Oilexco Share Discussion Threads

[steve73] 25/2/2017 10:16

Some good posts here yesterday... may I be permitted to add my tuppence worth?

$8/bbl for Reserves is way too high at the present time. It's perhaps suitable for some currently producing reserves which require little development & maintenance, but for anything further out than a couple of years it's multiples too high. I find using around $2/bbl gives reasonable equivalence for the mid-sized oil producers (and ignore contingent resources completely at this point in time). Much of SA's so called "Reserves" are pure guesswork, and probably wouldn't even make C2 category in a public company.. IMO. But I agree that it looks like a desperate attempt to cash in before it's too late due to alternatives to oil. which are becoming cost effective..

...or it would if we could better address the intermittency of much of it, and improve storage during excess production and supplement during slack periods.

Battery technology is interesting... yes, I agree it will be the future eventually, but even the most efficient batteries have power densities just a few % of typical hydrocarbons (in terms of kJ/mass or /volume). If you pack too much energy into a small volume/weight you risk the spontaneous combustion problems experienced by Samsung's mobile phones. And with larger battery "packs" or modules the problems are magnified. Even traditional lead/acid battery usage requires well ventilated storage, and once you hook up a few of them necessary for even very modest needs such as a small unmanned oil platform, they're a real problem.

Pumped water storage (such as Dinorwig in Snowdonia), or geological air compression systems might be more suited for grid scale storage... Thermal solar can incorporate overnight storage. Excess electricity could perhaps eventually be used to provide a hydrogen (or similar) storage, but it's unlikely to be a replacement for hydrocarbon fuels where weight and volume are important such as aircraft & freight transport (by road or sea).

Automation is steadily eroding many types or employment. don't underestimate what they will replace.. Fortunately I'm now retired and don't rear being replaced. At least I walk my dog for my own enjoyment, although there will no doubt be robots for this soon.

..anyway - I'm out to walk the dog now..!

[fangorn2] 25/2/2017 08:54

hehe indeed. Know the feeling bounty.
As an aside, vis technological progress, etc, interesting article here on such.





It Is Time for Luddites to Relax: Robots Will Not Take Over the World
Here is the opening of this interesting article by Allister Heath for The Telegraph:

Ever since the Industrial Revolution, the great fear has always been that automation would create mass, permanent unemployment. The most famous early scare came shortly after James Hargreaves, a brilliant innovator, came up with a multi-spindle spinning frame in 1764. Hargreaves, one of an army of free-thinkers who drove an explosion in economic growth, was born near Blackburn, a cotton producing part of Lancashire.

The local textiles industry couldn’t cope with demand, and Hargreaves’ innovation allowed a massive increase in productivity. But our inventor kept his device secret, using it only for his own production. He was right to be prudent: after his output helped depress prices – and hence deliver consumers a windfall – angry textile workers eventually broke into his property and vandalised his machines, forcing him to flee to Nottingham.

But progress wasn’t to be stopped, and automation has gone hand in hand over the past 250 years with an explosive increase in wages and employment. The reason? Machines increase output per person, and thus the demand for labour and wages. New jobs are created to replace old jobs, and then as these are automated even newer jobs emerge to replace the next lot of losses, and so on, ad infinitum. The main problem is one of mismatching skills: the process of creative destruction requires capital and labour to adapt constantly.

Yet there are many today who doubt that this overwhelmingly benign process will continue, especially with the advent of artificial intelligence, robotics, self-driving cars, drones and a new generation of learning machines. They are convinced that this is a new phase, and that millions of middle class jobs are about to be wiped out, with nothing to replace them.


David Fuller's view
Allister Heath is one of the brightest, most upbeat and creative journalists out there. I always read his prolific columns and often publish them.

So, do I agree with this column above? I think he will be right for the next few years, and possibly a decade or so. However, the accelerating rate of technological innovation which I have written about for a number of years is clearly evident if you think about the changes you have witnessed over the last ten or twenty years. Moreover, we are only in the foothills of this acceleration which has no natural ending. In other words, it could continue indefinitely.

Once intelligent machines have the capacity to develop and reproduce themselves, they will evolve much more quickly than our organic human brains. The best projections suggest this will occur before the end of this century.

Don’t take my word for it – see what Bill Gates, Stephen Hawking, Elon Musk and many others are saying. Here is a sample from Tech World.

[bountyhunter] 24/2/2017 16:13

if only I'd sold up at the peak... still, life is full of 'if onlys' !

[fangorn2] 24/2/2017 16:12

And the likes of Medi@Invest and other dodgy start ups..

Yes what a time that was....Unfortunately I was working overseas at the time so missed most of it..

[bountyhunter] 24/2/2017 16:06

certainly reminds me of the dotcom stocks such as Logica and Telewest back in 1999 -> early 2000
...back then everyone ignored accumulating high debt levels to their peril!
if interest rates rise then high debt levels quickly become unserviceable to the point of bankruptcy or debt for equity swaps to the detriment of investors

here's another interesting link re Tesla:

[fangorn2] 24/2/2017 15:54

Seeing articles such as this makes me think twice though...

"Tesla: Capital Raise Now, Or Bankruptcy In 4 Months"

[fangorn2] 24/2/2017 15:53

Yeah.Missed that boat myself.

Tad concerned about Solar City buy as it was a basket case compared to the leaders in Solar power sector. But you cant ignore Musk's leadership skills.

[bountyhunter] 24/2/2017 15:50

although longer term it has been a very volatile stock - looks good for trading if it drops back again!

[bountyhunter] 24/2/2017 15:37

A friend of mine bought Tesla stock in December last year - I feel like I missed the boat there!

[fangorn2] 24/2/2017 15:28

@Cash, Waiting for a decent entry point TYesla/Solar City side.

Exciting times tech side for sure..none of this Snapchat drivel.

[cashandcard] 24/2/2017 15:19

The battery storage space is dominated by big players. Its very hard to find any smallcap companies to gain good exposure at reasonable prices. Tesla/Solarcity is the best - but its already $40bln marketcap.

However, if renewables go mainstream and Tesla (with Solar city under its wing) really do dominate in years to come, then Elon Musks suggestion that they could be the worlds first Trillion dollar company may just look a bit more realistic.


Cash

[bountyhunter] 24/2/2017 15:09

Yes I agree re battery storage, although Tesla's current valuation reminds me of the valuations of tech stocks in the dotcom era!

[fangorn2] 24/2/2017 13:10

Happy to provide. found it interesting myself.

Will be intriguing to see where they do actually price this. Smacks of Saudis rushing for Oil exit to me,cash in as much as they can before technology finally makes Renewables economically viable..

Battery storage tech the key - not found a decent way to get exposure to that outside of Tesla/Solar city

[bountyhunter] 24/2/2017 11:14

interesting article fg;
also reminded me to roll the header to the April contract which I've just done

[fangorn2] 24/2/2017 11:03

Saudi Arabia $2 Trillion Aramco Vision Runs Into Market Reality
This article by Javier Blas and Wael Mahdi for Bloomberg may be of interest to subscribers. Here is a section:

Even within the Saudi government, doubts are emerging. A person familiar with the flotation, who asked not to be named, said last week Aramco in its current form would probably be worth about $500 billion because a lot of its cash goes toward taxes and future investors won’t have a say on investments in non-core areas. Another person familiar with IPO talks put the figure at a little less than $1 trillion if investors base the valuation on Aramco’s ability to generate cash.

Selling a 5 percent stake would therefore raise at least $25 billion, still enough to match Alibaba Group Holding Ltd.’s unparalleled 2014 offering and dole out millions of dollars of fees to the advisers hired to manage the sale, namely JPMorgan Chase & Co., Moelis & Co. and independent consultant Michael Klein.

The $2 trillion estimate was initially put forward by Deputy Crown Prince Mohammed bin Salman last March. There are two key issues, according to interviews with a dozen industry analysts, investors and executives, who asked not to be named because of the sensitivity of the matter.

The first is that it’s premised on a simple calculation: Take the 261 billion barrels of reserves Saudi Arabia says lie under oil fields like the onshore Ghawar and offshore Safaniya, and multiply by $8 (a benchmark used to value reserves). An independent auditor is assessing Saudi reserves, the second- biggest worldwide, before the IPO.


Eoin Treacy's view
When is the best time to IPO your company? When you can get more for it than you think it is worth. Saudi Arabia is one of the only participants in the oil business which has to have a really long-term perspective. Exxon Mobil and BP put out long-term forecasts for the energy market stretching into the 2030s but Saudi Arabia tends to think in 50-year timeframes.