Falkland O&G Share Discussion Threads

[trulyscrumptious] 01/12/2014 11:38

26p? Why pay that much?

[younasm] 01/12/2014 11:14

I am going to double up my FOGL holdings today (tiny holding that is) -- when I offloaded a few in October at 29p, it was looking like a mistake.

The lower oil price and uncertainty around prospects for FOGL make these a good punt/gamble at 26p.

[agnabeya] 01/12/2014 09:44

Purple - the Shale Oil bubble has been on the cards for ages. It's a political 'boom' creating smoke and mirrors about the size and quality of the domestic supply.
It's got to burst sometime.


edit: I'll be getting a few in drips at these prices.

Shafaq - I agree the oil prices could go lower - but I think Saudia are simply trying to open people's eyes ot the unsustainability of the Shale oil boom.
OPEC didn't reduce the demand figures for oil in the coming year - so there isn't exactly a glut. I can't see them cutting production - so whatever they fall to - I can't see the lower prices lasting for too long. I'm keeping some readies to pick up more shares if it does fall further. All IMHO - GLA.

[purple11] 30/11/2014 22:48

GRANTHAM: 'US Fracking Is A Very Large Red Herring'

 


Nov. 30, 2014, 4:56 PM



Jeremy Grantham is not a believer in the shale fracking boom.

Earlier this month, we highlighted Grantham's full quarterly letter to GMO clients, in which he said, among other things, that the US shale boom has been "a very large red herring."

So while some say the fracking boom has has helped keep oil prices low and aided the US on its path to energy independence, Grantham thinks it might have set us on a path to nowhere.

"Its development has been remarkable," Grantham writes.

"It will surely be seen in the future as a real testimonial to the sheer energy of American engineering at its best, employing rapid trials and errors – with all of the risk-taking that approach involves – that the rest of the world finds so hard to emulate. Similarly, it will always stand out as remarkable proof that, so late in the realization of the risks of climate change and environmental damage, the U.S. could expressly deregulate such a rapidly growing and potentially dangerous activity."

The overall thrust of Grantham's letter is that the world will soon be devoid of the resources it is going to need to sustain our current economic model, which over the last 150 or so years has been predicated on cheap energy, namely oil.

A concern Grantham has with fracking is that the boom hasn't been accompanied by any real concern as to the environmental damage it may be inflicting. But Grantham is also hugely skeptical on the potency of the shale boom because it doesn't address the problem of our need for cheap oil.

Grantham writes that, "[Fracking] has not prevented the underlying costs of traditional oil from continuing to rise rapidly or the cash flow available to oil-producing countries like Saudi Arabia, Iran, and especially Venezuela from getting squeezed from both ends (rising costs and falling prices)."

And as we saw last week, OPEC announced that it would not impose production cuts despite the sharp decline in oil prices seen over the last few months, and it seems unlikely that Grantham would be surprised by this.

Because if your national economy is chiefly predicated on exporting oil, you have made your bed and therefore must lie in it as oil prices drop.

Markets COTD November 20
Deutsche Bank
The US shale boom, in one chart.

But the US boom, which as Grantham notes has accounted for almost all of the increase in global oil production over the last several years, has been undertaken by companies, not countries.

And so with an eye towards profit, Grantham writes that these companies, "have drilled, as always, the best parts of the best fields first, and because the first two years of flow are basically all we get in fracking, we should have expected considerably better financial results by now. The aggregate financial results allow for the possibility that fracking costs have been underestimated by corporations and understated in the press."

And with a decline in oil prices set off by too much supply, it will be these companies that are forced to pare production, which will reduce supply, which will create — once again — expensive oil.

"The current fall in price does nothing to offset the squeeze on the total economy from rising costs," Grantham writes. "It merely transfers massive amounts of income from one subgroup (oil producers) to another (oil consumers), in a largely zero-sum game.

gas prices
FRED
Gas prices have plunged, helping consumers in the short-term, but potentially hampering producers longer-term.

"Oil consumers tend to spend more and save less than oil companies so short-term impacts are favorable. But we should not be carried away with enthusiasm because the declining investment from the oil industry will lower future growth. When, as now, oil costs are still rising even as prices fall there is of course a particularly savage effect on the profits of oil companies, squeezed from both ends.

"They must and will rapidly adapt by reducing expenditures and therefore oil production with the fairly obvious result that prices will rise again. The only longer-term price relief and net benefit to the economy will come when either we reverse recent history and start to find more oil more cheaply, which will be like waiting for pigs to fly, or when cheaper sources of energy displace oil."

And so for Jeremy Grantham, nothing fundamental has changed about our relationship with oil: pigs still don't fly.


Read more: hxxp://uk.businessinsider.com/jeremy-grantham-on-fracking-boom-2014-11?r=US#ixzz3Kaw38YXc

hxxp://uk.businessinsider.com/jeremy-grantham-on-fracking-boom-2014-11?r=US

[purple11] 30/11/2014 22:40

hxxp://www.ocean-rig.com/fleet/rig_availability

Eirik Raude now under contract to premier/noble


let the games commence. gla

[younasm] 30/11/2014 22:39

As I wrote before, make a note of oil price every month. At the end of 2015, the average price will be clear.Just as easy to draw a 12-month chart of WTI prices.

[shafaq] 30/11/2014 18:53

On average Us companies cost of extracting shale oil is about $90 per barrel, Saudi Arabia are prepared to go as low as $50 per barrel to completely kill off any company on shale.

[shafaq] 30/11/2014 18:48

If anyone thinks that the oil price will start rising then think again!!!Saudi Arabia and the other opec ministers laid down the gauntlet to the rest of the world resisting any attempt to raise oil prices or cut quotas in an attempt to kill off shale exploration which is beginning to bite them if it ever takes off.A very good article in the times revealed what was the thinking in the opec meeting.If the oil was to rise then it would give shale exploration a boost, if that happened then it may start to kick the rest of the world's reliance on Saudi,s oil demand and obviously rest of the oil producing nations.The price of oil at this juncture is a no go area for any shale explorers as it would not be feasible for them to take up very high costs for less return.Just imagine if the oil shale took off who would want to buy oil from Saudis then?.

[younasm] 30/11/2014 17:24

Brent crude average at $93 for 2015 is a good stab - only to be revised down later

[younasm] 30/11/2014 17:22

Oil price rising soon..... Well if you believe that, then keep buying more oil

[purple11] 30/11/2014 14:22

oil markets oversold

hxxp://www.bnn.ca/Video/player.aspx?vid=503334

[lilith83] 30/11/2014 10:55

Spread Betting and CFDs Nov Magazine now online: This month's is an SBM Oil Special Edition - Check it out here and help us spread the word!

[agnabeya] 30/11/2014 10:33

Shanie - me neither. Anything can happen, of course - but I just read purple's link and tend to agree with it. Gut feeling.
My idea is to buy on drops and sell on drilling spikes.
Des taught me not to leave too much for results. :)

[shanieboy01] 29/11/2014 22:48

Ok. I cant imagine it happening myself. I was just wondering if they would

[agnabeya] 28/11/2014 23:46

shanieboy - Hasn't the rig been signed for? I mean as a done and dusted deal?
They pulled the plug last time when it was $10 - I'll be surprised if it falls that far - but then again - I didn't expect that in 1998/99.

[shanieboy01] 28/11/2014 18:37

If prices Continue to fall what are the chances there won't be a campaign? ???

[purple11] 28/11/2014 12:28

personally sticking to my plan of selling for best price on rig arrival.

52%cos on Zebedee is too good to ignore imo

any short term dip in oil price will only be temporary in my view and if it snaps back up in new yr could give a real boost to sentiment just as things shape up.

market is only oversupplied by@1mmbl,hardly a glut., fogl wont be producing anything until 2018 ,and dizzy heights were reached before on $40 oil prices.

too close for rig mobilisation for me ....

now,wheres that 3d? atb

[cyan] 28/11/2014 10:57

Good morning younsasm. $60 ! Optimistic don't you think? lol

[younasm] 28/11/2014 10:30

As I mentioned last month, the oil price is unlikely to go above $80 anytime soon. Hopefully, the floor will be kept $60 in 2015