chloride6:


Loans go be like 32% be that now.

We don die for this country.

Companies go buy expensive forex come still collect 32% loan.

By the time you factor in 30% company tax, overhead and expenses, company don fold up.

Nukilia:


Lol, who's going to do all that you've listed?

PBundles:
Shale is not profitable at these levels. One of the reasons for the Oil crash was that the Saudis flooded the market knowing that at around $48-55 shale cant exist, hence a lot of shale producers went belly up. Hence my theory that I doubt you wont see oil at old prices and will stay within this range. when you take into consideration that the saudis have oils deposits that cost them around $1.5-2 to extract per barrel! Its not the deposits you have that ar really important, but the cost of extraction.

crackerspub:
The rate US is converting Shale gas will crash oil prices




Alaska/USA still have the largest oil deposits in the world


Their findings are not consistent
And their claims of large oil reserves has reduced by 80%

Price of oil will still drop even at the rate alternative source of energy is been used

crackerspub:
The rate US is converting Shale gas will crash oil prices




Alaska/USA still have the largest oil deposits in the world



Price of oil will still drop even at the rate alternative source of energy is been used

KingLennon:
OPEC should work with these oil producing states to see how they can revitalize oil production. If not for our president we will have been exporting more than 2 million barrels per day. So many pipe lines vandalisation in Nigeria is not helping issues

Franzinni:
The oily curse of nigeria.

The situation is like a house wife who is living comfortable with her husband... But one day a friend introduces her to a male prostitute and she loved the experience... Then she goes home and tells her husband she is not interested in the marriage and quits... And moves in with the male prostitute.... Now even tho she is getting a good banging every now and then.... She can never be at peace because every time his phone rings.. It becomes a nightmare for her...

That is the sticky situation we have put our self in.... All for crude oil..

GeneralOjukwu:


Disagreed with you in the past, but i agree with this...

But Saudis didn't flood the market, what they did was, they brought the price down to levels where Shale oil producers were making minimal profits.

Truth234:


Saudi didn't flood the market, there was production cut impeding excesses. In fact, Saudi production dropped to 21 months low in February according to OPEC data. Even though, Shale is not profitable at the current price level. They have what is called hedge with commercial banks --that covers their losses for certain years. Previously, we thought Shale won't come on board until prices reach $60/barrel and above but the hedge, Donald Trump negative attitude towards climate change and his favourable tax policy for businesses revamp that sector even at lower prices.

crackerspub:


Nice analysis, like replying smart dudes


You forgot to understand after China that is US that consumes lots of energy. What if they decided to buy only there oil what do you think will happen to the price of oil. They still control the price of oil directly and indirectly.

Nice analysis by the way

PBundles:
I may not have been clear, so let me rectify.

I was actually talking on back in 2014 when they started taking out the fracking industry. I was not talking about now. In fact they actually didnt hide it and I quote:

Opec will not cut production even if the price of oil falls to $20 a barrel, the cartel’s de facto leader said, spelling out a dramatic policy shift that will have far-reaching implications for the global energy industry. In an unusually frank interview, Ali al-Naimi, the Saudi oil minister, tore up Opec’s traditional strategy of keeping prices high by limiting oil output and replaced it with a new policy of defending the cartel’s market share at all costs

On the hedging, believe me I have an understanding on this, I do this for a living, I doubt that they are. Why would they? as mentioned they can extract in some fields at 1.5$ to the barrel so what risk would they run. And if they did, would be minimal since what real risk are they running. Now Nigeria on the other hand would have profited from a hedge but thats a different story all together.

On the Trump factor, we still need to see how far that plays. Even his favourable tax polices ( which I dont see getting passed at the levels he is suggesting. If corp tax gets to the 20-25 range, I would see that as a major win compared to current levels) will need to be passed and before they become actionable, we are taking fiscal year 2019 at the very earliest, so dont see that playing into the fracking at this stages.

Shale is not profitable at these levels. One of the reasons for the Oil crash was that the Saudis flooded the market knowing that at around $48-55 shale cant exist, hence a lot of shale producers went belly up. Hence my theory that I doubt you wont see oil at old prices and will stay within this range. when you take into consideration that the saudis have oils deposits that cost them around $1.5-2 to extract per barrel! Its not the deposits you have that ar really important, but the cost of extraction.

Truth234:


Bro what you quoted has no relevance to:

It actually does but I still dont think you follow, but its fine.

It didn't state Saudi increase production during the said period.

If you read what I mentioned in italics, it states that they were deviating from the strategy of refraining from production, hence increasing production.

On hedging, they actually did and still doing.

https://www.bloomberg.com/news/articles/2017-02-27/u-s-shale-surge-threatens-opec-strategy

I must be honest I didnt comb thru it finely, but I didnt see where the stated that he Saudis were hedging their oil bets.

If you think 20-25% will be good, I am glad to inform you that Trump proposed 15% federal tax, its huge and will get passed.

Im fully aware of what he proposed, but he wont get anywhere near there. If he gets anything below 25% as I mentioned, it will be seen as a win. There is not ONE analyst ( if you know, please let us know) and I concur that thinks he will get 15%. Its a negotiation strategy, you go far south, I go far north and we meet somewhere are the equator. Also remember that fiscal tax cuts have been tried before,maybe not this drastic and in short didnt work. The theory doesnt match the practical. He will need to cover the loss of tax to be received somewhere. Having said that he current level is way to high when compared to the EU etc.

The embolden, I am the one quoted in the article.
Dont follow, are your C. Sell or Julian Lee?

PBundles:
Shale is not profitable at these levels. One of the reasons for the Oil crash was that the Saudis flooded the market knowing that at around $48-55 shale cant exist, hence a lot of shale producers went belly up. Hence my theory that I doubt you wont see oil at old prices and will stay within this range. when you take into consideration that the saudis have oils deposits that cost them around $1.5-2 to extract per barrel! Its not the deposits you have that ar really important, but the cost of extraction.

PBundles:
Shale is not profitable at these levels. One of the reasons for the Oil crash was that the Saudis flooded the market knowing that at around $48-55 shale cant exist, hence a lot of shale producers went belly up. Hence my theory that I doubt you wont see oil at old prices and will stay within this range. when you take into consideration that the saudis have oils deposits that cost them around $1.5-2 to extract per barrel! Its not the deposits you have that ar really important, but the cost of extraction.

InvertedHammer:


It is more complicated than that. Saudi floods the market with oil, price crashes and shale companies go on idle mode.
But then Saudi, OPEC and oil-dependent economies like Nigeria and Venezuela go into financial crisis. They will be forced to cut production. Price starts going back up again. Guess who shows up again? Shale companies! And the cat and rat race continues.

Trust the power of technology. Shale companies will continue to innovate until their cost of extraction improves. It will probably get to the point where Saudi and others may be left to cook soup with their oil.

PBundles:




I see where you are coming from but I think its a bit more complicated than that. I agree technology as with all new things will get more efficient, but at a certain point you max out. where that will be we dont know. Also the business model of drilling remains the same and demands enormous initial capex, which is the big hurdle. So its not like you can say, Ok it didnt work lets go idle. Capex financing will be there and wont go away. The Ace that the Saudis have is cost of extraction as I mentioned. If you can extract a barrel as low as $1.5 a barrel, no form of tech can beat that. Hence I think these levels are here to stay. When the Saudis see shale companies getting courage, the kill the price to punish them sending a message top those that dare try.

Another thing that ppl arent talking about is the growth of electric cars, buses and even airplanes ( for the future). In most European countries its being pushed and Germany and Holland will actually ban petrol/diesel cars by the turn of 2030, when that happens the price will really go south.

PBundles:


I see where you are coming from but I think its a bit more complicated than that. I agree technology as with all new things will get more efficient, but at a certain point you max out. where that will be we dont know. Also the business model of drilling remains the same and demands enormous initial capex, which is the big hurdle. So its not like you can say, Ok it didnt work lets go idle. Capex financing will be there and wont go away. The Ace that the Saudis have is cost of extraction as I mentioned. If you can extract a barrel as low as $1.5 a barrel, no form of tech can beat that. Hence I think these levels are here to stay. When the Saudis see shale companies getting courage, the kill the price to punish them sending a message top those that dare try.

Another thing that ppl arent talking about is the growth of electric cars, buses and even airplanes (for the future). In most European countries its being pushed and Germany and Holland will actually ban petrol/diesel cars by the turn of 2030, when that happens the price will really go south.

InvertedHammer:


Saudi's production cost is $3/barrel. Shale companies production cost $5.85/barrel. (Business Insider, March 26, 2017). Quiet a chunk of the totak cost of production comes from Administrative overhead, Transportation, Capital spending and Gross taxes which pushes total cost for shale corporations to $23/barrel while Saudi (with no taxes levied) stands at $8.98. (Nigeria is $29/barrel). When push comes to shove, US can subsidize oil companies or give them incentives to control costs.

This is possible but I doubt if this is sustainable. Im not a supporter of subsidies, it forces companies to be inefficient. Having said that there are many ways to accomplish this.

OPEC has been relying on verbal interventions to curb the slide in oil prices. But technology, banks and Hedge funds are there to call their bluff. Don't forget that a lot of people making money in the oil business do not even own a spanner not to talk of drilling rigs. They are speculators who have billions of dollars in equities which is why fluctuations in oil prices tend to be exaggerated.

There is no doubt that market instruments exaggerate matters.

When everything else fails, there is always the last solution--war.