Touchstone Exploration Share Discussion Threads

[ileeman] 26/10/2018 14:44

More wells before the end of December, great buying op currently. Just wider markets correcting a bit once it calms down should rise aggresively.

[shanklin] 26/10/2018 08:40

Saw the share price drop here and thought Brent crude must be down to $60/barrel. But no, it is still $76/barrel

[buffythebuffoon] 25/10/2018 14:46

MT, your last paragraph could cause this board to briefly turn into a ‘What did the Romans do for us’ sketch.....

Buffy

[mount teide] 25/10/2018 14:13

One of the most remarkable oil market statistics is that since 1980 while consumption in the UK/Europe and USA collectively has not gone up at all, in China, SE Asia and India it has increased by a collective 24 million bbls a day.

This increase is equivalent to 24 times the annual oil production output of the North Sea - and yet today Chinese and Indian oil consumption per capita has still only risen to just one seventh (14%) and one eleventh (8%) respectively of that of the USA.

Since 1980 there have been few certainties in life other than death, taxes and the growth of oil consumption in SE Asia, China and the Pacific Rim (the chart has followed a 45 degree line for 38 years).

[mount teide] 25/10/2018 12:08

After oil and copper market capital investment fell over 60% between 2013 and 2016, its a paradox that although the supply and demand curve has since been strongly signalling a need for it to rapidly rise, commodity pricing is still to reflect this, resulting in the industry largely continuing to sit on its capital investment hands (outside of the heavily loss making US oil shale sector).

A similar situation occurred in the early 2000's and led eventually to a huge spike in the price of copper and oil to drive up investment in new production.

On the balance of probabilities the very low level of new investment in this latest cycle is actually playing into the hands of investors with the foresight to take exposure to the oil and copper sectors since as every day passes the certainty of either much higher or very much higher pricing grows - as the demand from the 4.5 billion population Chinese, SE Asian and Indian economic/urban infrastructure development juggernaut is still in its infancy, accelerating and has many decades still to run.

[mr. t] 25/10/2018 11:56

I find it amazing how so many pundits say oil prices are too high at $80, when we've been used to it for 10 years!

And in the last 10 years:

- Inflation means the real oil price today is cheaper. E.g. US consumer prices are 15% greater now than in 2008.

- As this chart shows - the world today gets 30% more gdp per unit energy compared to 1990.



- even with that energy efficiency, global oil demand has increased by over 10% since 2008:



- due to a combination of the recent price crash, the difficulty in reaching new resources, and negative political aspects (e.g. deepwater horizon, government tax hikes, climate change concerns, talk of peak demand, resources in unstable or hostile countries) investment in finding & developing new oil & gas supply has been low - with the odd exception like US shale. This has longer term consequences on oil prices.

Talk of renewables & electric vehicles rendering oil worthless is a noble aspiration, but I'm betting it's a long way from reality for quite a few years yet.

Barring a global depression or a surprising supply upside, and ackowledging there'll be volatility along the way, I think we'll see oil prices at this level or higher for sometime to come.

Good news for TXP and its shareholders.

[mount teide] 25/10/2018 10:59

The average price of Brent since 2008 has been $79.5 - during this period the Dow has appreciated 293% from its low.

Having a economist by training at the wheel employing smart oil price hedging during the height of the brutal oil sector recession during 2013-2016 enabled TXP to largely avoid what happened to TRIN - 158p to 1.75p fall in share price followed by a 300% dilution at a 97% discount to the 2014 share price high)

[mr. t] 25/10/2018 09:42

Even after the recent drop in oil price, spot Brent is still over $75 - about $5 greater than the average price through H1 this year.

Near term oil price is important for TXP to fund its large investment program, and to provide debt and equity investor confidence.

One of the main reason I'm invested though is that I think the mid to long term economics for high quality oil & gas producers is strong - and the market has not accounted for it in the forward curve, oil price forecasts, or company share prices.

This woodmac research is an example of why I think TXP is investing at just the right time:



"Wood Mackenzie said recovery from the recent downturn has been much slower than in previous cycles and annual spending is around £77billion too low to sustain production and ensure future demand growth.

The firm predicts annual spending will reach £386.5billion in the early 2020s.

This is far below the peak of £579.8billion peak in 2014 and WoodMac said this needs to increase to at least £463.8billion through the next ten years."

[mount teide] 25/10/2018 09:06

China and India with a combined population of 2.8bn (3.5 times the EU and USA combined) are along with the US, the World's largest oil importers.

Despite rising prices Chinese and Indian oil imports in tonnage terms have surged in 2018 by more than 6.0% over 2017 - in line with current GDP growth.

While Chinese Nat Gas imports in 2018 are currently up by a staggering 34% over 2017 after a number of new LNG import terminals commenced operations and others expanded capacity.

To date in Q4/2017 Brent has averaged $80.5 against $73.0 in Q3. While TXP's production is averaging more than 15% higher than in Q3.

[sleveen] 25/10/2018 08:16

I have the 250k buy @ 20p timed at 13.35pm.

So that trade's "in the price"

[sleveen] 25/10/2018 07:58

Brasso3

Thought I would add a bit of balance to the Brent up $1/bl brigade.

[lauders] 25/10/2018 07:54

With the DOW down around 600 points yesterday and the bearish stance now developing in the markets it may not go higher in the near term iLeeman. Certainly hope I am wrong as I am a shareholder, but I just think that "going up" is going to be limited for a while. Please let me be way off the mark ;-)

[ileeman] 25/10/2018 07:51

Yup massive buy I did say they are filling a buy order. Market makers would take a huge amount of shares.

Question is how many more do they want clearly market makers are holding the book to fill it, how many newbies can the markets get into selling up before they take it higher.

[brasso3] 25/10/2018 07:13

You sold out again Sleveen?

[sleveen] 25/10/2018 07:00

POB $10/bl less than the recent high.

[mount teide] 24/10/2018 19:36

Lowering the bid back to 19.0p today freed up enough stock to allow a 250,000 buy at 20.0p to be filled; reported after the closing bell.

[mount teide] 24/10/2018 08:40

Canadian crude oil since late September has been selling for just $20 bbl - a discount of $50 to WTI such has been the impact of pipeline bottlenecks and the US Refinery maintenance season.

The discounts mean that the oil industry in Alberta is currently losing around $100 million per day, according to GMP FirstEnergy and CBC.


Why Is Canadian Crude Selling For $20? - OilPrice.com

[sleveen] 23/10/2018 16:27

POO not helping that's for sure.

[ileeman] 23/10/2018 12:10

Market makers happy to take a lot of shares again. Indicates more background buyers soaking it up.

[ileeman] 22/10/2018 19:03

Surprised there is not more people loading up on the back of the holdings RNS. Looks like the significant holder most have loaded up quite a bit above 20p.

[mount teide] 22/10/2018 09:00

US Shale Oil Industry - New report concludes - "Until the industry as a whole improves, producing both sustained profits and consistently positive cash flows, careful investors would be wise to view fracking companies as speculative investments"



U.S. Shale Has A Glaring Problem - OilPrice.com today



'A new report from the Institute for Energy Economics and Financial Analysis (IEEFA) and the Sightline Institute detail the “alarming volumes of red ink” within the shale industry.

“Even after two and a half years of rising oil prices and growing expectations for improved financial results, a review of 33 publicly traded oil and gas fracking companies shows the companies posting negative free cash flows through June,” the report’s authors write. The 33 small and medium-sized drillers posted a combined $3.9 billion in negative cash flow in the first half of 2018.

The glaring problem with the poor financial results is that 2018 was supposed to be the year that the shale industry finally turned a corner. Earlier this year, the International Energy Agency painted a rosy portrait of U.S. shale, arguing in a report that “higher prices and operational improvements are putting the US shale sector on track to achieve positive free cash flow in 2018 for the first time ever.”

The improved outlook came after years of mounting debt and negative cash flow. The IEA estimates that the U.S. shale industry generated cumulative negative free cash flow of over $200 billion between 2010 and 2014. The oil market downturn that began in 2014 was supposed to have changed profligate spending, pushing out inefficient companies and leaving the sector as a whole much leaner and healthier.

But the warning signs have been clear for some time. The Wall Street Journal reported in August that the second quarter was a disappointment. The WSJ analyzed 50 companies, finding that they spent a combined $2 billion more than they generated in the second quarter.

The new report from IEEFA and the Sightline Institute add more detail the industry’s recent performance. Only seven out of the 33 companies analyzed in the report had positive cash flow in the first half of the year, and the whole group burned through a combined $5 billion in cash reserves over that time period.

Even more remarkable is the fact that the negative financials come amidst a production boom. The U.S. continues to break production records week after week, and at over 11 million barrels per day, the U.S. could soon become the world’s largest oil producer. Analysts differ over the trajectory of shale, but they only argue over how fast output will grow.

Yet, even as drillers extract ever greater volumes of oil from the ground, they still are not turning a profit. “To outward appearances, the U.S. oil and gas industry is in the midst of a decade-long boom,” IEEFA and the Sightline Institute write in their report. However, “America’s fracking boom has been a world-class bust.”

The ongoing struggles raises questions about the long-term. If the industry is still not profitable – after a decade of drilling, after major efficiency improvements since 2014, and after a sharp rebound in oil prices – when will it ever be profitable? Is there something fundamentally problematic about the nature of shale drilling, which suffers from steep decline rates over relatively short periods of time and requires constant spending and drilling to maintain?

Third quarter results will start trickling in over the next few days and weeks, which should provide more clues into the shale industry’s health. There is even more pressure on drillers to post profits because the third quarter saw much higher oil prices.

“Until the industry as a whole improves, producing both sustained profits and consistently positive cash flows, careful investors would be wise to view fracking companies as speculative investments,” the authors of the report concluded.'

[mount teide] 21/10/2018 18:06

World oil and liquids supply surpassed 100 million barrels a day for the first time in Q3/2018 - IEA

Global supply rose to 100.3 million bpd in Q3 the IEA said on Friday in its monthly oil market report. Output, which includes crude oil, natural gas liquids, biofuels and refinery processing gains, was 2.3 million barrels a day higher than Q3/2017 when Brent average circa $53.

So, despite increasing global oil and liquids production some 2.3% over the last year while Cushing stocks fell from circa 60m bbls to circa 25m bbls; such was the demand the price of Brent still rose over 60% from $53 to more than $85 at the recent peak - suggesting a much tighter market than the "adequately supplied" political language used by the IEA.

[mount teide] 21/10/2018 16:36

Asia's 4.6 billion population set to see it's oil deficit surge 30% to 35m bopd by 2025 - a forecast growth of 8 million bopd in just 6 years. Asia has got to find a supplier for an additional 1.3 times the North Sea's annual oil production EVERY year through to 2025.


Asia’s Thirst for Oil will Continue - Oil & Gas Bulletin - 15 October 2018

'Asia’s oil deficit will widen to 35 million barrels per day (bpd) by 2025, up about 30% from the current 27 million bpd, amplifying global trade flow imbalances, a senior executive at French oil and energy group Total said on Tuesday.

At the same time, Europe’s imports will be stable at 10 million bpd, while exports from North America and the Middle East will increase, said Thomas Waymel, the company’s president of trading and shipping.

The United States will export shale oil, but its refineries will continue to import medium and heavy sour grades, Waymel said during the Asia Pacific Petroleum Conference (APPEC) in Singapore.

Regulatory changes like IMO 2020, which will cap sulfur content in ship fuel, will be another driver for growth and changing trade flows, he said.

“The fuel oil flows will be reduced. At the same time, the shipping industry will need distillates … so Europe and Singapore will attract more distillates,” Waymel said.

New trade flows might emerge for high sulfur fuel oil either in coker capacity or power plants switching back from coal or gas to high sulfur fuel oil.

Light sweet crude will be more in demand, while heavy sour grades will need to be processed by complex refineries, he said.

“Regulatory changes will dramatically affect an increase in flows of both crude and products. It should also have positive impact on freight rates which is finally good news for ship owners,” he said.'

[mr. t] 20/10/2018 18:15

Maybe US Permian growth can fill any OPEC gap. Or maybe not...hTTps://www.spglobal.com/platts/en/market-insights/latest-news/oil/101918-falling-permian-well-performance-could-pose-risk-to-longer-term-growth-schlumberger