down. Alaska had more or less played out. The old conventional fields were exhausted. Some of these shale folks may have some egg on their faces now, but they allowed the United States of America to stand up to the then-powerful OPEC and assert its energy-independence, that after groveling for decades. Not to get too preachy on you, but the government of the United States really didn't say much of a thank you. I'm a Republican, but, well, you get the point . . . I've gone on too long. I don't even know why I try to push this agenda, but for some reason it irks me that the shale pioneers were the ones who kept us from enduring $200 oil at the hands of the Saudis and now they're getting dissed. I'm done. Take your best shot. It may look sorta stupid to try to get oil out of a rock but it gave us pride. And there's no price tag for that.

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Wasn't it a confederate colonel who after the civil war used left over shells in a well to promote oil flow? Wonder if the skeptics imagined today’s improvements.

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