Touchstone Exploration Share Discussion Threads

[fardels bear] 04/7/2018 13:36

What is the current level of debt owed to the Chinese by the Yanks? In the trillions...

Now, you might think I am being overly cynical, but..

[mount teide] 04/7/2018 13:26

captainfatcat - Indeed - the foreign policy initiatives of the US administrations of the past have rarely done much to make friends and expand their influence.

Economic historian Niall Ferguson predicted before Trump took office to "expect a revolution in US foreign policy under Trump" - since in office Trump has done very little to disappoint him!


Q: Will Trump's foreign policy change how the U.S. acts as a superpower?

Niall Ferguson: 'The scale of the change is still being underestimated by most people. I think this administration is going to change U.S. foreign policy more than any administration has done in our lifetime. Trump is repudiating the foreign policy of every president since Harry Truman. He is going to challenge fundamental assumptions about U.S. foreign policy, for example, that the U.S. should be primarily concerned with the defense of Western Europe and also East Asian allies against Russian aggression. I mean, that is clearly going to be challenged by those elements in the Trump administration that are openly pro-Russian.

Since 1972, the U.S. has basically had a good relationship with the People's Republic of China. I think Trump is challenging the very assumptions on which that good relationship has been based. I think a lot is in play here. It could also destabilize the Asia-Pacific region in ways that Trump's advisers may underestimate. Trump is going to change policy in the Middle East. He's going to get rid of Obama's pro-Iranian, anti-Arab, anti-Israeli strategy and go in exactly the opposite direction.

It will be a revolution in American foreign policy. And this is going to have a whole series of quite massive consequences. I think the very stability of NATO is going to be called into question by the pro-Russian stance of the new administration. I think the East-Asian order could become very disorderly if China reacts to Trump's opening gambits with naval action. This could escalate quite quickly. And if Trump is playing hardball on Taiwan, that plays right into the hands of the more nationalistic elements in Beijing.

If you try and make foreign policy on the basis of the art of the deal, you are quickly going to discover that international relations is not like real estate.'

[fardels bear] 04/7/2018 13:06

By the end of his term of office, I doubt he'll have many friends left.

[captainfatcat] 04/7/2018 13:05

MT maybe the timing of Irans sabre rattling is no coincidence Iran are currently commemorated the 30th anniversary of the downing of a commercial airbus passenger plane by a US Navy guided-missile cruiser USS Vincennes over the straights killing 290 people.

Astonishingly I note a year later, the captain of the USS Vincennes, William C. Rogers, was cleared of any wrongdoing in the incident, and was even awarded America’s Legion of Merit medal by then President George Bush for his “outstanding service".

[fireplace22] 04/7/2018 12:59

In Trump's psyche the two events are not related (Iranian sanctions, higher oil price), as the hike in import duty on steel pipes is unrelated to increasing the cost of fraccing. Cause and effect is not his strong point.

[mount teide] 04/7/2018 12:54

captainfatcat - ref: Hormuz Strait - Interesting.

Labelling an official state military as a terror group, is not only unprecedented, but entirely consistent with Trump's bull in a china shop foreign policy.

With Pompeo threatening to reduce Iran's oil exports to zero - its inconceivable that the Iranians will accept this, particularly when others around them(including their enemies) are expanding their oil exports.

For the Iranian revolutionary guard to the describe the US action as "like a declaration of war, but in an economic way", is likely to strongly support the view that its a bit rich of Trump to call for lower oil prices, when enacting foreign policy initiatives that are certain to continue stoking them.

[mount teide] 04/7/2018 12:28

The huge reduction in capital investment by many National Oil companies and multi nationals during the circa 5 year collapse in POO is now coming home to roost.

A few years ago Opec member Angola was Africa's largest oil producer - Angola's June oil exports fell to a 12-year low. According to government data in the state budget Angolan oil production is set to decline a further 36% by 2023 - they state: "The reality of the oil sector will be characterized by a situation of declining production in the coming years due to the various constraints oil companies have encountered to develop their activities,".

Angola is far from alone in now delivering deeper cuts than its OPEC quota. The problem, Bloomberg notes, is that Angola’s offshore fields are particularly costly to maintain, and there is little enthusiasm among oil companies to invest in this production maintenance.

“Most Angolan fields have struggled or entered into a steep decline phase after three years -- it’s the nature of the geological characteristics of Angola’s offshore production,” Energy Aspects analyst Richard Mallinson told Bloomberg.

Identical supply/demand challenges and a dearth of capital investment in production development and exploration over the past 5 years characterise the industrial metals markets too - both are long term cyclical markets in the early stage of a new recovery phase.

Interestingly, most commodity cycles often run diametrically opposite to the peaks and troughs of the global economy.

The previous global equity market peak in late 1999 saw the FTSE hit circa 7,000 while copper was at a 15 year low of $0.78.

The FTSE then tanked eventually bottoming in H1/2003 nearly 50% down, and by mid 2006 was still some 20% down. The Copper price during this entire period never dropped at all and by mid 2006 had risen by 375% to $3.70(some 493% better than a comparable investment in a FTSE tracker during that period)

From 2010 to Q1/2016 copper dropped 58% while the FTSE went largely sideways to finish at exactly the same level as 6 years before. Since then the FTSE is up 35%, while Copper is up 55%.(Oil price was in a similar downward trend from 2008 to the identical bottom in Q1/2016).

With the copper market forecast to go into a period of material deficit for most of the next 5 years(oil is already flirting with a deficit situation), and still 50% below its previous 2010 high(oil is still 88% below its 2008 high), and the FTSE close to an all time high valuation - the likely trend in comparative valuations over the medium term looks fairly predictable if the fundamentals and history is a reliable guide - particularly with the Saudi's, the Oil Industry's only swing trader planning to carry out the world's largest IPO in 2019.


AIMHO/DYOR

[fardels bear] 04/7/2018 12:21

OK, well perhaps one should assume we are all invested here based upon our assessment of a realistic outcome.

Being optimistic almost, but not quite, wiped me out five years ago..

I'm still optimistic that sentiment has turned towards oil now that consumer companies are falling out of favour, but..

[fardels bear] 04/7/2018 11:58

I'm not in SOIL, I was just asking if you were. Your pessimism makes me wonder why you invest in oils stocks..

[highly geared] 04/7/2018 11:47

Rossannan, why invest, at all, in anything, if your glass is always half empty?
I’m all for realism but without an optimism bias , stock investing isn’t for you?

[fardels bear] 04/7/2018 11:35

Are you in SOIL, ross?

[zengas] 04/7/2018 10:30

It doesn't unbook them lol

[zengas] 04/7/2018 10:24

All the more reason to book further reserves in the ground and increase the underlying value.

I don't think the company is envisaging a drilling programme at peak prices but more at a realistic average over time.

[sleveen] 04/7/2018 09:24

Brasso3

That may be so, but take out operating costs, interest, royalties, G&A, depreciation and other taxes: any profit made will be much less than the debt. Even if POO and production have increased. IMHO.

Have a look at the 2017 accounts, they illustrate my point nicely.

[fardels bear] 04/7/2018 09:22

Well the herd certainly isn't salivating all over the board so I think we might have a slightly longer wait for 30p.

[brasso3] 04/7/2018 09:13

I expect this will run up towards 25p - 30p before Q2 results. That will be the time when the market realises that the debt is a very small percentage of annual turnover.

[fardels bear] 04/7/2018 09:05

That story is from middle of May. A lot has changed since then. Venezuela and Libya oil exports collapsed for a start. OPEC didn't do what Trumpton wanted...