Roundtable Discussion; The Future of Mineral Sands. Watch the video here.
Thornback, I have to reluctantly agree. I would add that, even though this is now an optionality play to an extent, the likelihood is that funding and development are going to happen at some point and we should keep in mind that there is still huge upside in the exploration of ksk. I’ll pick my trade pot back up if sentiment gets really out of hand and we see a 2016 style bottoming. Given that the copper supply is so much more restricted now, I don’t see that as likely but who knows where the global economy is going. To reiterate a comment I made a couple of weeks back, the demand picture from China should pick up in H2 due to seasonal factors but that doesn’t mean copper can’t put in a double bottom and if lumber pulls back again it will be a sign that all is not well.
Thornback, Asipac knew the bfs numbers before placing so must have been confident that funding was achievable. I guess we now know why it was placed at such a discount. Very disappointed as the team have signalled all along that the bfs would be favourable against the Pfs. What was it Mark Twain said about mining investment?! Funding will take a while so the price will ebb as it has at HZM. Hoping to be very wrong about this but not expecting to be (giving up expectation is a hard lesson to learn in this space) My stops put in yesterday were well and truly smacked for my trade pot but expecting that all will come to fruition in the fullness of time - at the appropriate juncture. Given how poor the headline numbers are, I was kind of expecting a 30% smakdown but I guess some of it was already priced in as per my asiapac comment If Cu price starts troubling 3.2 then sentiment in the whole sector will flip in a day, and this will happen, it is just a question of when. Need the macro narrative to change first and some nice surprises to the upside from manufacturing and global trade. For those who follow such things, the lumber price has lifted off the bottom. It’s often referred to as professor lumber - often all over the place but tells dr copper when to get ready for some action. Not reliable but have a look at a chart of the two - it can lead by 1 - 4 months on tops & bottoms.
Couldn’t find hard DUC data but I did discover that the number of DUCs in the lower 48 have plateaued at 8500 since January according to EIA data. It was part of a seeking alpha article https://seekingalpha.com/article/4264230-fear-hope-oil-price-spike Read into that what you will. For my money it suggests that capex has reduced and now all wells are going into production or being plugged. Possible cleaning up of balance sheets in response to investor demands for better corporate management?
Hi, if you go through Art Berman’s twitter feed you will, eventually, find a graph with the rig count and production plotted on together showing the lag. It might be quicker to google image search it. RE DUCs I don’t have data, only discussions on twitter between oil analysts and engineers. You might try Mike Shellmans excellent oilystuffblog.com and see if he has written about it, I’m not able to today but I’ll have a look on Monday and see if I can find some good data. From memory it was something like 25-40% that are actually duds but companies don’t want to write them off because they need to list them as assets for fundraising. Obvs don’t rely on my memory though.
Evening all Couple of things that have been discussed tonight that sort of fall in my research wheelhouse. 1) rig count has been falling for a few months. Key is Permian which is basically most of global crude production growth atm. The rest is coming from Iraq, which has (suspiciously?) started pumping and drilling more since Iran sanctions were enacted. A concerning alliance if ever there was one. Shale Productivity gains are running around 5% over the last year so theoretically productivity should be flat but as we know the number has been marching ever upwards. A few key things - no new money has been raised in the equity market since end of last year, so rig count should remain in decline (unless shale has suddenly started generating free cash at $50bbl). majors are moving in but the patch won’t change structurally for a while as their investment horizons are more like 18months and they have the room to be picky over where they find productivity and we also all know that EIA production figures get significantly revised down after the actual data comes in. 2) there are a lot of DUCs but there is a reason they don’t go into production straight away - their production potential is below the economic threshold and so no further capex is expended on them to bring them into production. When the market turns down and capex budgets are slashed, marginal DUCs are brought into production when new wells are not drilled, but a significant proportion will not be brought into production unless oil price goes through the roof and even then, a proportion will never be productive because they are basically duds. Art Berman says 7 months lag on drill count to productivity effect, so August/sept sounds about right.
Evening Beerbull, Possible I suppose but then why use the SPR? I’m of the opinion the the whole Iran thing is about Bolton’s obsession. Trump was onboard until the market told him that it was going to have consequences and then he told Bolton to put a lid on it. I would be surprised if the US got physical in the gulf.
Sorry love you, but the demand for oil in India is very strong and it has booomed significantly in the last two years and Venezuela’s lack of demand has more than bee compensated for by loss of production. RE EIA numbers, I see that the net import numbers are huge. So US is buying oil to blend but not selling it yet. Gasoline always builds in the week after the start of driving season, but that was a biggie. Agricultural demand for distillates is way down due to flooding (check out the corn futures). Basically the US market is a mess. All the while adjustments are huge, at some point that pendulum will swing but when? Backwardation is saying that crude for delivery immediately is still strong, suggesting tightness. My thesis of end of H1/19 for my trade is looking shakey, the fundamentals might be there but the sentiment certainly isn’t. If the US$ Has rolled over then there might be light at the end of the tunnel, we will have to wait on the Fed for that I guess.
All north of Piper I’ve spent the morning going through the historical drill data. There appear to be a few interesting contacts and a large area that has never been drilled. I guess it’s all about the seismic.
At this rate the US refiners won’t be able to find anyone to sell them heavy grades. Hope DT is happy with US consumers paying a premium for gasoline. https://gcaptain.com/trumps-mexican-tariffs-could-hit-u-s-refiners-hard/
E121, Nice summary of where we are at. It will be really interesting to see the EIA February corrections today. The market is pricing in a fall in demand before it has happened - there is a chance DT decides that his re-election campaign is more important than his ideology but there isn’t much time before the damage is done. There is a theory that he is driving the economy into the ground deliberately to force the Fed to ease significantly before doing a 180 and introducing massive stimulus. If that is the the case it is going to be very happy days for us. Not sure what he does when oil hits $100bbl as a result though.
Thanks for all the maths everyone. I think the price paid reflects how the market is shifting and N.Sea assets are going to slowly rerate against other markets due to the quality and geopolitical stability. The benchmark spread is already telling the story to an extent. There is light at the end of the shale-narrative tunnel and one day investors are going to wake up and see that NSea isn’t the dead dodo that everyone thought. My ongoing strategy is to pick up unloved assets and await the inevitable turning tide. I’m here, obvs and I3E. HUR is too well followed for my liking as with PMO, anyone have any other under-the-radar gems?
Ahh. Classic misinterpretation ‘Defending TLOU by attacking KMR looks like a spineless way to approach discussion’ - I wasn’t defending Tlou by attacking KMR. I was attacking your credibility by attacking KMR, therefore making the association that if you comment it is as someone who’s credibility is questionable, supported by comments such as $50m capex Requirement.
Good grief, making garbage statements such as ‘why this BB was last year recognised as one of the worst on LSE’ is hardly credible. Still if hyperbole is your thing . . . How exciting, net cash of 15M (what? Chocolate coins?) but you don’t have to worry about that, no doubt the highly talented board will find a use for that - like dig another hole. The useful information RE Tlou has been discussed and disseminated at length over the last few years, still you could whine about how every post here doesn’t add value but then, errrrr, you would be posting chaff that doesn’t add value. Irony much? Now isn’t it time for you morning medication? You don’t want to be embarrassing yourself with BF-standard guff all day. PS said Plc might well get a long overdue rerate but it’s nice to be able to make some beer money whilst waiting, which does need some stock to be traded.