We would love to hear your thoughts about our site and services, please take our survey here.
London South East prides itself on its community spirit, and in order to keep the chat section problem free, we ask all members to follow these simple rules. In these rules, we refer to ourselves as "we", "us", "our". The user of the website is referred to as "you" and "your".
By posting on our share chat boards you are agreeing to the following:
The IP address of all posts is recorded to aid in enforcing these conditions. As a user you agree to any information you have entered being stored in a database. You agree that we have the right to remove, edit, move or close any topic or board at any time should we see fit. You agree that we have the right to remove any post without notice. You agree that we have the right to suspend your account without notice.
Please note some users may not behave properly and may post content that is misleading, untrue or offensive.
It is not possible for us to fully monitor all content all of the time but where we have actually received notice of any content that is potentially misleading, untrue, offensive, unlawful, infringes third party rights or is potentially in breach of these terms and conditions, then we will review such content, decide whether to remove it from this website and act accordingly.
Premium Members are members that have a premium subscription with London South East. You can subscribe here.
London South East does not endorse such members, and posts should not be construed as advice and represent the opinions of the authors, not those of London South East Ltd, or its affiliates.
That's outrageous chilts! Suggesting that the US would take measures to protect their own interests whilst enforcing sanctions on those who won't "bend the knee".
One point - if the shale industry did get into extreme difficulties and production started to plummet, would Trump step in and offer support saying it was in the national interest to maintain production?
Thank you - I'll keep my fingers crossed for oil below 100 bucks then (Joke!)
Neatly summed up HMH. For now the shale companies may be protected from the lenders but as things stand when they breach covenants and/or look for refinancing the ownership effectively moves across to the lenders. The lenders will not have lost as much money as the equity holders and will cut their losses. They don't like to increase losses. That's what they do. Of course if oil is $100 that all changes.
*been listening to LBC this morning. All about the Virus. Seems pretty evenly split between those forecasting the end of the world with others saying its no worse than the silent killer Flu. Statistically its worse than Flu by a factor of 15-20 times. Poised between caution and panic.
That’s exactly it Risking it....that want to be the ‘swing’ nation re oil.
That fact is they still have to import 8mbpd to mix with there ‘vinegar’ type oil.
With natural declines of 40%+ cutting Capex cannot be done. If you cut capex this year in half, you end up with a 10% loss of revenue for the current year and you will enter the next with a production 20% lower YoY, that hit to revenue will bankrupt the companies as money is made on the margin. This time around OPEC will make sure they get to full production by keeping the price in the $60s for the next couple of years really wearing them out.
So basically, the only thing the shalers can do to save themselves and their rotten business model is to pump more oil. As we've seen they keep on adding enough barrels and interest costs yearly to prevent themselves from ever making money, and less so paying down their debt.
Expecting some massive defaults the comming years. When credit goes it's over, bankrupt companies will let wells produce the last oil which is done in 4 years, sell the assets witch all consists of wells carried on the balance sheet at far higher values than they would ever fetch today and then be done. And that will be the end of the shale gold-rush, an era that will cause some big supply disruptions down the road.
Thank you Romaron
I guess that's the jist of my questions - on the face of it, it just doesn't make sense. I can only assume some support exists so that the USA can claim energy independence.
I'm no more expert than you riskingit but consider that the US is more welcoming towards energy companies than Europe (big empty spaces) plus their acceptance of lower environmental standards. The American pysche is unlikely to change overnight and Trump (US economy, isolation & big business interests) has shown that a fixed percentage of Americans are happy to be led by the nose. BP are attracted to this whilst at the same time moving away from older fields and long cycle conventional projects that risk being stranded. I'm still confused as to why they continue to pump shale when for many it's uneconomic. Maybe they believe that oil could be much, much higher in a year or two. The US certainly has the military might to make it happen.
Thank you E121
If I'm being honest I do not fully understand the shale market like some contributors on here. Do you have any numbers on the make up of the shale players with regards to size i.e. majors and minnows?
I only ask becuase BP paid a lot of money for the BHP shale assets so would the smaller players ultimately get picked up as and when they run out of cash?
That’s because they had plenty of greedy lenders willing to throw large sums of money into Shale, The profit never materialised nor have they got their investment back and at this rate they may never get it back.
Riskingit - there is a major difference between what happened in 2016 and what's happening now/late 2019 - Wall Street has pulled the plug on funding drilling either via Equity or Debt for nearly all companies, unless they have tangible cash flow from ops that exceeds capex (both drilling/property acquisitions). Shale has a mountain load of debt coming due in 2021 and upwards, and many shalers' debt is trading in distressed territory with no hope of refinancing. Unless they cut capex (and oil goes up as a result eventually), they'll have no hope in hell. And this 'segment' of shale is pretty substantial.
I don't undertsand the euphoria surrounding shale and the oil price?
When OPEC flooded the market a few years back and WTI hit low 30's, it barely dented their armour