a couple more companies
DAMNED! I wished Chouest was a public company…would love to know their numbers!
How would the Baker Hughes purchase affect Halliburtons stock? Would their stock have dropped more without the buyout?
[QUOTE=justaboatdriver;148839]How would the Baker Hughes purchase affect Halliburtons stock? Would their stock have dropped more without the buyout?[/QUOTE]
well the Baker Hughes stock sure did nice as a result
[QUOTE=c.captain;148841]well the Baker Hughes stock sure did nice as a result
[/QUOTE]
Not nearly as good as my Delta Airlines stock.
Chouest is doing fine, remember all the raises they’re due to give out? Some good stuff in this thread, I have enjoyed reading.
[QUOTE=z-drive;148843]Chouest is doing fine, remember all the raises they’re due to give out? Some good stuff in this thread, I have enjoyed reading.[/QUOTE]
No question Mister Gary is the Great White shark who will eat alive any of the weak in the offshore industry. Said it before and will say it again, he is the preeminent American maritime businessman of the late 20th and early 21st centuries. There is a reason he never went public with his company…to keep total control and to keep the numbers private. I am sure he is in fine shape and will weather this downturn without pause.
.
[QUOTE=tugsailor;148833]What is the true cost of oil? What if OPEC had not been price fixing, and mostly keeping the price artificially high, for the last 40 years? How much of the cost of oil is the the overhead and profits of the speculators which inflate the price? How much of the volatility of oil prices is caused by manipulation and speculation?
What is the real cost of Mideast oil, fully accounting for US military expenditures, to “assure supply”?
I have no way to know, but I have a gut feeling that “high cost” deepwater oil, shale oil, and tar sands oil, is still a lot cheaper than the true cost of Mideast oil after taking US military expenditures into account.
Only the US spends trillions of dollars on military expenditures to keep Mideast oil flowing while the rest of the world gets a free ride. Maybe we should stop subsidizing the price of Mideast oil for the entire world, and then see where the price of oil settles.[/QUOTE]
From 1982 to about 2013, the US spent roughly 18 thousand billion dollars on defense, not including any “Homeland Security” Dept costs.
We clearly didn’t need to spend it on anything else.
[QUOTE=lm1883;148851]One word “petrodollar”. Google it.[/QUOTE]
I have and can tell all that when one does, one does not discover a blissful world of lemonade springs and rainbow stew there…
if half the dire predictions of the conspiracy tinfoilhat types would have us believe then we are headed into a very black hole indeed for the ol’ US of A.
I for one don’t believe the bottom is going to drop out of the dollars for oil arrangement anytime soon but the foundation of the structure is weakening…it cannot stand forever (at least not without military intervention to prop it up…hint: Iraq 2003)
Now find a graph of the USD vs a basket of world currencies over the same time.
My personal belief is the price wars may last 6 months, but then go higher to stabilize between 70 and 90 a barrel. Also a good portion of Louisiana’s energy boom is natural gas which unless oil drops so low that it’s competitive with natural gas then we should be fine. Also now is a great opportunity for operators to get discounted contracts for the gulf as they are focused on the bigger picture. The long term!!!
From CNN:
[QUOTE=water;148881]From CNN:
There are a lot of different things to balance here. Cheap gasoline, diesel, and heating oil is good for our balance of trade and the overall US economy. The lower the price of oil goes, the more the Russians will be squeezed and the less money Putin will have to fund his military aggression. A year of low oil prices and hard times in Russia might force Putin off his throne. However, we should not allow OPEC to severely damage our domestic production,and American energy independence and security.
I suggest that the government do the following: Buy cheap excess foreign oil for the strategic petroleum reserve to help stabilize prices. And if necessary, put a tax on imported oil of say $20/bbl to keep prices high enough for shale production to continue.
From Bloomberg:
Oil at $40 Possible as Market Transforms Caracas to Iran
By Gregory Viscusi, Tara Patel and Simon Kennedy Nov 30, 2014 4:01 PM ET
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Photographer: John Moore/AP Photo
An official of the Saudi oil company at a rig near Howta, Saudi Arabia.
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How Oil's Price Plunge Impacts Wall Street
Oil’s decline is proving to be the worst since the collapse of the financial system in 2008 and threatening to have the same global impact of falling prices three decades ago that led to the Mexican debt crisis and the end of the Soviet Union.
Russia, the world’s largest producer, can no longer rely on the same oil revenues to rescue an economy suffering from European and U.S. sanctions. Iran, also reeling from similar sanctions, will need to reduce subsidies that have partly insulated its growing population. Nigeria, fighting an Islamic insurgency, and Venezuela, crippled by failing political and economic policies, also rank among the biggest losers from the decision by the Organization of Petroleum Exporting Countries last week to let the force of the market determine what some experts say will be the first free-fall in decades.
“This is a big shock in Caracas, it’s a shock in Tehran, it’s a shock in Abuja,” Daniel Yergin, vice chairman of Englewood, Colorado-based consultant IHS Inc. and author of a Pulitzer Prize-winning history of oil, told Bloomberg Radio. “There’s a change in psychology. There’s going to be a higher degree of uncertainty.”
A world already unsettled by Russian-inspired insurrection in Ukraine to the onslaught of Islamic State in the Middle East is about be roiled further as crude prices plunge. Global energy markets have been upended by an unprecedented North American oil boom brought on by hydraulic fracturing, the process of blasting shale rocks to release oil and gas.
Cheap Gasoline
Few expected the extent or speed of the U.S. oil resurgence. As wildcatters unlocked new energy supplies, some oil exporters abroad failed to invest in diversifying their economies. Coddled by years of $100 crude, governments instead spent that windfall subsidizing everything from 5 cents-per-gallon gasoline to cheap housing that kept a growing population of underemployed citizens content.
Those handouts are now at risk.
“If the governments aren’t able to spend to keep the kids off the streets they will go back to the streets, and we could start to see political disruption and upheaval,” said Paul Stevens, distinguished fellow for energy, environment and resources at Chatham House in London, a U.K. policy group. “The majority of members of OPEC need well over $100 a barrel to balance their budgets. If they start cutting expenditure, this is likely to cause problems.”
Without OPEC limits, oil production can continue to flow, overwhelming the market and demand, until prices no longer cover day-to-day costs at existing oil wells. Stevens said some U.S. shale producers may make money at $40 a barrel or less.
Brent crude finished last week around $70, signaling the amount of pain that may lie ahead.
Not All Suffer
To be sure, not all oil producers are suffering. The International Monetary Fund in October assessed the oil price different governments needed to balance their budgets. At one end were Kuwait, Qatar and the United Arab Emirates, which can break even with oil at about $70 a barrel. At the other extreme: Iran needs $136, and Venezuela and Nigeria $120. Russia can manage at $101 a barrel, the IMF said.
“Saudi Arabia, U.A.E. and Qatar can live with relatively lower oil prices for a while, but this isn’t the case for Iran, Iraq, Nigeria, Venezuela, Algeria and Angola,” said Marie-Claire Aoun, director of the energy center at the French Institute for International Relations in Paris. “Strong demographic pressure is feeding their energy and budgetary requirements. The price of crude is paramount for their economies because they have failed to diversify.”
Russia’s Vulnerability
Brent crude is poised for the biggest annual decline since 2008 after OPEC last week rejected calls for production cuts that would address a global glut. Brent is now at its lowest since the financial crisis – when it bottomed around $36 – and has sunk by a third from the start of the year.
Like this year’s decline, oil’s crash in the 1980s was brought on by a Saudi-led decision to defend its market share, sending crude to about $12 a barrel.
“Russia in particular seems vulnerable,” said Allan von Mehren, chief analyst at Danske Banke A/S in Copenhagen. “A big decline in the oil price in 1997-98 was one factor causing pressure that eventually led to Russian default in August 1998.”
VTB Group, Russia’s second-largest bank, OAO Gazprombank, its third-largest lender, and Russian Agricultural Bank are already seeking government aid to replenish capital after sanctions cut them off from international financial markets. Now with sputtering economic growth, they also face a rise in bad loans.
Oil and gas provide 68 percent of Russia’s exports and 50 percent of its federal budget. Russia has already lost almost $90 billion of its currency reserves this year, equal to 4.5 percent of its economy, as it tried to prevent the ruble from tumbling after Western countries imposed sanctions to punish Russian meddling in Ukraine. The ruble is down 31 percent against the dollar since June.
This Will Pass
While the country’s economy minister and some oil executives have warned of tough times ahead, President Vladimir Putin is sanguine, suggesting falling oil won’t force him to meet Western demands that he curb his country’s interference in Ukraine.
“Winter is coming and I am sure the market will come into balance again in the first quarter or toward the middle of next year,” he said Nov. 28 in Sochi.
Even before the price tumble, Iran’s oil exports were already crumbling because of sanctions imposed over its nuclear program. Production is at a 20-year low, exports have fallen by half since early 2012 to 1 million barrels a day, and the rial has plummeted 80 percent on the black market, says the IMF.
Lower oil may increase the pain on Iran’s population, though it may be insufficient to push its leaders to accept an end to the nuclear program, which they insist is peaceful.
‘Already Losing’
“The oil price decline is not a game changer for Iran,” said Suzanne Maloney, senior fellow at the Brookings Institution, a Washington-based research organization, who specializes on Iran. “The Iranians were already losing so many billions of dollars because of the sanctions that the oil price decline is just icing on the cake.”
While oil’s decline wrenches oil-rich nations that squandered the profits from recent high prices, the world economy overall may benefit. The Organization for Economic Cooperation and Development estimates a $20 drop in price adds 0.4 percentage point to growth of its members after two years. By knocking down inflation by 0.5 point over the same period, cheaper oil could also persuade central banks to either keep interest rates low or even add stimulus.
Energy accounts for 10 percent to 12 percent of consumer spending in European countries such as France and Germany, HSBC Holdings Plc said.
Nigerian Woes
As developed oil-importing nations benefit, some of the world’s poorest suffer. Nigeria’s authorities, which rely on oil for 75 percent of government revenue, have tightened monetary policy, devalued the naira and plan to cut public spending by 6 percent next year. Oil and gas account for 35 percent of Nigeria’s economic output and 90 percent of its exports, according to OPEC.
“The current drop in oil prices poses stark challenges for Nigeria’s external and fiscal accounts and puts heavy pressure on the exchange rate,” Oliver Masetti, an economist at Deutsche Bank AG, said in a report this month. “If oil prices remain at their current lows, Nigeria will face tough choices.”
Even before oil’s rout, Venezuela was teetering.
The nation is running a budget deficit of 16 percent of gross domestic product, partly because much of its declining oil production is sold domestically at subsidized prices. Oil is 95 percent of exports and 25 percent of GDP, OPEC says.
“Venezuela already qualifies for fiscal chaos,” Yergin said.
Venezuelan Rioting
The country was paralyzed by deadly riots earlier this year after police repressed protests about spiraling inflation, shortages of consumer goods and worsening crime.
“The dire state of the economy is likely to trigger renewed social unrest, while it seems that the government is running out of hard currency,” Capital Economics, a London research firm, wrote in a Nov. 28 report.
Declining oil may force the government to take steps to avoid a default including devaluing the currency, cutting imports, raising domestic energy prices and cutting subsidies shipments to poorer countries in the region, according to Francisco Rodriguez, an economist at Bank of America Merrill Lynch.
“Though all these entail difficult choices, default is not an appealing alternative,” he said. “Were Venezuela to default, bondholders would almost surely move to attach the country’s refineries and oil shipments abroad.”
China Bailout?
In an address on state television Nov. 28, President Nicolas Maduro said Venezuela would maintain social spending while pledging to form a commission to identify unnecessary spending to cut. He also said he was sending the economy minister to China to discuss development projects.
Mexico shows how an oil nation can build new industries and avoid relying on one commodity. Falling crude demand and prices in the early 1980s helped send the nation into a debt crisis.
Oil’s share of Mexico’s exports fell to 13 percent in 2013 from 38 percent in 1990, even as total exports more than quadrupled. Electronics and cars now account for a greater share of the country’s shipments. Though oil still accounts for 32 percent of government revenue, the Mexican government has based its 2015 budget on an average price of $79 a barrel.
Related reading:
Oil Seen in New Era as OPEC Won’t Yield to U.S. Shale Oil Bust of 1986 Reminds U.S. Drillers of Price War Risk OPEC Refusal Means Oil Industry’s Weakest Producers Left Behind
To contact the reporters on this story: Gregory Viscusi in Paris at gviscusi@bloomberg.net; Tara Patel in Paris at tpatel2@bloomberg.net; Simon Kennedy in London at skennedy4@bloomberg.net
To contact the editors responsible for this story: Alan Crawford at acrawford6@bloomberg.net Timothy Coulter, Ken Fireman
What’s Putin going to do with gas come the depths of winter in Europe? He’s played games with shortages/supply disruptions in years past.
[QUOTE=z-drive;148909]What’s Putin going to do with gas come the depths of winter in Europe? He’s played games with shortages/supply disruptions in years past.[/QUOTE]
he is a man who somehow believes he needs no friends in the world and instead likes to use his pointy stick with great relish against all challengers or even those who grumble over his heavy handed tactics. Just maybe if Russia starts feeling pain over low energy prices and being forced into a small corner by Europe and the US, the Russian people will see his supposed strength as a leader is really nothing but a bully’s tactics. Maybe, just maybe, his popularity will erode in the eyes of his people and his forever rule will be brought short. Severe economic pain can bring about all sorts of new feelings in a populace.
anyway, it is a nice thought to think of Czar Vlad the Impaler being hoisted on his own petard!
From latest issue of Oilpro
Bracing For A New Oil Paradigm In The US Drilling Markets
With the “OPEC put” a thing of the past (at least for now), the price of oil is almost assuredly headed lower over the next 3-6 months. 15-20% downside in crude feels like a probable near-term scenario, which suggests Brent (at $73 now) could test $60 by 1Q15. A new paradigm for oil prices has emerged with OPEC setting the oil market adrift to chart its own course.
As long as this new paradigm is in place, oil prices could fall until enough production is shut-in to slow supply growth and restore confidence in supply/demand fundamentals. In other words, a non-OPEC production response to lower crude oil prices is the only fundamental factor that can stop the oil price decline in the near-term. Until datapoints emerge to demonstrate a non-OPEC response, traders have nothing firm to hang their hat on, and oil prices will head lower without some unforeseen production outage (ie a Mid-east conflict flare-up).
So while break-even costs are a useful metric for thinking about when investments in new drilling activity might taper off, the true floor for crude now is the price at which production is shut-in by marginal producers. In other words, the production operating cost of the highest cost barrels is your new floor. While some estimate global oil supply operating costs average below $40/barrel, the highest cost non-OPEC barrels will likely start to be shut-in when Brent tests $60. This could be enough to create buying pressure and stabilize oil prices even without any OPEC support.
While the level where oil prices bottom is up for debate, one thing is clear: the trend is no longer the industry’s friend. As such, it is worth taking a look back at several other big downturns to frame expectations around US rig count trends should commodity prices continue to tank.
enter image description here
Entering the 2001/2002 slowdown, the US rig count was tracking near 1,300 units, and declined to a bottom of 738 over the course of 9 months (-43%). The recovery was slow this time, and the rig count trended flat for 9 months after bottoming.
enter image description here
Entering the 2008/2009 crash, the US rig count was tracking near 2,000 units, and declined to a bottom of 876, again over the course of 9 months (-57%). This time, the recovery was quicker, with the rig count boomeranging off the bottom.
Today, the US rig count is at 1,917 (including 1,851 land rigs). It’s too early to say how far it will fall this time, but it’s fair to say that the US rig count has now made its cyclical highs and the next nine months will be spent giving up the gains of the past nine. The steepness of the 2015 activity decline is now in the hands of non-OPEC producers. That means it is anyone’s guess what this rig count drop will look like.
HBP drilling to hold leases, borrowing base re-evaluations, and E&P revolver capacities are now key variables in the drilling activity equation that we will be examining in upcoming weekly drilling reports.
Weekly Rig Count Stats
In the US, the land rig count fell 13 units to stand at 1,851 this week. In spite of the negative oil headlines, the fall was mostly gas-drilling related.
Table
The US land drilling market has recently undergone a big upswing. Those gains are now at risk given the crude oil-sell off as the rise has been driven by horizontal drilling increases in oil plays (especially the Permian). The land rig count is up 164 units y/y. With recent weakness in crude oil prices and the holiday season underway, we expect the rig count to trend lower into year-end.
Trend
A regional summary of rig counts by key basins is below. The Permian remains the most active region with 566 rigs this week followed by the Eagle Ford with 209 active rigs. The Permian Basin is up 96 rigs year-over-year, leading all basins in growth.
Regions
The rig count in Canada stands at 438 units, up 4 rigs this week. The Canadian rig count should remain strong for the next 4 weeks or so before beginning its seasonal decline.
Canada
Predictive value can be found in charting rolling average weekly rig count changes. Normalizing week-to-week noise, this exercise exposes whether up or down rig count trends are intensifying, weakening, or inflecting. Below are three charts we will be watching closely for directional clues in the weeks ahead. The oil trend is already showing a material loss in momentum.
Oil
horiz
overall
Unfortunately, the nice graphs did not come through.
Oil drops a bit more in Far East trading, and European markets this morning, also pulling down other commodities and stocks. Most currencies fell a bit against the dollar.
Oil Leads Commodities Lower as Stocks Decline With Ruble
By Emma O’Brien and Nick Gentle Dec 1, 2014 5:24 AM ET
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Photographer: Daniel Acker/Bloomberg
A fuel pump stands at a Road Ranger gas station in Princeton, Illinois, U.S. Collapsing… Read More
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China Financial, Property Stocks Favored: UBS's Chen OPEC Decision May Boost Global Growth, Oliver Says
Oil led commodities to a five-year low as energy producers declined the most in a global stock rout while the ruble weakened to a record. Standard & Poor’s 500 Index futures fell after U.S. holiday spending slowed.
West Texas Intermediate crude slid 0.8 percent to $65.64 a barrel at 10:20 a.m. in London, after reaching $63.72, the lowest since July 2009. The MSCI All-Country World Index dropped 0.4 percent and S&P 500 futures lost 0.5 percent. Russia’s ruble weakened 3.3 percent against the dollar and Australia’s currency retreated to a four-year low. Copper fell 0.6 percent to a four-year low.
A gauge of government bond yields around the world fell to an 18-month low as collapsing oil prices damped inflation expectations and pushed the Bloomberg Commodity Index to the lowest level since 2009. German manufacturing unexpectedly shrank last month and a Chinese factory gauge fell to an eight-month low, data showed today. U.S. consumers cut spending by an estimated 11 percent over the post-Thanksgiving weekend before Cyber Monday’s e-commerce sales.
“For investors who are long commodities, it’s a very painful place to be,” Nic Brown, head of commodities research at Natixis SA in London, said by phone today. “As you exit your energy, you will inevitably be getting out of a lot of other stuff as well. Energy still makes up a very significant proportion of the big indices.”
Oil extended its retreating after capping its biggest monthly loss in about six years in November as the Organization of Petroleum Exporting Countries signaled the group will leave it to the market to reduce a global glut.
Brent Slides
Brent for January settlement fell 1.2 percent to $69.34 a barrel on the London-based ICE Futures Europe exchange, after reaching $67.53, the lowest since October 2009. Prices declined 18 percent last month and are 38 percent lower in 2014.
Gold for immediate delivery rose 0.9 percent to $1,178.43 an ounce, after falling as much as 2.1 percent to the lowest level since Nov. 7. A proposal that would have required the Swiss National Bank to hold at least 20 percent of its assets in bullion was voted down in a referendum yesterday. Silver rose 3.3 percent after dropping as much as 6.7 percent.
The Stoxx Europe 600 Index declined 0.6 percent, with Total SA and Royal Dutch Shell Plc down more than 2.3 percent.
Vodafone Group Plc lost 2.4 percent after people with knowledge of the matter said the British phone company is considering a combination with John Malone’s Liberty Global Plc. The cost of insuring Vodafone’s debt rose seven basis points to 65 basis points.
Altice Talks
Altice SA increased 5.4 percent as it entered exclusive talks to acquire Oi SA’s Portuguese assets. Gagfah SA jumped 13 percent as Deutsche Annington Immobilien SE agreed to buy the German property company. Deutsche Annington dropped 2.1 percent.
EON SE advanced 5 percent. Germany’s biggest utility will spin off conventional power generation and set a new dividend policy.
The MSCI Emerging Markets Index slid 1.6 percent, the most since Oct. 16. The Hang Seng China Enterprises Index of mainland shares traded in Hong Kong decreased 2.9 percent. In Hong Kong, police began clearing roads leading to government offices after a night of tussles with pro-democracy protesters who are calling for free elections in 2017.
China Slowdown
China’s official factory index fell to 50.3 for November, below the 50.5 reading projected by economists, while a private gauge from HSBC Holdings Plc and Markit Economics came in at 50, the border between expansion and contraction.
The Shanghai Composite Index declined for the first time in eight days, slipping 0.1 percent from a three-year high.
The ruble tumbled to 52.16 per dollar on concern lower prices will drive the world’s biggest energy exporter’s economy into a recession. Credit-default swaps on Russia’s government debt climbed for a sixth day, increasing 26 basis points to 340 basis points, the highest since July 2009.
Dubai led equity markets in the Gulf region lower as Emaar Properties PJSC, the emirate’s largest stock, traded without the right its next dividend. The DFM General Index declined 2.5 percent, bringing the drop since it peaked on Sept. 3 to 19 percent.
Aussie Drops
The plunge in oil prices is dividing the foreign-exchange market into winners and losers. The Aussie dollar plunged as much as 1.1 percent to 84.17 U.S. cents today, the lowest since July 2010. The Bloomberg-JPMorgan Asia Dollar Index also fell to a four-year low as the ringgit weakened 1.5 percent.
The yen reversed losses after dropping to a seven-year low of 119.14 per dollar immediately after Moody’s Investors Service cut Japan’s credit rating. It gained 0.4 percent to 118.14 per dollar.
Government bonds are gaining amid the selloff in crude. The average yield among securities in the Bank of America Merrill Lynch World Sovereign Bond Index dropped to 1.59 percent at the end of last week, the lowest level since May 2013. Australian 10-year yields declined below 3 percent today for the first time in two years. Rates on European bonds including German and French securities fell to record lows.
To contact the reporters on this story: Emma O’Brien in Wellington at eobrien6@bloomberg.net; Nick Gentle in Hong Kong at ngentle2@bloomberg.net
To contact the editors responsible for this story: Stephen Kirkland at skirkland@bloomberg.net; Justin Carrigan at jcarrigan@bloomberg.net Justin Carrigan
I think the price is dropping to punish putin and a few others as well, intentional or not they will be punished.
Unless somebody on here knows otherwise, I seriously doubt Saudi can pump more oil, it just says it can.
Its issue is not cost to produce its the debt and other overheads that eats all their cash.
I think the other item is global demand is levelling off and OPEC no longer pump most of the oil, therefore dont have control of the price any longer.
China now trying to sell of gas contracts that they have in OZ, there goes the ozzie share market or maybe get lucky and ship to Europe?