Touchstone Exploration Share Discussion Threads

[che7win] 21/11/2018 19:05

The thing is, oil companies are pumping from the sweetest spots in the Permian right now, those sweet spots will not last forever and there is no hope of being profitable outside of them without much higher prices.

[che7win] 21/11/2018 19:02

hTtps://oilprice.com/Energy/Energy-General/US-Shale-Has-A-Glaring-Problem.html

[red rook] 21/11/2018 19:00

MT,

For the US, and certainly the current US administration, the oil demand-supply economics is secondary. They will encourage pumping, and increase production, in an effort to force oil price down. At every opportunity Trump cites his desire to see oil prices much lower.

The US economy can absorb the cost, and since it is a multifaceted economy a lower oil price will help other sectors of the economy. Also, it plays well to the US consumer.

On the global stage, he understands that this will also give him political and strategic leverage over others. I think his strategy is already working. OPEC is becoming ever more irrelevant. Countries like Iran, Russia, and Saudi are principally oil economies and will blink first.

[mount teide] 21/11/2018 18:34

RR - 'the US shale industry will continue and grow for some time to come.'

I would agree - however, both Madoff's ponzi scheme and the US sub prime loan 'industry' went on much longer than they should have.

Oil consumption in the US has in fact not increased in nearly 40 years, while on a per capita basis it has actually fallen.

The 35m bopd increase in global oil consumption over the last 40 years has come almost exclusively from the 4.2bn population of China, SE Asia and India and, with per capita consumption rates there still a tiny fraction of the US and Europe, the demand growth is unlikely to change anytime soon.

[mount teide] 21/11/2018 18:08

Most of the cheap money that flooded into the US Shale industry over the last decade has come from Wall Street - it has more than a whiff of the 2008/9 Sub Prime Loan scale risk about it.

[red rook] 21/11/2018 17:54

Mount Teide,

I don't think the 'US Shale industry' can be treated as a homogenous entity. Some US shale producers, like those operating in the Permian, have better and more robust economics than others.

Also, from the US point of view the importance of US Shale production, is not just about economics. Its partly national security through oil independence, and with Trump in the White House, a means to project US global power. Principally directed towards Russia, China and also Opec ! That is why the US shale industry will continue and grow for some time to come. Of course, it will have to adapt to changing (adverse) conditions like it did in the last downturn, when the Saudi's tried to bury the sector.

[mount teide] 21/11/2018 16:59

The US Shale industry is very good at talking its own book.

The reality is that it is currently wallowing in $1.35trn of debt and has collectively lost $300bn since its inception and has over $150bn of low interest rate loans coming up for renewal over the next 12 months in a rising US interest rate environment.

The average break even oil price rate for the US shale industry has been estimated at $70 which is consistent with the $300bn of collective losses to date.

Additionally, most of the new pipeline capacity will not impact the industry in a material way until late next year - as a result the current $20 discount to WTI the US shale producers currently get could easily blow out to the disastrous $50 discount to WTI the Canadian tar sands producers are being hit with, as a result of increasing production into a similar pipeline bottleneck.

[che7win] 21/11/2018 16:46

Oil up nearly 200 cents.US fracking is in trouble if bond yields keep rising - it's been driven by cheap money, I think the markets haven't cottoned on to the fact there would not be a fracking industry without quantitative easing.Oil consumption I thought was closer to 100m bopd?When you hear the media talking about oil consumption slowing down next year, they mean expected growth btw.On the most pessimistic forecasts, oil consumption is forecast to grow 1.3m bopd. The problem is that US fracking has grown much quicker than expected.

[on target] 21/11/2018 16:31

Maybe worth mentioning that total global oil production is currently 93 million bopd, so while 2 million is a lot it's not so massive percentage wise.

[zho] 21/11/2018 16:16

If correct, this could put a dent in any oil price recovery:

"OPEC’s bad dream only deepens next year, when Permian producers expect to iron out distribution snags that will add three pipelines and as much as 2 million barrels of oil a day."

[scottishfield] 21/11/2018 16:13

That's better today, bargain hunters, had some myself too.

[ileeman] 21/11/2018 13:59

Hope people are taking advantage of this dip, back towards 20p would be nice.
Silly drop.

[che7win] 21/11/2018 13:45

Trump is clearly a bully with his continual rants, think the market is starting to ignore them...

[buffythebuffoon] 21/11/2018 12:31

Bounce off 60p...

Buffy

[red rook] 20/11/2018 21:30

Libya's production output coming online and adding to the mix dosn't help matters. They will not be persuaded to cut back production in any OPEC meeting!



'Libya’s output has skyrocketed in the latter half of the year to its highest level in more than five years, reaching 1.28 million barrels per day as reported in November, more than double its June production of 500,000 bpd.'

[wanobi] 20/11/2018 21:16

KS I'm seeing a bounce off 60p,,,, hopefully, cheers Wan :-)


free stock charts from uk.advfn.com


fingers crossed :-)

[king suarez] 20/11/2018 20:42

Any thoughts on where this oil price sell off might end/stabilise at? Been pretty brutal.....

[mount teide] 20/11/2018 20:10

October Average Production: further to the earlier post:

'Only six of the eight 2018 wells are producing from their target zones - the other two are producing at less than 20bopd each(company threshold for commerciality) from an upper zone(a license requirement test) while awaiting clearance to produce from the principal target zone of the wells.

Assuming an historic 20 bopd each from these two wells(could well be less) during October that would indicate that the other six 2018 wells are currently producing at 70bopd+.'


Additionally, one of the high performing Coora 1 Block wells(CO-372) is operating on a restricted pump capability, awaiting the introduction of new downhole equipment to handle higher than expected gas volumes:


Coora 1 Block - 11th October Update:

CO-372 is currently producing on pump at a field estimated rate of 137 bbls/d. CO-372 has produced approximately 5,500 barrels of oil since being placed on production on August 18, 2018.

CO-373 is producing on pump at a current field estimated rate 50 bbls/d. The well has experienced high volumes of gas, which have restricted the pumps ability to operate at full capacity. New downhole equipment is expected to be installed to accommodate the higher gas volumes.'

[zengas] 20/11/2018 20:00

Imo already in cheap territory now.
M/cap £17m/$22m.
18.5 mmbo P2 represents under $2/b including debt.

Last year Brent index was $54/b - $61/b Jan - Nov (and as low as $46/b).
Production last year reached 1369 bopd in September and 1470 bopd in October compared to breaking 2k bopd recently.

Effectively we aren't looking at much in the way of gains so far despite increasing the production significantly, while being back in a familiar oil price range.

Some more production to come on stream but crucially we are closer to drilling exploration targets some described as low risk and into previous discoveries.

In my view the investment case is as strong as ever particularly back at this range. Liquidity I think adding to the volativity in price.