[QUOTE=beekerbetter;149259]And I’m done with you yet again.[/QUOTE]
fine by me…SIR!
[QUOTE=tugsailor;149235]I don’t have a good handle on what it costs to produce Deepwater Gulf of Mexico oil.[/QUOTE]
Analyst Imran Khan from this 5day old Forbes article says, “average breakeven oil price needed is between $65 and $75 per bbl” with GoM production being more long term and lucrative than shale production which is kinda backed by this article from oilprice.com. Forbes has a nice video with some more maths, which should excite c.captain 
On a long term basis, a project must not only breakeven, it must make a healthy profit.
For a long term project, it doesn’t matter much if it only breaks even on a cash flow basis during short term market disruptions. It does not really matter if it loses money on a short term basis, as long as the owners have deep enough pockets. What counts is strong financial performance over the 30 year life of the project.
As long as production revenue exceeds the variable operating costs, a project is beating breakeven on a cash flow basis, and production will continue. That’s ok for a couple years.
P[QUOTE=c.captain;149255]. …
btw, I would certainly say that for each here who label me with your rather timid epithet there are ten who think otherwise…I am not here to win Miss Congeniality but to speak openly and with candor. NOT sorry if you are offended by my plain speaking…SIR![/QUOTE]
Which 10? Point 'em out…
Name 10 who listen to your repetitive bullshit. Don’t use the 10 troll accounts you’ve created to bump yourself with either.
[QUOTE=tugsailor;149271]As long as production revenue exceeds the variable operating costs, a project is beating breakeven on a cash flow basis, and production will continue. That’s ok for a couple years.[/QUOTE]
try telling that to shareholders when you tell them dividends are being cut…
here’s one to start…his username is Uniblab
you can see him posting to gCaptain in the candid photo
then there is this guy…thePharaoh
he’s a prince…in fact I think he was the artist formerly known as Prince
then there’s these four fine gentlemen who’s usernames escape me at the moment
they live by me just outside the rail yard…I buy em Ripple and they give me “thanks” whenever I demand it
[QUOTE=smoker;149267]Forbes has a nice video with some more maths, which should excite c.captain :)[/QUOTE]
AND HOW! I got me a fine woody watchin that one!
bummer for you to waste one of those expensive purple pills just for a finance video.
Id be saving them for xena!
In my not humble opinion this is just a burp in the oil business. The oil majors look much further down the road than the next quarter or even the next 5 years. The shale fields will play out soon, relatively speaking. Day rates will go down due to supply and demand but the majors must have proven reserves to keep their stock price up. Producing from those reserves is not an issue, especially now that there is a temporary price lull.The boondoggle of the pipe line from Canada to the GOM is the LAST thing needed for many reasons but the politicians might give that gift to line their own pockets which would only make things worse. Write your congressman.
I am not panicking but then I experienced the last turn down of the 80’s and planned accordingly. I think things will get worse but not terribly so.
[QUOTE=tengineer1;149333]In my not humble opinion this is just a burp in the oil business. The oil majors look much further down the road than the next quarter or even the next 5 years. The shale fields will play out soon, relatively speaking. Day rates will go down due to supply and demand but the majors must have proven reserves to keep their stock price up. Producing from those reserves is not an issue, especially now that there is a temporary price lull.[/QUOTE]
there are three acts to this play
act 1 is the locate productive fields which is a huge part of our business. seismic surveys and exploratory drilling are characters in this act and I would expect it to remain active but possibly at lower levels and if costs can be reduced which even before the downturn in oil price was being demanded by the operators
act 2 is to take the fields found to production and there are more characters in this act. drilling, completion, subsea installation, platform building, pipelines, et all… a very, very expensive act to put on with so many high priced actors.
act 3 is the maintenance of production after first oil starts. players are workover and subsea
I would think during a low oil price time like this with decreased revenues that many majors will keep act 1 in the play but cut act 2 short by putting projects on hold indefinitely until the cash flow improves. the oil discovered remains in the bank so to speak available to be withdrawn in the future albeit with a delay due to the need to build the production infrastructure in the future.
I never have known how the percentages breakdown in our industry regarding spending. How much to exploration, how much to putting in production and how much to maintaining production? I certainly believe the installation to be more than exploration and maintenance together.
a very important part of an oil companies share price comes from the value placed on the reserves it has available, maintaining that over positive cash flow must surely happen all the time.
Share price is all about greed and fear as we now see…
PS I think the GoM doesnt have much to worry about but clearly business takes the opportunity to make a few cuts when they can ( which means they all do it together, happens in other industries)
Sucks for me. Low oil prices mean that some of the bit more “difficult” projects in the north may be delayed and I’m only good at developing expensive solutions… 
yup…the riskier projects are going to be the first to be axed
By Bloomberg On January 7, 2015
By Joe Carroll
(Bloomberg) — Dangerous and difficult oilfields that looked like goldmines when crude fetched more than $100 a barrel have turned into money pits as oil crashes to multi-year lows.
Collapsing oil prices not only shrink profits for producers and imperil dividend payouts prized by investors, they can cripple a company’s future growth by starving it of cash needed to find, drill, assess and equip discoveries. A spending halt in deep-water fields and Canada’s oil sands could disrupt the chain of new projects needed to keep the world supplied as older wells dry up.
For the biggest explorers, the impacts of slumping prices are dramatic. Every $10 price drop erases $2.8 billion in annual cash flow for Exxon Mobil Corp., according to analysts at Barclays Plc. For Chevron Corp., which is more crude-dependent than its bigger rival, a $10 change translates to $3.85 billion in cash flow.
“Because of their long lead times, once canceled or postponed, oil sands and deep-water projects cannot be brought on line at short notice in response to rising prices,” Chief Executive Officer Andrew Hall said in a Jan. 2 communique to investors in his Astenbeck Capital Management commodity funds. “This sets up the potential — if not the inevitability — for supply shortfalls in the future.”
Energy explorers who committed to hundreds of billions of dollars in oil projects from Brazil to Scotland to Oklahoma during the past five years now are scrambling to trim costs and delay contracts. Crude’s tumble to less than $50 a barrel, the lowest prices since 2009, is prompting budget cuts and layoffs from the rig floor to the steel mills that make piping for wells.
Lingering Glut
An oil-market rebound that would bail out the most ambitious and expensive ventures seems increasingly unlikely. Worldwide demand growth is faltering, worsening a U.S. supply glut that hasn’t been this big at this time of year in three decades. The excess — a result of the unprecedented production boom in U.S. shale rock formations — may take “months or years” to be absorbed, said United Arab Emirates Energy Minister Suhail Al Mazrouei.
Brent crude futures, the benchmark contract for more than half of the world’s oil, fell for a fifth day and touched a 5 ½- year intraday low of $49.66 a barrel. The 6-month slump is the longest since the global financial collapse of 2008 that slashed demand for petroleum-based fuels.
Fortune Shift
Oil was trading for $125 a barrel when drilling began on Noble Energy Inc.’s Gunflint prospect in May 2008 about 70 miles (113 kilometers) off the Louisiana coast. Now oil is 60 percent less valuable as the Houston-based company begins installing a sprawling network of pressure-control devices and valves more than a mile beneath the sea surface that will start pumping crude by the middle of 2016.
Reba Reid, a Noble spokeswoman, didn’t respond to telephone messages left at her office.
At another deep-water Gulf of Mexico project, known as Stampede, Hess Corp. is forging ahead with a $6 billion effort to unlock as much as 350 million barrels of crude starting in 2018. When directors at Hess and three partner companies formally greenlighted Stampede in October, oil was trading for more than $80 a barrel.
Every $10 drop in the price of a barrel of crude erodes Hess’s cash flow by $850 million, according to Barclays.
Lorrie Hecker, a spokeswoman for New York-based Hess, declined to comment on whether Stampede will be postponed or redesigned to account for the slump in crude markets. Details on the company’s 2015 spending and drilling plan won’t be released until later this month, she said.
Moving Ahead
“Stampede is an important long-term part of our portfolio that we intend to move forward,” Hecker said in an e-mailed message.
Even before the oil market collapse began in late June, developers in Canada’s oil sands were already doubting the viability of new projects after a $250 billion building spree over the preceding eight years.
France’s Total SA put its C$11 billion Joslyn joint-venture project with Suncor Energy Inc. on hold in May, citing escalating construction costs. That followed a 2013 cancellation by the companies of their C$12 billion Voyageur oil-sands upgrader.
In September, Norway’s Statoil ASA delayed work on the 40,000 barrel-a-day Corner oil-sands development. Devon Energy Corp. said in November that a decision on how to proceed with its Pike oil-sands venture with BP Plc will be made by the end of 2015.
Too Costly
In Brazil, home to the Western Hemisphere’s biggest oil discoveries in a generation, falling prices are close to slamming shut the profitability of those reserves. Petroleo Brasileiro SA, or Petrobras, said in a statement yesterday that it needs a minimum price of about $45 a barrel to justify tapping the string of mammoth offshore discoveries that captivated the global energy industry in 2007. That $45 figure doesn’t account for costs associated with handling natural gas that flows to the surface alongside crude, or other infrastructure. Those costs add another $5 to $7 to the per- barrel price Petrobras said it needs.
Exotic offshore and oil-sands projects aren’t the only ventures at risk. In a geologic formation along the Kansas- Oklahoma border known as the Mississippi Lime, $65 is the threshold for reaping an “acceptable return,” Sandridge Energy Inc. Chief Executive Officer James Bennett said during a Nov. 6 conference call with analysts.
At the time, benchmark U.S. oil futures were trading for $77.91 a barrel. Since that conference call, Oklahoma City-based Sandridge’s stock has plummeted 62 percent as oil fell below $50.
Duane Grubert, a Sandridge spokesman, didn’t respond to a phone message seeking comment.
Copyright 2015 Bloomberg.
seriously! how in the name of heaven can Shell even contemplate going back to the arctic again this year? everything is against them, price, shareholders, politics, government, environmental groups!
Deep water projects are not looked at as short term investment. If you start a project now it could be ten years out or more to reach full production. Long term oil prices still look favorable as demand catches up to supply. As far as Shell Alaska goes, it is more about the proof of concept. They have also invested too much into it to quit, and again the production from that site is looked at long term.
[QUOTE=Number360;151431]Deep water projects are not looked at as short term investment. If you start a project now it could be ten years out or more to reach full production. Long term oil prices still look favorable as demand catches up to supply. As far as Shell Alaska goes, it is more about the proof of concept. They have also invested too much into it to quit, and again the production from that site is looked at long term.[/QUOTE]
All understood, but shareholders ALWAYS must be placated…hard to do when profits plummet
at a small risk of being wrong, I predict the DoI grants Shell a lease extention and nobody goes back to the arctic for several more years
I also predict the huge Blue Elephant sitsr moribund and useless as it silts in at its berth
Heh…got a call from Hornbeck back in Sept…I was at sea between Panama and Honolulu, and way out of phone range. When I got home, the message still didn’t pop up until I replaced my aging crap-phone. The didn’t email (why I don’t know…my email was on my resume), just called.
Anyhoo, now it may have been a blessing in disguise. I’ll contact them anyway, especially since upgrading, so they can keep my resume for the files but I doubt there’s a job now.
Sometimes you do life and sometimes, life does you. That’s life.
The progressive liberals are celebrating this as some sort of victory over “Big Oil” when in fact, it will cause a serious blow to American jobs in the short term and sever taxes paid into the kitty for all their pet projects, like this proposal to send people to community college. Plus, there is the paradoxical effect of people driving more, and driving gas guzzlers that sat idle when gas was more expensive. So how any liberal can call that a victory is anyone’s guess, unless it’s the victory of spending a little less to get to work. That’s if you have a job at the end of it all.
On the other end are the conservative people who think that drill here, drill now, works. Well, they think they’ve won, too, but when their friends and relatives in the oil patch come home broke and unemployed they’ll be singing a different cantata.
And then there’s the 401ks that will get hit hard. Just bend over America, here it comes again.
other than in the energy sector, I can’t imagine too many industries which will hurt for low oil prices? we certainly know transportation is loving this! I have read that with every dollar drop in the price of gasoline is equivalent to a $100B economic stimulus spending package most of which is going to go to consumer spending
of all industrial output how much goes to energy related projects I wonder? 10 to 15% perhaps?
[QUOTE=c.captain;151488]other than in the energy sector, I can’t imagine too many industries which will hurt for low oil prices? we certainly know transportation is loving this! I have read that with every dollar drop in the price of gasoline is equivalent to a $100B economic stimulus spending package most of which is going to go to consumer spending
of all industrial output how much goes to energy related projects I wonder? 10 to 15% perhaps?[/QUOTE]
You are forgetting about the ripple effect. When energy companies and employees are not spending, other sectors of the economy take a hit, too.