Excellent analysis about Russia and Oil, from Seeking Alpha: http://seekingalpha.com/article/2581505-8-major-reasons-why-the-current-low-oil-price-is-not-here-to-stay
15 Oct '14
RE: 'Lift cost' - Gambier?
The lift rate in Russia has been about $18, but that will have changed with recent exchange rate shenanigans. The Russian oil and gas industry is taxed harder than any other. The main tax is the mineral extraction tax (MET) which is on a sliding scale. The tax is based on a urals blend of a barrel of oil. If say a barrel is $70 then MET would be about $12, at $80 a barrel it would rise to about $14. So the company is getting fixed margin regardless of the price of a barrel of oil. Obviously we would not benefit if oil rises to $150 as MET increases accordingly, but at the same time as the price falls MET is reduced. The government has started to reduce tax such was its negative effect on exploration and production. The problem is public spending is locked into tax revenues from oil, if they fall Putin may change the terms, but he is not far from making the industry unprofitable as it is so I can't see that happening. In this market cash reserves and cash flow are everything. Exillon are safe, they have great cash reserves , great cash flows and very low costs. They can weather a very serious storm. Doesn't do much for the valuation of the company though. Still see this being bought on the cheap within a few months.
15 Oct '14
'Lift cost' - Gambier?
Read that Saudi has the lowest 'lift cost' at $4 per barrel if this makes sense. If correct how would this compare to EXI cost if known. Afren and Cairn being hammered by falling oil price and the ' lift cost' for off shore will be considerably higher than onshore like Saudi but someone on a different blog thinks it costs Afren $80 a barrel which sound way OTT to me. Any thoughts Gambier. Thanks
15 Oct '14
Falling oil price
Russian oil taxation (escalator) means that EXI will be somewhat protected from current oil price. Fortunately the previous board built the infastructure without debt whilst the sun shined, now we reap those benefits. Of course we are now in the hands of people of unknown character.
10 Oct '14
big rise today
strange day as way down earlier on and now up alot. Then again it is EXI!!
10 Oct '14
big fall today?
Not sure why. Sept production was up circa 500 barrels a day v august but nothing spectacular. Not huge volumes being traded either ?
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