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Saudi/OPEC End Game
Posted on 12/15/14 at 12:07 pm
Posted on 12/15/14 at 12:07 pm
If you were a mass exporter of a finite product I.E. Saudi's and their oil, wouldn't you rather sell half as much oil for 100 dollars a barrel than twice as much for say 60 dollars a barrel? I mean you are depleting your stock and only making a net revenue income gain of 10% give or take.
10
Posted on 12/15/14 at 12:08 pm to Strannix
Long-term play to Crush fracking
Posted on 12/15/14 at 12:09 pm to Turbeauxdog
quote:
Long-term play to Crush fracking
Sure but for how long? another 5 years?
Posted on 12/15/14 at 12:09 pm to Strannix
They're trying to make fracking and oil sands uneconomical to cause their competition in North America to sweat and possibly give up the ghost. That's my theory. It's total desperation on their part. Literally their entire civilization possible only because of oil revenue. lol at them.
Posted on 12/15/14 at 12:11 pm to LSUTigersVCURams
quote:
Literally their entire civilization possible only because of oil revenue. lol at them.
North American Producers have trillions tied up in the Bakken, Wolf Camp, Eagle Ford etc. lol they have creditors and junk bonds out the arse, they aren't gonna walk away from it all and fold up shop. They will sale at break even or less to stay out of insolvency.
Posted on 12/15/14 at 12:12 pm to Turbeauxdog
I have a question when it comes to fracking: how economical are operations compared to development? A slight dip in prices might be enough to make companies sit on a lot of tight oil fields that haven't been developed yet, but if there's already a supply glut, wouldn't they also have to wait out the supply that's already developed?
This post was edited on 12/15/14 at 12:13 pm
Posted on 12/15/14 at 12:13 pm to Iosh
quote:
how economical are operations compared to development?
The upfront costs are the major concern, they've gotta produce now to stay ahead of the credit monster, they can't not sell.
Posted on 12/15/14 at 12:13 pm to Turbeauxdog
But its still in the ground and as time goes by I would think the tech to get it out gets cheaper.
Edit
Ah. I can see from a current investors standpoint.
Edit
Ah. I can see from a current investors standpoint.
This post was edited on 12/15/14 at 12:15 pm
Posted on 12/15/14 at 12:17 pm to Strannix
quote:
If you were a mass exporter of a finite product I.E. Saudi's and their oil, wouldn't you rather sell half as much oil for 100 dollars a barrel than twice as much for say 60 dollars a barrel
They are staying in the game to maintain market share. Last time this happened they didnt, and it cost them over the long haul so theyre making a difference decision this time.
This post was edited on 12/15/14 at 12:18 pm
Posted on 12/15/14 at 12:21 pm to BobBoucher
Don't forget the loss of the war machine and its insatiable appetite to gobble up gasoline/oil supplies in Afghanistan & Iraq.
Then you have the destabilization of Iraq and Syria with their rock bottom oil/gas prices they are putting into the open market.
Then you have the destabilization of Iraq and Syria with their rock bottom oil/gas prices they are putting into the open market.
Posted on 12/15/14 at 12:22 pm to Turbeauxdog
quote:
Long-term play to Crush shale
Posted on 12/15/14 at 12:27 pm to Strannix
quote:
Long-term play to Crush fracking
Posted on 12/15/14 at 12:30 pm to MrLSU
quote:
Don't forget the loss of the war machine and its insatiable appetite to gobble up gasoline/oil supplies in Afghanistan & Iraq.
Hope to God this is sarcasm of some type.
Posted on 12/15/14 at 12:33 pm to papasmurf1269
quote:
Long-term play to Crush fracking
So the Saudis are going to start importing natural gas too? The majority of shale booms are gas driven at this point, Marcellus, Haynesville, Barnett, Eagleford (50/50) The only real shale oil booms are the Wolfcamp and Bakken, and the Wolfcamp has very good gas production as well. The oil/gas price ratio disparity is as good as it's been in years when you are looking at BOEPD.
Posted on 12/15/14 at 12:34 pm to Strannix
quote:
Strannix
The Saudis are playing "Who Has the Deepest Pockets". They believe they can produce enough at low prices for long enough to crush the fracking industry. What they don't realize is that with the technology already well-developed, once they raise prices again it will be little effort for fracking to get back under way.
So right now all we have to do is sit back and enjoy the low-priced oil (and the resulting lowered prices at the gas pumps) while sitting on reserves we've found but haven't really tapped yet. Once their reserves run out, what do they have? They have sand, heat, militants, rugs and camels. Without oil, the Middle East will eventually (over generations as the easy money slowly peters out) go back to being mainly a Stone Age-era land that appeals mainly to archaeologists.
Meanwhile we have lumber, we have minerals, we have oil, we have natural gas, we have fishing, we have manufacturing, we have high technology. We have so many things they have to import or will have to import once the oil dries up (which may not happen in our lifetime, but it will happen).
My guess is they will play this game for a year or so, two at most, then increase their prices once they realize that crushing the American fracking groups isn't as easy as they thought.
This post was edited on 12/15/14 at 12:36 pm
Posted on 12/15/14 at 12:38 pm to Turbeauxdog
quote:
Long-term play to Crush fracking
It's tempting to think we are their targets, but that doesn't make as much sense as Iran and Russia being the targets.
Posted on 12/15/14 at 12:41 pm to uway
quote:
It's tempting to think we are their targets, but that doesn't make as much sense as Iran and Russia being the targets.
I don't doubt for a single second Iran and Russia are targets. I don't even doubt they are primary targets (especially the Iranians, since rumor has it that current US/UN negotiations might soon lead to easing oil restrictions on them), but don't think they aren't looking at our increasing energy independence as an issue to tackle.
Posted on 12/15/14 at 12:48 pm to Strannix
quote:
If you were a mass exporter of a finite product I.E. Saudi's and their oil, wouldn't you rather sell half as much oil for 100 dollars a barrel than twice as much for say 60 dollars a barrel? I mean you are depleting your stock and only making a net revenue income gain of 10% give or take.
Don't want to lose market share so they cut price in order to dry up the excess supply has turned out to be the shale barrel. They're hoping prices are back in the $85 range come the end of next year. People will list any mountain of additional reasons from Syria to Russia to Iran (and laughably ISIS), but it's really quite simple.
The pain train is coming for the US independents. I think one big problem I've seen over the last few years is that Wall Street became so fixated on repeatable resource plays that public companies first then nearly every PE backed since became a single, pure play player. So you have all these companies that are Bakken, Eagle Ford or Permian only....all their eggs in one basket, borrowing like crazy to keep the rigs running banking everything at $80+. Now sub $60s are here and they are fricked.
Posted on 12/15/14 at 12:52 pm to cwill
quote:
Now sub $60s are here and they are fricked.
Oh no doubt, especially guys like Halcon and some of your smaller Eagleford players, SM has taken a huge hit too.
Posted on 12/15/14 at 12:55 pm to Strannix
quote:
Halcon
They were fricked before, now they just fricked X10.
And the story is simple, it has nothing to do with international politics and everything to do with simple economics. The Saudis just want to force others to cut supply (not them again) and push the price back up to the $80s.
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