Touchstone Exploration Share Discussion Threads

[novicetrade68] 22/8/2018 12:53

A 30% reload no less.

[mount teide] 22/8/2018 08:28

EIA: U.S. Oil Production Growth Is Slowing - OilPrice.com



'The EIA just revised down its forecast for U.S. oil production growth for 2018, an acknowledgement that pipeline constraints are slowing output gains in the Permian basin.

The EIA believes the U.S. will average 10.68 million barrels per day (mb/d) this year, down 0.11 mb/d from last month’s estimate. It also revised down its forecast for next year’s average output to 11.7 mb/d, down from 11.8 mb/d previously.

The downward revision comes after recently released data from the agency suggested that output growth during this past spring was not as robust as previously thought. The EIA, at the time, thought shale production continued to grow at a blistering rate, with production rising by over 200,000 bpd between the beginning of April and the end of May. But more recent data suggests that production actually dipped a bit over that period.

It may seem like an insignificant revision, but it points to broader problems, particularly in the Permian basin, which could cause the U.S. to undershoot expectations going forward.

Recent movements in the rig count lend a little more weight to this notion. While the number of rigs bounces around from week to week, the overall number is essentially unchanged since May. And in the Permian, where all the drilling action has been concentrated, the rig count stood at 480 at the start of August, no higher than it was in early June.

“The lower forecast for output this year reflects slightly slower than expected growth in middle quarters of this year, possibly related to pipeline constraints out of the Permian basin that have reduced wellhead prices in the region,” Tim Hess, a product manager for the EIA’s Short-Term Energy Outlook said, according to Bloomberg........


...Forecasting 12 to 18 months into the future is always tricky, so there will be plenty more revisions to the production figures going forward. But the latest downward revisions suggest that the array of challenges facing the shale industry, which have been discussed in the media for some time, are starting to show up in the data.

[mount teide] 22/8/2018 08:22

L2 - 4 v 1 / 18.0p v 18.5p - all other MM's on 20.0p

[mount teide] 22/8/2018 07:54

US Shale Oil Industry - running to stand still until late 2019?

According to research by Rystad's analysts, US Shale oil industry costs are currently rising at more than 5 times the expected production gains for 2018 - the industry is spinning the news that some of the cost is preparatory work to support more production growth in 2019.

Spending Boost Fails To Raise Production In The Permian - OilPrice.com today




'A survey of 33 shale companies by Rystad Energy found that while the group revised up spending by about 8%, they only increased their expected production levels for this year by 1.4%. “This disconnect might suggest that the shale industry requires more capital than before to achieve healthy production growth,” Rystad said in a new report.

There are some signs that the Permian, for instance, is running into some productivity problems, raising the possibility that the highly touted “efficiency gains” over the past few years are reaching their limit.

On the other hand, the industry is also spending more because they have plans to increase drilling activity, which could lead to higher output next year. “While a part of increased spending is due to service cost inflation, a significant part of the incremental budget is also planned to be used for additional drilling throughout 2H 2018 to support more intensive completion activity and production growth in 2019,” Rystad Energy said in its report..............

......Overall, cost inflation is playing a pivotal role in driving up spending budgets, but Rystad cautioned not to take that conclusion too far. Much of the spending increase is also laying the groundwork for higher production down the road. “While higher cost inflation played a role in the uptick in investment budgets, as evident from 2Q earnings reports, the majority of incremental capital expenditure is still planned to be directed to a larger number of intensive long-lateral completions and facility build-outs,” Rystad said.

The reason that the revisions to the guidance for 2018 look so unimpressive is that these investments may only result in production increases next year. That approach makes sense given that pipeline constraints in the Permian won’t be resolved until late next year. A lot of companies are doing the upfront work on drilling, but deferring completions until 2019 when new pipelines come online and Midland differentials rise. In other words, shareholders may groan at some of the figures that came out of second quarter earnings reports, but most shale executives expect things to improve next year.'

[hgk1979] 20/8/2018 09:46

Mr T

Thank you for the answer 👍🏽

[mr. t] 19/8/2018 19:27

Hgk1979,

The high deferred tax is because drilling capex can be deducted as capital allowances at a faster rate than they are depreciated in the accounts. So TXP pays less tax this year due to drilling, but it will have to pay it in the future. It gives a helpful cash flow benefit. P.13 of the latest management discussion and analysis gives a description:

“The deferred tax liability balance mainly related to the discrepancy of the fair values over the carrying values of the Company’s producing assets. The primary driver of the increase from year-end was based on capital expenditures incurred during the first quarter. Trinidad capital allowances are deducted at a greater rate than the carrying values of property and equipment, which are reduced by depletion. During the three months ended March 31, 2018, the Company recorded a deferred tax expense of $1,209,000 (2017 – $320,000).”

[mount teide] 19/8/2018 17:45

In spite of oil and industrial metal prices rising from the 2016 lows by close to 200% and 60%-140% respectively by Q1/2018, the big players are still to yet invest money in the mega-project arena.

The oil mix needs these long-cycle barrels as these wells tend to flow at many multiples of the rate of the unconventional shale plays that continue to soak up the lion’s share of new capex dollars. The copper market needs to address the rapidly declining head grades in the major mines(the largest 20 mines generate 40% of current global production).

Intuitively we know major long-cycle oil and copper production must return. But, as the EIA and Kitco supply graphs show, it is way past due if we are to have any hope of replacing barrels lost to the decline of fields currently on stream/falling head grades at the major mines, never mind keep up with the relentless 1.5%-4% annual growth in demand.

The good news is it is inevitable that it will happen as a result of market forces pushing up prices but such was the balance sheet impact of the depth and length of the last recession it may take another year or two before a meaningful return to higher capex levels is seen. And that is exactly why I believe there is another price super-spike in the offing. My guess is it’s 18-36 months out and will be the catalyst for the 9 year equity bull market to roll over and severely correct.

There is little doubt we are living on borrowed time in the area of oil and copper supply. There is a gap in the pipeline to replace these supplies that cannot be filled in the short run.

The oil, copper and shipping industries keep re-learning the same lessons. Which is good for investors in these sectors as once every 15-20 years it provides us with a recovery stage that is as close to a one way bet as the equity markets throw up, such is the scale of the boom and bust nature of these markets.

There are not many industries like quoted shipping companies(dry bulk/commodity/oil) that can can absorb the almost compete wipe out of their equity on global exchanges, as happened during 2008 to 2016, and still operate with the wider world in complete ignorance.


AIMHO/DYOR

[mount teide] 19/8/2018 14:55

Venezuela's oil industry is in meltdown and now likely to lose its highly valuable US Refineries as compensation for expropriating billions of dollars of assets from US Oil majors.


Venezuela’s Key Refineries At Risk Of Seizure - OilPrice.com

'In 2007, following Venezuela’s expropriation of billions of dollars of assets from U.S. companies like ExxonMobil and ConocoPhillips, I suggested a potential remedy.

Since Venezuela’s state-owned oil company, PDVSA (Petróleos de Venezuela, S.A.) owns the Citgo refineries in the U.S., the companies that had lost billions of dollars of assets should target these refineries for seizure as compensation.

These refineries have the same vulnerabilities as the U.S. assets in Venezuela that were seized. They represent infrastructure on the ground that can’t be removed from the country.

Citgo has three major refining complexes in the U.S. with a total refining capacity of 750,000 barrels per day. Recognizing the vulnerability from asset seizure, PDVSA tried to sell these assets in 2014, and valued them at $10 billion. That value may be grossly overstated, considering that Venezuela subsequently pledged 49.9 percent of Citgo to Russian oil giant Rosneft as collateral for a $1.5 billion loan.

In recent years, PDVSA has lost a series of arbitration awards related to expropriations, and companies have been looking for opportunities to collect. In May, ConocoPhillips seized some PDVSA assets in the Caribbean to partially enforce a $2 billion arbitration award for Venezuela’s 2007 expropriation.

ConocoPhillips had sought up to $22 billion — the largest claim against PDVSA — for the broken contracts from its Hamaca and Petrozuata oil projects. The company is pursuing a separate arbitration case against Venezuela before the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). The ICSID has already declared Venezuela’s takeover unlawful, opening the way for another multi-billion dollar settlement award.

Last week, a court ruling has opened the door for Citgo assets to be seized to pay for these judgments.

Defunct Canadian gold miner Crystallex had been awarded a $1.4 billion judgment over Venezuela’s 2008 nationalization of a Crystallex gold mining operation in the country. A U.S. federal judge ruled that a creditor could seize Citgo’s assets to enforce this award.

This ruling is sure to set off a feeding frenzy among those that have won arbitration rulings against Venezuela. Until the legal rulings are settled, it’s hard to say which companies will end up with Citgo’s assets. But it’s looking far more likely it won’t be PDVSA'

[hgk1979] 19/8/2018 10:58

Anyone knows why the deffered taxes are so high in the reports?

[che7win] 16/8/2018 22:02

Finished up 6.3%

[novicetrade68] 16/8/2018 21:37

This is not a great share for trading with a spread often between half a penny and a full penny, I would be surprised to see this breaking 17p, may briefly touch 17.50p on the bid, but then the ask will stay likely 19p so what's the point.

[fardels bear] 16/8/2018 18:11

So that's seven posts he's made today SINCE announcing that he's fully out again due to a placing that he wants to browbeat us into believing in.You have sat too long for any good you have been doing lately... Depart, I say; and let us have done with you. In the name of God, go!

[che7win] 16/8/2018 17:33

5% up in Canada

[crooky1967] 16/8/2018 14:04

All I am concerned about is that daily production per quarter is growing and would expect to be at 3200 bopd by end 2019 based on current plans and oil prices

[captainfatcat] 16/8/2018 13:58

rossannan the "middle stage" is the time when production is at its most stable. You seem to have the wrong end of the stick.

[mount teide] 16/8/2018 12:40

ross - making assumptions using very short term data is almost guaranteed to generate a highly misleading impression of the underlying performance.

That's why i used 31 months of well recompletion and field decline data - it evens out short term variations in performance and gives a much more accurate and reliable understanding as to the underlying performance.

Only you could describe as a concern the performance of 4 wells that have produced some circa $10.9m of gross revenue to date against a completed cost of $4.4m, and that are still each averaging 91.25 bopd some 14/15 months after first production, and where the management were expecting an initial stabilised production of circa 65 bopd.

While it is wise to be cautious and always check the evidence, if you go overboard and let it cloud your judgement, its easy to miss out on some great investment opportunities.

With respect, to have sold, bought and sold again in less than week smacks of short term trading - Good luck with that approach - you'll probably need it since CFD and Spread-bet industry research shows 96% of short term traders lose money over the longer term.

[spangle93] 16/8/2018 12:22

Rossannan - ref RRL, dunno, I don't really follow it too close on account of my holding now being worth less than the cost of selling it :-( Operationally they seem to be doing OK, but there's the big issue of the debt they have - at least at TXP there is much better cash flow, and (at least IMHO) Ortoire success possibilities that would greatly reduce the dilution if they went down the equity route to pay the outstanding loan.

LGO was the one that illustrates the vagaries of small company investing, and why astute investors like Zengas advocated yesterday holding a basket of stocks - a tool getting stuck the hole would be an irritation to a company of BP's size or even Tullow's size, but a "black swan" company crippler for LGO

[spangle93] 16/8/2018 11:02

Ross - interesting point about the RRL announcement you mentioned. I'm assuming you meant "The well was successfully put into production at a stabilised rate of 120 bopd and has produced over 12,200 barrels of oil to date".

Forgive me if this is already clear to all, but the thing with these Trinny wells is that they produce at a stabilised or constrained rate. When you drill a well here, you don't know in advance what net pay, porosity, permeability, water saturation etc you'll get - you know it will be within a certain range. So throughout the period after wireline logging the open hole to probably a month after start up, it's all about tuning the well so that it produces at the optimum rate for the reservoir it's accessed. Offshore wells use chokes on manifolds to constrain the flow, whereas onshore, it's done through the settings on the nodding donkey. Suck too hard and while early production is good, it's unsustainable, suck too soft and you're losing NPV, ROR. That's what it means by stabilised rate, and if it's done right, so that rate the reservoir can deliver to the well matches the production rate, there is no decline.

At the opposite end of the scale are those that produce 10-20 bbl/day, that wait for pressure to build up, then they have a quick burst of production, and are shut in for the rest of the 24 hours. These could be like this for years.

The field decline will therefore come from the wells that are in between the two stages, or ends of the spectrum

P.S. There's also maintenance downtime to consider, so a well might flow at says 110 b/d but its average is 100 because for 3 days each month it may have to be shut in for tests, facilities or flowline maintenance, yada yada