Posted on 02/02/2016 5:28:04 AM PST by thackney
...Hamm announced that Continental would slash its 2016 capital spending to $920 million -- a 66% cut from last year's level. His objective is for Continental to live within its cash flow for the first time in years. Assuming an average oil price of $40 a barrel, Continental expects its new plan to generate excess cash flow of $100 million in 2016.
"Some people didn't pull back as fast as they should have," says Hamm. "They are pulling back now." Hamm's move represents capitulation of a sort. In late 2014 he decided to sell off all of Continental's oil price hedges for $400 million, betting that prices would soon recover. They didn't, and Continental missed out on about $700 million in proceeds that those hedges would have generated. No surprise, he's even more bullish now. Prices are "unsustainable," he says. "People aren't making any money."
These bad days won't last. America's oil output has already turned down from 9.6 million barrels per day to 9.2 million bpd. Hamm, backed up by analysis from his resident team of data eggheads, expects the declines to accelerate as drillers capitulate. Each passing month will shave another 125,000 bpd off U.S. output -- adding up to about 1.5 million bpd this year. As it happens, that's almost precisely the same amount of oversupply currently sloshing around world markets, according to Energy Aspects, a consultancy.
(Excerpt) Read more at forbes.com ...
...you mean I shouldn’t dump my COP and XOM and HAL?
(not planning to anyway)
I read recently that we are exporting oil for the first time in 40 years, and it occurs to me ...
With tumbling gas at the pump prices, major production and now export revenues ...
will the pump price stay in the lower zone ?
Hann had one of the world’s most expensive divorces
As long as the oil price is low, the gas pump price will be low.
With ban lifted, U.S. oil exports off to slow start
http://fuelfix.com/blog/2016/01/29/with-ban-lifted-u-s-oil-exports-off-to-slow-start/
...”Today’s price environment, spreads do not generally support significant crude oil exports. However, we believe that as we move out of this cycle, world will recognize the abundance of our resources, the benefits of supply diversification, and they know they count on the U.S. producers,” he said....
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When oil prices are low, the difference in price between light and heavy becomes smaller. It reduces the economic pressure to export more of our expensive light sweet and import in more heavy sour.
we need markets to sell it, pray for a middle east war we are NOT involved in, so our oil gets the lions share
we can pump it, but if no one is buying...
China is buying a lot of oil, it is getting them to buy it from us that we need...maybe in exchange for foreign debt, but that means someone has to buy it, we dont have a nationalized oil cartel
Don’t dump HAL.
Big things happening here.
Why bail out the Saudis, Russians, and Iranians?
Me, I’d rather have more affordable gasoline.
$60 a barrel. Sure, one day it will come back to that.
US double production. Never. That would mean energy independence.
We just have to build enough solar and wind farms and breed more unicorns for that to happen.
How to raise oil prices?
I vote for overthrowing the government of Saudi Arabia, but that’s just me.
Great analysis by Hamm. However, as a producer he only looked at one side of the equation: supply. What about demand? The economies of China and India are slowing down.
Japan has been in the doldrums for 20 years or so. Europe is not exactly booming and the price of oil substitutes such as natural gas show no signs of increasing. We may see oil priced at $33.00 to $40.00 a barrel for a while.
It seems to me that Hamm is always overly optimistic. It often feels like he is trying to talk the stock price up.
Without a massive and worldwide economic boom I would expect the price of oil to eventually rise toward the break-even point for large scale frack production which right now is said to be at about $60 and pass it by a small percentage. That BE is declining steadily, though, as technology improves and the price of oil probably will not see the stratosphere short of that massive economic boom or heavy political intervention. As the US government forces America to convert to so called alternative power generation the price of oil will tend to decline even as the price of consumed energy steadily increases which will increasingly shackle the American economy. I do not believe there will be any relief in the next administration. The Democrat/Soros control of the voting process and the vote count is probably insurmountable in part because the Republican Party will not challenge vote fraud, no matter how open. The Party, in a judicial deal agreed to never challenge Democrat voter fraud.
Your going after the unicorn vote?
Maybe... but, what about global economic decline?? That's what's happening. In this scenario, I see the price declining a bit further.
We're STILL in an over-supply situation. Production is falling, but...so is demand. It's a race to the bottom. At best, I don't see a driving force for price stability until the second half of this year.
I don’t get the worry over the low price of oil. Cheap energy is good thing in nearly every aspect of the economy.
With modern technology there is NO valid reason for oil to be at prices we are used to seeing. We are just used to seeing artificially propped up prices on a commodity that should be dirt cheap. Those that are complaining have literally been on a gravy train and will need to join the real world and figure out a way to make money with oil priced like something pumped out of the ground and not like it’s crack cocaine.
400 new well permits issued for Texas this week. Proven fields still drilling, just not at a frantic pace.
Hundreds of Billions of dollars by the oil and gas companies has been pulled out of their spending.
They buy a lot of pipe, valves, operators, pumps, motors, controllers, cable, structural steel, etc.
Those dollars are not going into the economy.
The US is a major oil producers and a major supplier of equipment and services used by the oil industries world wide.
They won’t stop fly out of my butt.
Everyone else has been wrong about the recovery in oil, why shouldn’t Hamm join them?
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