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"I think you’ll find that a lot of oil companies would love to have a gross unit Opex of $2.6/bbl....
Very attractive indeed...."
Not if it comes with a mandatory $21 fee per barrel that is unvarying when oil prices are above $21 a barrel and if the field operator is forced to give away 70% of a sizeable portion of their oil production, a portion that grows as capex spending slows, to a free carried stakeholder, the KRG.
I haven’t looked at the accounts of any offshore producers producing real Brent crude, on which there is no quality discount, but the higher opex per barrel costs of North Sea operators may be irrelevant – I don’t know. And then that 40% capacity building charge – is that more than the UK Government charges in Petroleum Revenue tax and corporation tax? I don’t know – but I am not going to get excited about low lifting costs as I assume our BoD wants me to.
Not leaving it to the consumer is a massive mistake. Are they are trying to force people on to public transport ? as clearly Elcy cars will not work. Petrol will be very expensive for millionaires the Army and Police only in a few decades.
You don't have to agree with it, but you should take it into account.
From Hydrocarbon Processing, today :
Global oil demand to peak in 2026
The rapid adoption of electric vehicles (EV) around the world will probably cause global oil demand to peak two years earlier than previously expected, Norway's biggest independent energy consultancy Rystad said.
World demand is now seen peaking at 101.6 million barrels of oil per day (bpd) in 2026, down from a forecast made in November of a peak in 2028 at 102.2 million bpd, Rystad Energy said.
"The adoption of electrification in transport and other oil-dependent sectors is accelerating and is set to chip away at oil sooner and faster than in our previous forecast," Rystad wrote.
Before the outbreak of the COVID-19 pandemic in early 2020, Rystad had anticipated that peak oil demand would be reached in 2030 at 106 million bpd.
Aside from the staggering takeover of EVs, assumptions across all our scenarios see oil demand being either phased out, substituted, or recycled across a range of sectors, it said. (Reporting by Terje Solsvik, editing by Nerijus Adomaitis)
Its all very well building millions of electric vehicles , but its entirely another having the generating capacity and a power grid capable of distributing that same power ( look at Texas recently ) . The UK power grid is almost overloaded as it is and will require 10's of £billions and at least a decade to update it.
Politicians have a habit of making promises they will not have to implement , especially just before elections (LOL) I also imagine no one is going to like their overseas holidays taxed out of existence by some punitive tax on airtravel. Ill believe it when it happens.
LOL
For once I agree with you , that return on investment may indeed be a key reason why no oil major has been willing to commit to Kurdistan so far, or at least not publically. However Contracts can be re negotiated , a PSC is not cast in stone, its a living document. I expect the Kurds are looking at these Contracts now and I would imagine they will be altered in the future.
IMO
IMO
“the lifting costs are only a part of our production costs”
Yes, this is obvious...Im pretty sure everyone here knows that.....
Even so...as previously stated...
I think you’ll find that a lot of oil companies would love to have a gross unit Opex of $2.6/bbl....
Very attractive indeed....
Thats all.
Chill
Yes, Putup and Highlander1970 are right: the lifting costs are only a part of our production costs if you are comparing us with oil producers in other countries: the capacity building charge is a deduction we are forced to pay, but it is deducted BEFORE our revenue figure is computed. Ditto the 10% royalty and the free carried share of profit oil the KRG takes. So really we ought to add all these mandatory 'costs of production' to our lifting cost before comparing our costs of production with producers elsewhere in the world. The directors trumpeting our low lifting costs is a piece spin for the unsophisticated, just like the buy backs were alleged to be value accretive in April/May 2020. JMV
I would think you’ll find that a lot of oil companies would love to have a gross unit Opex of $2.6/bbl....
Very attractive indeed....
"Good job we have a massive onshore field with lifting costs of about $2.50 a barrel....."
$35 and below results in losses for GKP so this fabled $2.50 figure is utter tosh
I’m not comparing anything with anything. Just reminding those on here that we have a great onshore asset, and that IMO (and clearly Mr Buffett’s too) that oil is here to stay.
Apologies that you are unhappy with my phrase ‘we have the field’ - lots more bigger things to be upset about in this world fella...
Maybe time to log off and go to bed sir.
Whatever nufc. You just keep on comparing apples with lemons and see how well that delusion works out for you. We don't get to keep the difference between our lifting costs and the price of oil as the marginal return of production. We don't 'have' the field.
It’s not misleading. It’s simply repeating what GKP themselves state in their RNS’s (it is a pretty impressive gross unit OPEX tho, let’s be honest). There’s a lot more misleading info on here and ADVFN, as I’m sure you know. Stop trying to nitpick....
From 2020 full year results.
“GKP achieved its 2020 cost reduction targets, reducing Opex and G&A by more than 20% compared to 2019 and delivering gross unit Opex of $2.6/bbl, below the low end of the guidance range and down over 30% versus 2019.”
“Guidance for 2021 of average gross production of 40,000 to 44,000 bopd, net Capex of $55-$65 million and gross unit Opex of $2.5 to $2.9/bbl.”
"We do for the next few decades."
We are the contractor. We don't get to keep what we lift. There's a huge difference.
What matters for marginal production is the percentage from the sale of one more barrel of oil produced that we get to keep to cover overheads, taxes and returns to capital providers. For comparative purposes you have to pro forma for these costs to make a comparison with an entity that keeps all the proceeds from a sale of a marginal barrel. Our effective 'pro forma lifting cost' is dramatically above $2.50-$3 per barrel. You knew that, but touted the metric anyway despite knowing it's grossly misleading.
Nufc- totally agree regarding your comment ‘oil here to stay’
The perception and reality are two very different things you read headline figures about EV’s growing by 150% etc but overall purchases of EV’s compared to ICE cars is less than 1% worldwide. No doubt that will shift over time but it’s a long way off. Then you have a the small matter of air travel and the billions of manufactured products that use oil. Oil is most definitely here to stay, if anything I believe post pandemic we will see a surge in prices given the pent up demand for worldwide travel etc.
GLA
Also, BB you better send Warren Buffett that report as he clearly didn’t read it before he decided to buy a $4.1 billion stake in chevron.....
https://www.reuters.com/article/amp/idUSKBN2AG2KW
Oils here to stay
“We don't have the field.”
We do for the next few decades. Unless of course (and yes I’m going to say the forbidden word) a TAKEOVER comes our way hehehe.
Also, you forgot to copy and paste the part where the report says.....
“The be clear, our AET-2 scenario is just that, a scenario and is not our base case scenario”
LOL
If only we got to keep everything above that $2.50. We don't have the field.
Good job we have a massive onshore field with lifting costs of about $2.50 a barrel.....
Maybe you should post that on all the other oil stock forums, especially those who have offshore assets where it costs $30/$40 just to get it out the ground
I read that someone claims Wood Mackenzie have put a valuation of $8Bn on GKP.
I also read, on WoodMack's own website, that their AET-2 scenario paints a rather bleak picture of near- and medium term crude consumption / demand / price. Note that this is a scenario - but is based on the developed world's stated aims as per the Paris Agreement.
You don't have to believe it, but you certainly should take it into consideration.
"...As demand plummets under AET-2, the outlook for oil prices gets weaker and weaker. As mentioned, oil demand begins to decrease in 2023 and, soon after, the decline accelerates to year-on-year falls of 2 million b/d.
Consequently, oil prices begin to slip later this decade.
By 2030, under AET-2, we would expect Brent to average US$37 to US$42/bbl, down from US$60 to US$70/bbl currently. As low-cost producers, OPEC would end up with a 50% share of the market by 2050. But even though that is an increase in share, under AET-2, the rate of oil demand displacement is such that OPEC cannot prevent prices from falling over the forecast period. With demand declining 2 million b/d a year, OPEC cannot cut production enough to support prices over time because each year sees another large demand drop.
After 2030, the industry can rely largely on production from assets already on line. In 2040, our modelled oil price is in the range of US$28 to US$32/bbl. After 2040, as the demand decline accelerates, Brent slides to US$10 to US$18/bbl in 2050."
Look at both sides of the coin.
woodmac.com/horizons/reversal-of-fortune-oil-and-gas-prices-in-a-2-degree-world/