BHP Billiton (BHP), in search for increased earnings from existing assets, is looking to its DUC wells to provide a boost.
The natural resources giant has some premium wells it has been sitting on that it can quickly complete and make a profit. It didn't reveal how many wells it has that can generate earnings at about $45 per barrel, but it does have about 1,400 it will complete if the price of oil approaches the $60 per barrel mark.
With iron ore expected to be subdued for the next decade, and coking coal producing some profits, BHP needs another profitable revenue stream to move its earnings. Shale oil is an excellent asset, with a relatively small investment needed to get them going.
If oil sustainably jumps past the $50 per barrel mark, it's also looking at developing new wells.
More on BHP Billiton and its DUC wells strategy
Wednesday, June 22, 2016
Oil Rig Productivity 4X what it was 2 years ago
Rig productivity may be a game changer very few investors are taking into consideration, as each rig can produce over 4X what it did a couple of years ago, according to Capital Economics.
In 2014 a rig could pump out about 6,000 barrels of oil per day. Today, a new rig can pump out an average of 27,000 barrels per day. That of course doesn't necessarily mean each well can meet the capacity of the rig, but with the improvement in identifying top-producing wells, it's almost a guarantee they'll come close to it.
What this suggests is the new rigs being added in the U.S. may be pumping out far more oil than the market is looking for, which would offset the decline in production from low-cost shale producers much stronger than expected.
When combined with the increase in production from some OPEC countries, it could be a strong headwind in the months ahead if the new rigs contribute a lot more supply than is being priced in.
More on new oil rigs and increased productivity.
In 2014 a rig could pump out about 6,000 barrels of oil per day. Today, a new rig can pump out an average of 27,000 barrels per day. That of course doesn't necessarily mean each well can meet the capacity of the rig, but with the improvement in identifying top-producing wells, it's almost a guarantee they'll come close to it.
What this suggests is the new rigs being added in the U.S. may be pumping out far more oil than the market is looking for, which would offset the decline in production from low-cost shale producers much stronger than expected.
When combined with the increase in production from some OPEC countries, it could be a strong headwind in the months ahead if the new rigs contribute a lot more supply than is being priced in.
More on new oil rigs and increased productivity.
Saturday, January 23, 2016
ExxonMobil: Several Things Investors Need to Know
Summary
Where its strength - as measured against its peers - gives it some strong potential.
Refining will struggle to maintain recent past performance.
Running leaner should help the company long term.
Credit rating and rising cost of capital could be a risk further out.
Could political correctness over "climate change" take down Exxon Mobil?
Being one of the largest companies in the world and operating in a politically incorrect industry has made Exxon Mobil (NYSE:XOM) a target of many special interest groups and ambitious politicians, hoping to raise money for their cause or secure the next term in office.
Add to that the challenge of an unprecedented low-price oil and gas environment, and it definitely testing the foundations of the company as it takes a number of hits from different sources, while at the same time attempting to keep the company moving forward.
more info on ExxonMobil info investors should know
Where its strength - as measured against its peers - gives it some strong potential.
Refining will struggle to maintain recent past performance.
Running leaner should help the company long term.
Credit rating and rising cost of capital could be a risk further out.
Could political correctness over "climate change" take down Exxon Mobil?
Being one of the largest companies in the world and operating in a politically incorrect industry has made Exxon Mobil (NYSE:XOM) a target of many special interest groups and ambitious politicians, hoping to raise money for their cause or secure the next term in office.
Add to that the challenge of an unprecedented low-price oil and gas environment, and it definitely testing the foundations of the company as it takes a number of hits from different sources, while at the same time attempting to keep the company moving forward.
more info on ExxonMobil info investors should know
Timing of Iran's Oil Exports Not as Important as Some Think
Summary
Projected increase in demand versus ongoing supply.
Beware of temptation to time the oil market.
Some considerations on what to look for.
Dollar cost averaging versus lump sum investing.
Now that the price of oil has plummeted to under $31 per barrel as I write, it's worth taking a look at whether or not it's getting close to consider seriously investing in the commodity, or continue to wait on the sidelines; including whether to initiate a position or add to a position.
Most of the decision should be based on whether or not investors believe it's at least close to a bottom, or at minimum, a price range that reflects being near to a low.
Since I'm not a believer in timing the market, looking at a price range is the best way to analyze where the price of oil is at. The challenge is we're in uncharted territory. Not because we haven't seen significant price fluctuations in oil before, but because we have never seen it after the emergence of shale oil as a significant supplier.
more on Iran's oil exports
Projected increase in demand versus ongoing supply.
Beware of temptation to time the oil market.
Some considerations on what to look for.
Dollar cost averaging versus lump sum investing.
Now that the price of oil has plummeted to under $31 per barrel as I write, it's worth taking a look at whether or not it's getting close to consider seriously investing in the commodity, or continue to wait on the sidelines; including whether to initiate a position or add to a position.
Most of the decision should be based on whether or not investors believe it's at least close to a bottom, or at minimum, a price range that reflects being near to a low.
Since I'm not a believer in timing the market, looking at a price range is the best way to analyze where the price of oil is at. The challenge is we're in uncharted territory. Not because we haven't seen significant price fluctuations in oil before, but because we have never seen it after the emergence of shale oil as a significant supplier.
more on Iran's oil exports
Saudi Aramco: What Type of Returns?
Summary
Largest IPO in history may be on the horizon.
Saudi Arabia looking for revenue alternatives.
Even a small part of Saudi Aramco would be huge.
A number of variables would determine its attraction to investors, including the stock exchange or exchanges it would be listed on.
What this confirms about the oil market and the price of oil. In a recent interview with 'The Economist,' Saudi Arabian deputy crown prince Muhammad bin Salman said one of the things he's taking into consideration as a way to relieve the financial burden on the government from an expected prolonged period of low oil prices, is to go the IPO route with state-owned oil giant Saudi Aramco.
Not only is it the most valuable oil or energy company in the world, it's probably the valuable company in the world too.
Go here for more on investing in Saudi Aramco
Largest IPO in history may be on the horizon.
Saudi Arabia looking for revenue alternatives.
Even a small part of Saudi Aramco would be huge.
A number of variables would determine its attraction to investors, including the stock exchange or exchanges it would be listed on.
What this confirms about the oil market and the price of oil. In a recent interview with 'The Economist,' Saudi Arabian deputy crown prince Muhammad bin Salman said one of the things he's taking into consideration as a way to relieve the financial burden on the government from an expected prolonged period of low oil prices, is to go the IPO route with state-owned oil giant Saudi Aramco.
Not only is it the most valuable oil or energy company in the world, it's probably the valuable company in the world too.
Go here for more on investing in Saudi Aramco
Thursday, January 21, 2016
Oil Price: 2016 won't be good to it
There are a lot of moving pieces with the price of oil, but the bottom line is supply and demand is still the major catalyst for the price movement, and oversupply will continue to be the story throughout 2016, and probably further out.
No matter what type of ancillary stories are published in the financial news, investors should almost solely focus on the supply/demand trend.
I say solely because there are other factors when diving deeper into individual companies. But when looking at where the price of oil is going, the supply and demand equation is by far the most important piece of the price puzzle.
My point is we need to keep from being distracted by other data thrown into the mix. It will have some importance, especially as it relates to certain companies, but it won't have much of an impact - if any - on oil prices.
Not only is the market going to continue to supply more than demand, but supply is going to rise even more with the introduction of Iranian oil into the export market. That will happen fairly soon. The goal of Iran is to boost supply by at least 1 million barrels a day. It hopes to do that by the end of 2016. That may be a stretch, but there is no doubt it'll significantly increase the supply of oil in 2016.
Demand will not be able to keep up with it. It already was going to be difficult to match the oversupply already in the market. Adding Iranian and other oil like that in Indonesia and probably Libya, will continue to make things worse.
More on the 2016 oil price outlook
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