Member Info for Boyobach

Hi Jl

Glad you liked the post. I've never tried to present squiggly lines as anything more than they are - just plots of the sp over time that reflect the history and the trends -a picture of what has happened projected into the future. The interpretation is, as I have said a number of times, down to the eye of the beholder. We are all inclined to see what we want to see - the flaw is usually ours. If snow fell on December 25th every year for 100 years then it would have a fair chance of happening in the 101st year - but it would not be a certainty.

Recognising when we've followed the wrong track is important. The reported and deduced fundamentals of G have blind-sided a lot (maybe all) of the folks on this BB to what might happen if the wider market is unstable..Also a collective view that G was not reacting to OP. - when, of course, it totally was (as the charts clearly show) has driven the price lower than any supposed it might. I think the last two months has cast a bright light on how we can filter out information or opinion that doesn't fit with our version of reality.

I'm learning all the time - not least of all today, when the price is unexpectedly 6p adrift from where I'd place it under the circumstances, even though it looks neat on the chart.

Good Luck mate!

For Thursday 20th December

It was apparent early on that G was struggling to hold the blue line https://invst.ly/9kyg3 despite the fact that it was perfectly on target as far as tracking Brent is concerned. It’s understandable though - the market likes to be ahead of the game and no-one knows where OP is going next. Mixed messages from API, EIA and the Fed were not helping. The end result today looks overdone by up to 8p, with the sp landing on yet another red line on the chart.

G’s tracking of ‘Brent since Peak’ had been incredibly tight over recent days but today’s late fall was certainly overcooked with the tail end of the G line well below Brent: https://invst.ly/9kyex This should correct itself over the next day or two, if not immediately. It’s noticeable too that DNO and GKP also appear to be pulling more closely into line with Brent’s decline ‘slope’ since October 3rd, although their reaction to Brent’s afternoon fall was not overdone as much as G’s

The weekly chart https://invst.ly/9kycx
doesn’t really show the context of these moves although it does highlight G’s excessive drop in the last hour.

https://www.malcysblog.com/

Worth a quick read: comments on OP and DNO attempt at Faroe TO.

Dodgepot's post is interesting. I guess this Will Geroud would necessarily talk along those lines, given the context etc. but although shale production is way more efficient than it was, I believe it still requires quite a lot of drilling to maintain output so it can be relatively expensive cf conventional. I wonder if he mentioned the kind of price that's needed to sustain those projections and what he thinks of Trumps policy to drive prices down? OIl demand is still increasing too whilst new resources are not being found to replace the big ones that are or will be fading out. Ultimately oil is a mugs game: a few barrels too little and the price rockets, a few too much and the price hits the floor. Not a recipe for smooth supply and rational prices. The greedy cartels deserve all they get in this regard.

Bunks query: at what price will you go into loss?

The short answer is that my overall average is 150, made up of a core acquired around 111 and later additions acquired above 200, but never above 240. That effectively means I'm in the black provide OP stays above $52.

Through complacency, because of the underlying profit on the core, I was not disciplined enough with my later additions to the core - which should have been disposed of as they dropped into loss. However, it was a classic error of paying too much attention to the G 'story' - the 'fundamentals' and not enough to the underlying decline which from early October was 100% to do with OP despite the fact that OP had had little obvious bearing on the preceding phase - mid August to end September. That phase seemed to be a simple and natural pull-back after the market got too far ahead of itself. It was predictable and good for trading 'on the side'.until I realised it was deeper and probably due to market disappointment with G's progress with exploitation of non-Taq Taq resources. I also suspect some investors flipped between G, DNO and GKP as there seemed to be some odd contra-movements during that period. Because of those distractions I was very slow to realise the fundamental shift to OP dominance in the equation, especially as the anticipated support levels still seemed to be valid - though progressively more flaky. Obvious now, of course.

It may work out better than you think bunks. $56 OP should keep G above the blue line and maybe over 160p until the cavalry arrive in the shape of proper OPEC + cuts.. The EIA stats were a draw, contradicting the API figures for a build .... WTI looks to be firming up with any luck.Trust your Elf on the shelf. ... he's as reliable as anything else around here.

As there’s been a lot of comment today, and I’m rather more obsessed than usual because I need to consider if/how/when to pull out before I go into loss etc etc, It’s perhaps worth a closer look at today’s price action, so here are two 15’ close-ups so we can see what’s going on, first wth G:
https://invst.ly/9kkpg

… then with Brent:
https://invst.ly/9kkr6

Tight relationship? Yes - this time anyway.

My commentary would be that G happens to be staying really close to Brent ATM because I think the market is quite unsure about how to value G - it’s more complicated to assess than GKP IMO - too much ‘story’ about gas and stuff which never seems to happen, so it's easier just to do a 'back of a fag packet 'calculation based instantaneously on OP.

So Brent breaks upward from around 13.30 (in a way that eventually proves to be relatively limp to be honest) and G, which has been hugging the downtrend, responds, little knowing that Brent’s flirtation with $57 will fizzle after the market closes a couple of hours later. Still hope is not lost - out of hours Brent is not always a reliable indicator of what the grown ups will do during normal hours. The EIA numbers don’t give a strong indication to me: a draw but a lot less than the analysts thought. I wish the analysts would shut the F up TBH. There’s only one message that counts and it comes out every week so the analysts just give the market an extra reason and opportunity to change direction. Either way, up or down, G will follow whatever direction Brent takes tomorrow.

Meanwhile, about support levels and Fib - Bottmzup pointed this out a while back, although I think he put the line at 165. I did agree with him - one man’s fib at 165 and another’s at 160 are close enough for me. I only pay attention to Fib because traders worship it. It’s like religion - if enough folk believe in it then it self-fulfills (until it really counts - then you need something more tangible). I think I scrubbed my post-175 support level at around 166 because the falling ‘blue’ was a bit more relevant and, in light of the OP influence, I decided, Like Theresa May, that it looked like a loser and G’s support lines did not necessarily coincide with what Brent might do - which is an utter mystery to me and every genuine oil pundit I’ve read. My thoughts about tomorrow are crystal clear, however: check what Brent is doing before the market opens and let that guide you.

From Reuters:
https://www.reuters.com/article/us-usa-oil-eia/us-crude-stocks-fall-in-latest-week-eia-idUSKBN1OI1VA

Extract (full article worth a read)

Crude inventories fell by 497,000 barrels in the week to Dec. 14, a much smaller draw than the decrease of 2.4 million barrels that analysts had expected. The decline was the third consecutive decrease.
Crude stocks at the Cushing, Oklahoma, delivery hub rose by 1.09 million barrels, EIA said.
U.S. crude futures were little changed after the data was released and were up $1.12 at $47.36 at 10:44 a.m. EST (1544 GMT). Ultra-low sulfur diesel futures extended gains after the data showed a surprise draw in inventories of distillates, which include diesel and heating oil.

Cheers Jack

Yes - weekly clicks filter out a lot of stuff so you can see the wood for the trees. I don't publish all the charts I use - I probably pi55 a few people off with the ones I do post but a picture paints etc etc.
G is so reactive to OP at the moment that I basically don't trust the support levels etc too much - they provide a sticking plaster that delays a fall but if Brent goes down then they ain't worth a bean. You are probably right about the monthly contract - not something I can comment on. I just sense that there are lots of mixed messages about oil being broadcast by companies and countries with serious vested interests. OPEC+ and other such events are usually a bit of a stunt where various entities (eg Russia) often play a different hand to the one they lay on the table. Quite when/if the OPEC+ cuts will bite is hard to tell though they are doing a good job talking them up even though nothing has happened yet.
I suspect today's EIA report (which I haven't seen yet) could influence prices tomorrow more than anything else.
ATB

For Wednesday 19th December

Little to add after my piece earlier about analysing G better when it is governed almost exclusively by OP and planning for the risks in that regard.

Today, G https://invst.ly/9khvd has understandably been following the blue downward trend line given that Brent has been at a low point for H2. Encouraging to see it just 1 or 2p down on where an OP based calculation places it, which ties in with the lag against Brent shown on the longer term ‘Peak Oil’ chart here: https://invst.ly/9kht1

With any luck, a 58p OP should have G up to 166p.

The week so far shows GKP following Brent less slavishly than G, although possibly moving to correct some divergence that has built up over the last couple of months. DNO a little down more than necessary in light of yesterday’s drop in OP (flat-line when Oslo shut). Don’t forget that the longer term ‘Peak Oil’ chart (above) is a more reliable guide to their relative performance : https://invst.ly/9khv7

$57 ?

Thanks Ocelot - good to know for when the market chooses to recognise them properly again - I guess this will not be till the FY Results. Clearly the present market calculation appears to be simply based pro-rata OP referenced back to an historic sp , which may be understandable given the current volatility of OP and to the extent that if OP = 0 then the company is pretty much worth zero, as the market appears to be taking little or no account of cash accrual etc. until it is reported.

My only thought is that, as a consequence of extracting oil to sell, that element of the assets should decline - but hopefully this has been more than offset by latest CPRs etc. Also, I guess OP and Natural Gas P are factors in valuation of reserves but presumably a rather opaque formula. Hence, I suppose, the market's fairly fierce linking of G's sp to the OP at the moment - something it tended not to do earlier in the year.
Regds

Forgot to add: Reserves value is proportional to OP, obviously.

Cashless: 'but it takes no account of reserves, gas, bopd upgrades and potential drill hits!!'

That was the whole point Cashless - my purpose was to do a calculation based on what the market is currently doing - which is stripping all that out and doing a straight calculation on OP and history.
The market currently isn't taking any of those factors into consideration. We have to be real about the sp - it is low and it could go lower. So the first question we should all be asking is whether we are comfortable with what could happen to the sp in the worst case Then - if we are - we can put the rose-tinted specs on and resume dreaming of what might (or might not) be.

Since Brent started to fall in October there have been some company specific variations in SP but they have all 'nulled-out' - as my earlier post today explains.

DNO is a good comparative stock but be aware that because the Oslo exchange closes earlier there is a timing mismatch that can give a false impression at the end of day and start of day on comparison charts - especially as Brent continues to trade out of hours. DNO, like RDS, does not have a 1:1 relationship with the OP - so it has suffered rather less than G since 3rd October (peak Brent price). If you'd like to see where G's sp would be today if it had performed as well as DNO since 'peak Bent' then try this formula: G sp * 76/65. This transforms 160 to 187, which is about where G would be if it were performing like DNO. The formula uses the percentage differences read off my chart and will change over time.

Typo correction for my last post concerning Brent lowest price for recent years :

NB: there was a 4 month period Dec 16-Apr 17 that went as low as $29 at one point!

As things go from bad to worse it seems worthwhile going through the likely worst case scenarios, with a view to either holding or a managed exit from G as necessary.
It’s a personal view - please DYOR.

G’s sp is currently tracking Brent from peak ($86) rather more closely than the other oil cos. In fact, at the close yesterday the match was virtually exact. This tells me two things:
1) The market feels that, OP apart, G’s sp was more or less correct on 3rd October (248p) and it hasn’t changed this view.
2) G’s sp is currently 1:1 linked with OP (on a percentage basis).

I also know that the current sp and OP are an almost exact match for mid-late September 2017, when the sp was 151-161.

So I’m going to value G’s sp at nominally 158p with Brent @ $55 and use OP*158/55 to estimate the sp for different values of OP.

The present sp is the same as the market level for G in September 2017 - so I’d anticipate that as the OP firms up around $60 and 2018 FY results are presented there should be an uplift to this position.

What’s the worst I can expect for OP? After looking at post 2014 history charts, I’d suggest that Brent is unlikely to fall below $45 for a significant period which would put G at 129p. This is also close to possible support levels around 130p on my chart for G. NB: there was a 4 month period Dec 16-Apr 17 that went as low as 29p at one point!

How long a low level of $45 might last is difficult to say but I’m bearing in mind that US production needs higher values and OPEC really wants to see Brent at $70. $65-$70 seems to be a likely sweet spot for matching supply and demand, placing G back around 190 as things stand. I believe the EIA has forecast $61 average for 2019, equivalent to an sp of 175p. I doubt we’ll see Brent back up to $80 as this just seems to stimulate over-supply.

It’s important to note that, quite deliberately, none of this takes into account the presumed cash accrual or any other positive news that may be forthcoming at the FY results or at the Trading and OPs update in January.

G/GKP/DNO/ RDS/Brent ‘peak’ tracking today: https://invst.ly/9kcf8

For Tuesday 18th December

The week so far: https://invst.ly/9k24s

I think the technical term for today is carnage. G unfortunately gave the signal I mentioned yesterday to confirm that there’s no imminent bottom: it dropped onto the falling blue trend line within half an hour of the market opening. A slightly overdone drop that corrected an hour or two later. But OP continued it’s erratic fall and wherever that goes, G is now destined to follow - whatever any charts say.

G is now back at the same levels as September 2017 - pre KRI Referendum crisis - when OP was about $53, G was in net debt, production and resources were lower etc etc Yet the market appears to feel the company is no better value than it was then. They are obviously not getting the memos from Hawkey, JL and everyone else. I guess market cap is now down to around £446m.

As I say, there’s still no sign of a bottom - just some increasingly unconvincing levels for G to drop through with comparative ease. 150 (ish) might offer some support, it’s shown as the top of three light blue lines here: https://invst.ly/9k24e but there’s not much else until around 135, where there might be a stiffer level of support as it connects with the red line on the same chart. But, as I say, OP is in control of G’s sp for the time being.

G (daily clicks): https://invst.ly/9k25d
What can I say? It’s heading down obviously. On this chart 150 is in red - not that previous reds have stopped the decline. It’s about 10p below so might just do the job if OP stays above $55.

If the price gets near enough then gaps tend to get hoovered up.
G clearly in the hands of OP now - and no-one really knows where that is heading.
G was at this sort of sp in Sept 2017 when OP was about $53, with lower production and net debt- so a lower sp is not entirely rational right now. But anything possible in a sell-off.

My best guess is that the basement is around 130-135 JL
But as G had lost about 4p per $1 drop in OP at one point today, I'm not offering any guarantees! Clearly OP could get down to $50, which would fit with that figure.

Yes Jack.
Unfortunately I don't think today was about the gap-fill issue.
Genel doesn't really have a bottom. 152 looking like the next floor down - on the way to the basement.