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   Gold/Mining/EnergyBig Dog's Boom Boom Room


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To: E_K_S who wrote (199258)6/12/2019 9:42:50 PM
From: Black Blade
   of 204003
 
If Oil Prices Dip into the $20-$30 range expect mass bankruptcies in the Shale basins ....................................

Margins for the Shale players are very thin at best and many are under water now. Watch the rig counts. Banksters and Investors are demanding to see material improvements (who can blame them?) after years of burning cash to keep production and cash flow to meet payments (like hamsters on a hamster wheel). I suspect some of the major mid-tier players like PDX, APA and CXO will probably scrape by and maybe even get bought by a major but many if not most of the small fry and dead money in a low oil price environment. Heck, I suspect even DVN could be in play at lower O&G prices. We have been discussing these possibilities and many here in the oil patch are making their "exit strategy" plans (many looking at taking early retirement and others lining up other potential work outside hydrocarbons, and some even looking at the "gig economy" or "side hussles"). There's a sense of fear among the workers as we all nervously watch oil and gas prices. Rig Counts are the key metric now ... watch for Friday's numbers.

- Black Blade

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To: robert b furman who wrote (199260)6/12/2019 9:47:59 PM
From: Black Blade
   of 204003
 
Farm Planting and Ethanol ...............................................................................................................................

Been watching the farm planting news as well. Not sure what to play on this other than grain ETFs or maybe something like ADM. Could try trading futures but got out of direct commodities trading a couple years ago. The corn planting is running late and I suspect some wheat planting in areas like North Dakota could be impacted as they hope to get a couple plantings a year but they haven't been hit as hard as the midwest farmers. Still, trying to figure out how to play this sector .....

- Black Blade

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To: Black Blade who wrote (199262)6/12/2019 9:50:14 PM
From: robert b furman
2 Recommendations   of 204003
 
Farmer who leases my land went to wheat planting as soybeans were getting late.

I think a lot of corn will not be planted in lieu of shorter maturing crop.

Bob

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To: Elroy Jetson who wrote (199257)6/12/2019 9:50:49 PM
From: Black Blade
1 Recommendation   of 204003
 
Yeah, that Anadarko purchase don't look so smart now does it? .....................................................................

With the investor lawsuits and having to divest some of the acquisition, it may just bite them in the ass as oil and gas prices turn south. Maybe they just jumped too quick and the CVX boys are probably wiping their brows thinking they dodged a bullet.

- Black Blade

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To: E_K_S who wrote (199258)6/13/2019 12:57:37 AM
From: Elroy Jetson
1 Recommendation   of 204003
 
Pipelines crossing state lines earn FERC regulated tariffs. The main natural gas trunkline from Canada to the west coast of the US, complete with lateral feeder lines from wells along the way was once merely a cost-plus pass-through item for PG&E regulated by the California PUC.

TransCanada purchased this pipeline network in 1991 and began a $2 billion expansion program, but because this change was approved by the California PUC I'd assume the FERC tariff was going to be similar in cost for consumers.

In theory a pipeline operated within a single state could charge something different, like a percentage of the product value transported, but I've never run across this sort of arrangement. It seems a terrible risk for a capital intensive pipeline company to take on.
.

China and all of Asia had a very warm winter which has left them fully stocked-up on LNG and buying less than they normally do, but Chevron continues to receive the $10.40 / mBTU they presold most of the Gorgon project at.

Drilling new offshore Gorgon production wells last month, but with Asian LNG Spot Prices at $6.20 mBTU it's unlikely the Chevron will expand production beyond that needed to continue to meet the pre-sold contracts.

When Gorgon Train 3 went offline for a few weeks in January due to the heat wave in Northern Australia the spot price of LNG climbed, so at least some of the Japanese, Korean and other Gorgon buyers are selling their deliveries on at a loss.

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To: Black Blade who wrote (199264)6/13/2019 1:01:13 AM
From: Elroy Jetson
2 Recommendations   of 204003
 
I'm confident Chevron will buy the Anadarko assets they wanted later from hapless OXY.

Exxon and Chevron are looking at $15 / barrel production costs there, and although it sounds disingenuous, Chevron's bid for Anadarko would not have taken the current price of oil into account.

Chevron's bid would have been determined by Chevron's little-changing long-term oil price forecast for the coming 30 years, so I certainly didn't expect a higher follow-up bid. If OXY wanted to pay too much, that was their business. The acreage will be available later.

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From: Black Blade6/13/2019 8:38:53 AM
   of 204003
 
Gulf of Oman tankers hit in suspected attack - Oil Prices Jump Higher
..............................................................................................................................................................................
Iranian TV released this photo of the suspected tanker attack

The state-run Islamic Republic of Iran Broadcasting (IRIB) released this photo, which purportedly shows one of the tankers on fire in the Gulf of Oman after a suspected attack Thursday. CNN has not independently verified this image.

Smoke billowing from a tanker in the Gulf of Oman after a suspected attack.

US has not ruled out possibility tankers were attacked by projectile or hit mine

From CNN’s Barbara Starr

US officials have not ruled out the possibility that the tankers involved in the Gulf of Oman incident Thursday were attacked by a projectile or hit an underwater mine.

"The US at this hour has not ruled out [that] the ships may have hit a mine in the water, or were attacked by a projectile. They are trying to determine the cause," a US defense official told CNN.

A US P8 Poseidon maritime patrol aircraft is conducting surveillance in the area, according to the same source.

The guided missile destroyer USS Bainbridge responded to the incident after the US Fifth Fleet -- responsible for US naval forces in the area -- received two separate distress calls on Thursday morning.

The US defense official said the destroyer took on board 21 mariners from the Kokuka Courageous tanker, who were originally rescued by a tug boat.

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To: E_K_S who wrote (199258)6/13/2019 10:37:54 AM
From: isopatch
   of 204003
 
Oil is one of a number of important financial and commodity markets that signal changes in the economic growth rate. Downtrend telling us growth likely to be less than 2 - 3, in the months ahead. Probably, a lot less, unless this trade & tariff mess with China is resolved - with a even a mildly positive outcome - during that time.

Iso

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To: isopatch who wrote (199268)6/13/2019 12:21:46 PM
From: Elroy Jetson
1 Recommendation   of 204003
 
I see a "trade divorce" with China rather than a trade deal because China is not yet prepared to change and prosecute their laws in a way which upholds the rights of foreign IP owners - and in my opinion this is the key problem with China trade, not a trade imbalance. But US exports to China are so small the US has little to lose until this problem is addressed.

The FBI and Cyber Division created the criminal cases against ZTE, Huawei and additional companies yet to be announced during the Obama administration, which greatly cripples China's tech-based exports.

Trump has added import tariffs to this, which is mutually self-harming until businesses redirect their supply chains away from China. Lightheizer also wants a full disclosure of communist party funding to China's companies, numbers which I doubt even the Chinese leadership knows.

China's propaganda machine has pitched up a shrill anti-foreign campaign citing a 5,000 year history of imagined slights which have nothing to do with China today, but is quickly making life difficult for westerners living in China. In the process China's deliberate conflation of opposition to China's centrally-planned maoist-lenininst government as "Western racism" has made it largely impossible for them to concede to IP protection or allowing the the future imposition of tariffs or other penalties if China does not heed any agreement they sign.

Globally companies and the US military have prepared for a cut in exports of so called "rare earths" from China since 2012 when they briefly cut-off the supply to Japan. The US primary mine is 25% rare earths compared with the 0.625% purity in China's mines, and the US military has funded the development of a much cleaner and less costly process the separate the various elements from each other with a solvent and a series of mixing settling tanks being build currently at the California mine once owned by Chevron. Since 2012 a large portion of the "rare earth oxides" imported from China has gone into building stockpiles. Tailings from Florida's massive phosphate mines are a secondary source of a mind boggling quantity of "rare earths" - which contrary to the name aren't rare but as common as calcium and magnesium.

China is operating from a position of fundamental weakness having raised their pirate flag a couple of generations too soon. But their propaganda to their public have made it virtually impossible for them to come to the IP protecting trade terms we require. So it's a divorce.

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To: Elroy Jetson who wrote (199269)6/13/2019 12:45:07 PM
From: isopatch
2 Recommendations   of 204003
 
Agree. China will not do "a deal", compromise or show any flexibility, let alone cave. They're an "Insular (aka Continental) Power". For centuries, historians have emphasized Continental Powers are inflexible compared to Island Nations or Island based empires such as the UK or Japan. So....

1. Unless Trump caves, almost entirely? Global economic conditions will worsen rapidly from here.

2. Unless Trump caves? A recession, perhaps a severe one, becomes very likely just before the 2020 election. Everybody knows how that plays out.

He will cave, period! And, of course, claim victory. Hey folks not being partisan. This is economics 101 "straight up".

Though now exactly the same as the infamous Smooth Haley Tariff? This huge strategic blunder is close enough to for me to usurp poetic license by abeling it Smooth Haley 2.0.

Trump will cave by early next year, at the latest.

All IMHO, of course.<g>

Iso

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