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Analysts: Permian Oil Output Set To Double By 2023

https://uk.finance.yahoo.com/news/analysts-permian-oil-output-set-180000699.html

Permian oil production— currently just shy of 4 million bpd—jumped by around 1 million bpd from a year ago and is set to jump by another 1 million bpd, to 5 million bpd, by early 2020, Eric Lee, energy analyst at Citigroup, told CNBC.

“We’re happy to look out to 2023, when it gets to 8 million. ... They figured out how to access it at very low break-evens, like $30/$40,” according to the analyst.

How come they never thought of unlocking the potential of the Permian in the USA between 1975 and 2005 - for thirty years American oil production declined - and yet nobody thought to unlock the potential of the oil resources in the Permian basin? Why not? Especially when 8 million bopd just from the Permian would be almost double the total US oil output in 2006 (from every state including Alaska). So why didn't the US companies/government tap into this resource before 2005? Seems a little odd or not?

Analysts: Permian Oil Output Set To Double By 2023

https://uk.finance.yahoo.com/news/analysts-permian-oil-output-set-180000699.html

Permian oil production— currently just shy of 4 million bpd—jumped by around 1 million bpd from a year ago and is set to jump by another 1 million bpd, to 5 million bpd, by early 2020, Eric Lee, energy analyst at Citigroup, told CNBC.

“We’re happy to look out to 2023, when it gets to 8 million. ... They figured out how to access it at very low break-evens, like $30/$40,” according to the analyst.

How come they never thought of unlocking the potential of the Permian in the USA between 1975 and 2005 - for thirty years American oil production declined - and yet nobody thought to unlock the potential of the oil resources in the Permian basin? Why not? Especially when 8 million bopd just from the Permian would be almost double the total US oil output in 2006 (from every state including Alaska). So why didn't the US companies/government tap into this resource before 2005? Seems a little odd or not?

Analysts: Permian Oil Output Set To Double By 2023

https://uk.finance.yahoo.com/news/analysts-permian-oil-output-set-180000699.html

Permian oil production— currently just shy of 4 million bpd—jumped by around 1 million bpd from a year ago and is set to jump by another 1 million bpd, to 5 million bpd, by early 2020, Eric Lee, energy analyst at Citigroup, told CNBC.

“We’re happy to look out to 2023, when it gets to 8 million. ... They figured out how to access it at very low break-evens, like $30/$40,” according to the analyst.

How come they never thought of unlocking the potential of the Permian in the USA between 1975 and 2005 - for thirty years American oil production declined - and yet nobody thought to unlock the potential of the oil resources in the Permian basin? Why not? Especially when 8 million bopd just from the Permian would be almost double the total US oil output in 2006 (from every state including Alaska). So why didn't the US companies/government tap into this resource before 2005? Seems a little odd or not?

Hi

In my opinion it's looking good technically to be long now. There are two share-price channels stretching back 20 years. Although the tops are different the bottoms are very similar. And the bottom has historically been about 220p, (give or take 10%). And the upside historically, extending the tramlines forwards, is about 320p (lower channel) or about 500p upper channel. So in terms of risk/reward it's a buy from me on a technical basis. Also despite what the fundamental analysts would want people to believe - there is not much evidence that fundamentals ever trump technicals. For better or for worse it seems the market is created by technicians who largely ignore the views of the fundamental analysts). Well that is how I explain the fact technicals are often better predictors of future share prices than fundamentals - although personally, for the sake of the "real" economy I wish people would listen to the fundamental analysts a bit more - because using technicals to reach company valuations is terrible when it comes to the "real economy" because often value is completely mispriced - the people who create value lose out - and the people who believe 100% in technicals like a religion make a shed load of money - and then people expect the world to be a reasonable place to bring their children up in - really? The more one's own actions deviate from rationality then logically the less rationally the next generation will behave - oh fuck it - nobody care - not I even really seeing that I know it's all social really as much as I think ability should count more than contacts, it seems contacts nearly always count far more than a person's ability. Anyway, none of this affects my reasoning above - the share price has rarely dipped below 200p during the past twenty years - Sainsbury's a stable business - what's not to like about the risk/reward?

Morbox hanks for your insights - it's great to hear from you as you have actually worked for National Grid, although a long time ago as you say.

Max Margolliss - I'd just like to point out that there is now a price cap in this market - that's hardly called allowing market forces to work is it? And yes I do believe even big companies can sometimes become victims of scams so large that most of the shareholder value is wiped out - look at RBS as an example of a bank that was being scammed when it thought it was actually making profits. So how do we know that there aren't some DelBoy characters around getting rich at the expense of Centrica shareholders who have seen the share price halve in less than two years?

Helx - I really can't understand why Shell would want to try and enter the retail energy market in the UK through organic growth (apart from liquid fuels). Centrica shares are priced so cheap that surely if Shell wanted to enter the UK retail energy market then they would just buy Centrica for £2.70 per share and rationalise the business - surely got to be less hassle than competing head to head with Centrica and them having to run as a loss making business for many years unless Centrica finally gives up (it may take Centrica 10 years to burn through all their shareholders capital - would Shell really want to run a loss-making business for 10 years just to get involved in the relatively small and already competitive UK energy market?)

And last but certainly not least WGR - for the life of me I can't think of why certain forces seem to love criticising Centrica - are they really that bad in terms of service? I really would like to understand what issues/problems people in the City seem to have with Centrica? They have done well to keep their debt low and they don't seem to have lavish palaces for senior management and private jets like Tesco, RBS (used to have), and Big Oil still has? It's incredibly complex to keep track of all their customers metre readings and to bill them correctly. They are vital to the functioning of a capitalist system in the UK unless you want people being allowed to steal electricity (as in Eastern Europe) or the country to fall into energy chaos (aka Venezuela). Surely shareholders deserve something more positive from the business over the next 5-10 years? Or do they? If not I would really like to understand why? Why do some people think Centrica is running things the wrong way? Is that what even the shorters think ... or have they just found a trend that keeps rewarding them and are therefore staying short until the downward trend changes?

Because the smaller suppliers need to buy their energy from somewhere. The established companies have been around for ages and have built up large supply networks. The new companies who have set up within a matter of one or two years can't possibly have created their own supply networks in that short time. Hence some of their energy must be bought off the more established companies. Also it fits in with articles from various sources (media and others online) which state that the newer companies are getting their energy on credit from the more established companies and when they go bankrupt they are not underwritten by banks/shareholders (or don't have capital from bondholders), so their is no financial backer to repay their debts to their wholesale energy supplier.

Also if this wasn't happening then how do you explain the fall in share prices of SSE and Centrica?

Also what's the point of writing to an MP - they earn so little how could they possibly have any influence? The people with influence in the world are those earning hundreds of millions per year (or who have assets worth billions) Absolutely pointless to think an MP could do anything - someone with serious money could change the law far faster (that's the influence of money sadly).

You people on here worry me. The share price goes up 10% and the comments change to being more optimistic. But when the share price goes down 10% the comments suddenly become negative.

Now I'm not saying it's done intentionally ... but take a good look at it....just hope any newbies take note....you need a sound rationale, sound risk assessment, patience, and a strong belief in rationality, to make money trading. Just want any learning the game to have the best chance possible as it is not easy....but can be extremely lucrative

The less positivity on here the better in my opinion .... let's stop talking of 90p and remember the politicians are going to bad oil/gas use soon (well ban cars and gas cookers at least). So remember we are only ever one bad deal away from administration.... this company made mistakes in the past....can't dig itself out of a hole just with Catcher....needs heads to remain focused on good safe operations (no excessive capex) until 2021.

Hi jl5006,

How come you think the Brexit debate is a reality?

I find it hard to take seriously that a binary choice like this would have as much an effect on the future of the UK economy as from if Parliament debated whether to build some new gas-fired or nuclear power stations. Or to introduce something like state-planned automated production of as many "essential products" as possible, and a basic income for citizens. Or just to debate how often the roads should be resurfaced - this would make a massive difference to the likelihood of attracting economic investment to the area I live in (currently the roads are in such a mess it puts people off making journeys which aren't essential). Also there are other issues which could be debated - such as reforming the planning laws to encourage more building (to address the housing shortage). And there are many more issues which would have a far bigger impact on citizens lives, and the overall economy, than a binary issue like Brexit. For example is it the fact there is not much of a food culture in the UK (at least compared to France) which means that it is hard for small-scale food producers to recruit staff. Is the abundance of unhealthy eating options (takeaways) to do with poor education around nutrition in schools? Also what about the breakdown of communities and the ghetto-sisation and gentrification of areas (something which is happening but politicians don't want to discuss as admittedly it is hard to figure out workable solutions) - but one solution is to find a way of getting people to invest on the outskirts of cities rather than all the major capital projects only occurring in the city centres. Don't people think it is a waste of money to redevelop the same city centre site three times in a decade and yet spend nothing on sites a few miles from the city centre? These are the root cause of inequality and community breakdown - because budget holders don't seem to want to do anything innovative in case it annoys the people who are benefiting over-and-over again from all the money being spent on the same old sites/city centres. It's so boring I can't really understand how the banks/councils haven't got bored of repeatedly enriching the same people/areas by now - surely there is a psychological benefit sometimes just from a change - hence reason enough for council to try innovative economic schemes, because even if the scheme doesn't perhaps maximise potential profits, there is at least a value to be had of citizens needing to change their behavioural patterns if they want to benefit from public funding.

I know I'm not personally a boring person - but neither did I think I was unusual in often finding that there is a value to be had in doing something differently just purely for the sake of it - you can't judge everything against profit - or can you?

Anyway personally I think the whole debate is just a theme which avoids any headline news stories about the economic decline, NHS services creaking, food price rises, roads full of potholes, food bank use increasing, rising inequality, and a complete absence of local councils spending money on promoting individual commercial freedom and local economic activity (such as the culture they have in France of farmers markets, local wine trading, and just a much more vibrant and contented feel, or so it comes across to an outsider). In Germany there is also apparently the Mittlestand. So the UK seems to be one of the few countries that thinks shipping in mass-produced, low quality, generic products, and just selling them in boring stores like Argos or a generic large supermarket is an acceptable direction to take the country in. Really?

Hi,

I'm struggling to figure out who actually wants to leave the EU.

There is a majority in parliament to remain.
Most business people who are interviewed on the news (which could be biased of course) want to remain.
And most citizens on the news (which could be biased of course) will not say that they want more immigration from non-EU countries - which is what the Brexiteers are proposing to replace any EU staff who leave the UK.

Anyway personally I think the whole debate is just a theme dreamt up by the countries media masters to keep the country focusing on one theme for a couple of years - this avoids any headline stories on the news about economic decline, NHS services creaking, food price rises, roads full of potholes, food bank use increasing, rising inequality, and a complete absence of local councils spending money on promoting economic activity such as farmers markets, or just doing something innovative that brings people from different communities together centred around commerce (rather than centred around enforced political correctness which has no lasting benefit unlike commerce). All just in my opinion. So really I think it all very much sounds like a media smokescreen to avoid them putting economic issues on the news, or the creaking NHS, or the general economic decline of so many communities (a few prosper whilst the many don't - typical Conservative moral values I guess).

Even if Cairn is awarded this money will India pay it?

I was reading earlier that people like Peter Thiel think along the lines of - who will stop me if I don't?

Hence the people in the Indian finance department might just think - if I don't pay this money to Cairn who will force me to?

Personally I don't see who will force them to pay the money? Do you?

Money is global - there are no borders to wealth really anymore. Hence rational investors will always compare every company in a sector across the entire globe before deciding where to allocate their funds.

So look at Genel Energy - same production as Enquest - lower costs (due to being land based) - similar free cash flow after taking into account differences in taxation/profit sharing with government.

So the enterprise value of Enquest is about $2.5 Billion. The enterprise value of Genel Energy is about $0.9 Billion. How can this be if the market is rational? With similar free cashflow, and similar production profiles going forwards, how can shareholders value one company at almost three times the value of the other?

This is like valuing an apple at £1 just because it is located in the Middle East and yet valuing the same apple at £3 if it's located in the North Sea. People might think there is more risk associated with the Middle East than with the North Sea - yet is this true? The UK government keeps robbing the shareholders of North Sea companies to pay for their welfare spending to support the 65 million population of the UK - when actually there isn't the money for this long-term and responsible people need to find other sources of income (rather than consistently increasing taxation upon the rightful income of others, this income being derived from the people who had the foresight, energy and capital to set up companies producing oil from the North Sea - something which was far harder to do than many jobs!) Yet the Middle East is policed by the Americans who still believe in the income generated by the companies doing the work going to the owners of those companies (including shareholders). So can you really say the financial risk is higher in the Middle East than in the UK? The perceived political risk doesn't necessarily equate to an objective assessment of the financial risk does it? At the end of the day no politician is going to be able to go against the wishes of the Americans in the Middle East - you will get taken down militarily pretty quickly. On the other hand politicians in the UK are free to keep raising tax rates on productive industries which drives investors away from the UK. So where does the largest financial risk really lie?

It's not really about project execution risk anymore in my opinion - it comes down to can you trust a government not to hand out the wealth your company is creating to a load of people who only want to live on the taxes you pay (like parasites).

Well, once the student knows more than the teacher (or simply has more natural talent which has eventually taken them to a higher level) - then things may change in the future....

Got other things to do now ...busy....busy ...governments are a waste of time.....driving Ferraris from Seattle to Whistler is how the children of those who perpetrate the great American banking frauds spend their time .... they wouldn't even waste a minute of their day talking to a person in the UK government .... Goldman Sachs are far more likely to know how the financial future is being planned to unfold.

Krakenoil, I have watched the financial markets for over a decade, doing lots and lots of fundamental analysis and modelling. What always seems to happen to oil companies is financing charges balloon, money keeps being paid out even when major capital projects are supposedly complete - hard to have any confidence in this sector as a shareholder - they have allowed governments to over tax the sector for more than a decade - CEOs never speak out against the climate change lobby in the media. Investors are being stitched up across the sector based on the evidence of the past 10 years - it's not just one thing the sector is working against to have a viable financial future - but so many things are against us at present:
(1) Tax rates set by governments on petrol and oil production are ludicrously high everywhere except USA
(2) Technology is working against us by offering companies in other sectors cheaper alternatives to petrol/oil.
(3) Climate change lobby/politicians are constantly undermining the public knowledge's/beliefs about the benefits to economic activity from using oil/petrol.
(4) Poor management within the oil companies themselves who consistently agree to overpay the service companies which this sector uses.
(5) A lack of respect by the boards of directors within this sector for the capitalist system and the investors - perhaps because the investors never actually vote to remove CEOs who deliver negative financial returns.
(6) The whole stock market system is corrupt - share prices in this sector went way to high from 2010-2014 when oil prices were over $100, and nobody bothered about the inevitable losses this would generate over the next decade to any investors who didn't sell out from 2010-2014.

Hi Colebrook1972, 400K is nothing to the CEO - he is worth over £50 million. In fact it was very smart of him to buy £400K, it helped him to boost confidence amongst the people who take director buys as a signal of confidence in the company. However when you are buying less than 1% of your net worth then the person doing the buying doesn't really care whether they make a profit on those shares or not. Often directors buy in small amounts before bad news comes along - it is generally a signal to wiser people to get out if a director only buy £10,000 in a company (this is less than a day's pay for most directors).

Annoying that shareholders have to subsidise new companies selling energy at below cost price. Basically Centrica has become a charity handout for the people who feel they are entitled to alter-the-market-structure so that they can buy their energy at below cost price. It's not capitalism in the Uk anymore - it's communism (or pretty close to it)!

https://www.thisismoney.co.uk/money/markets/article-6796619/Brilliant-small-energy-firm-bust-2019-leaving-17-000-households-lurch.html

Replace nuclear with gas-fired plants

Two world-class gas assets with more than 27 net trillion cubic feet of gas resources, geographically positioned to supply global LNG growth for decades to come

https://uk.finance.yahoo.com/news/wildhorse-development-corporation-wrd-q4-194017145.html

Surprised people aren't focused on the enormous debts of other oil companies - Chesapeake only has production of about 120,000 bopd and net debt of $8.2 Billion (Compared to around $3 Billion for Premier Oil).

https://uk.finance.yahoo.com/news/5-impressive-numbers-chesapeake-energy-132800501.html

Plenty of oil companies that aren't really profitable - is Chesapeake really profitable or is it just running to stand still even at current oil prices? If it is running just to stand still then I don't care how large its prospective resources are - they are financially not really worth anything if they can't be produced at a profit. I think shale is a good story - but if the decline rates are true then the bigger a shale company grows the more wells it will have to drill in every subsequent year just to stand still - at some point the oil, sand, chemicals needed for all the thousands of new wells needed just to stand still each year will become as large a cost as the revenue from the oil being produced. At this point the assets will go from being worth billions to being worthless (because once the tipping point is reached the declines per year after that can't ever be turned around - because the whole business case in the first place was predicated on a kind of forever growth story - that the new wells each year would pay for themselves as well as replace the production declines which increase for each year older the other well are). It's hard to explain succintly, but I'm sure that anyone that is familiar with the huge numbers of wells that the shale industry has drilled will get my point. Yes the Permian basin in massive, yes the acreage in Dakota is massive, yes there might be far more oil there than has so far been exploited - but at some point the tipping point I have alluded to will be reached - and when it is there will be years of irreversible production declines - but the case is when will this occur?

https://uk.finance.yahoo.com/news/5-impressive-numbers-chesapeake-energy-132800501.html

It's more the principle that I was getting at. The roads are getting worse every year ... and it's about time someone paid for them to be resurfaced.