Official (Alberta) Oil Discussion Thread - Page 254 - Calgarypuck Forums - The Unofficial Calgary Flames Fan Community

_Q_ · 03-09-2020, 05:23 PM

We all know this drop on oil prices is temporary. Yet Canadian oil companies are all acting as if it's economic Armageddon.

Is there an industry out there more fickle than our own Oil and Gas industry?

GGG · 03-09-2020, 06:00 PM

Quote:

Originally Posted by _Q_

We all know this drop on oil prices is temporary. Yet Canadian oil companies are all acting as if it's economic Armageddon.

Is there an industry out there more fickle than our own Oil and Gas industry?

Debt is always a problem and covenants that are associated with it. Though the big guys should be immune to that. They are probably concerned with Dividend cuts.

It’s all the service guys that end up losing big. With the price the way it is production expansion doesn’t make sense so any active drilling is likely deferred until there is more certainty.

Hockeyguy15 · 03-09-2020, 06:37 PM

Sounds like people are expecting this to drag out until Q4. That would be brutal for a lot of people.

burn_this_city · 03-09-2020, 06:37 PM

Quote:

Originally Posted by _Q_

We all know this drop on oil prices is temporary. Yet Canadian oil companies are all acting as if it's economic Armageddon.

Is there an industry out there more fickle than our own Oil and Gas industry?

The market cut in half the value of some fairly significant producers in 1 day.

Ashasx · 03-09-2020, 06:39 PM

Oil Claws Back From Historic Crash After Global Price War Erupts

Quote:

(Bloomberg) -- Oil clawed back some of its biggest drop in a generation as investors grappled with the most volatile market on record in the midst of simultaneous supply and demand shocks.

Futures rose about 4% in early Asian trading on Tuesday after collapsing by a quarter on Monday -- the biggest price drop since the 1991 Gulf War. A gauge of volatility in New York futures jumped to the highest level since at least 2007.

Quote:

West Texas Intermediate crude for April delivery rose as much as $1.83, or 5.9%, to $32.96 a barrel on the New York Mercantile Exchange and was at $32.55 at 8:02 a.m. in Singapore. It crashed by more than $10 a barrel on Monday to end at $31.13 a barrel.

Brent for May settlement was up 4.1% at $35.75 a barrel. It earlier rose as much as 6.6% after falling 24% Monday to end the session at $34.36 on the London-based ICE Futures Europe exchange.

https://ca.finance.yahoo.com/news/oi...220837400.html

Bunk · 03-09-2020, 07:18 PM

Looks like Kenney is going down the path of more borrowing and stimulus spending, not deeper cuts. Upon thinking about the borrowing rate points made, I could get behind that in the short term. I still believe in the medium term, diversifying revenues is important.

Slava · 03-09-2020, 07:30 PM

It's futures, so these things can definitely change. But at this point oil is up about 5.5%.

you&me · 03-09-2020, 07:47 PM

Quote:

Originally Posted by Slava

It's futures, so these things can definitely change. But at this point oil is up about 5.5%.

Not to be too pessimistic, but it’s worth pointing out that % drops are larger than % gains, so a 5.5% gain, especially from the recent lows, is less significant than it would usually indicate through the course of normal trading...

Slava · 03-09-2020, 08:09 PM

Quote:

Originally Posted by you&me

Not to be too pessimistic, but it’s worth pointing out that % drops are larger than % gains, so a 5.5% gain, especially from the recent lows, is less significant than it would usually indicate through the course of normal trading...

Yeah and that is ~5% of the lower figure. It's not overly pessimistic to suggest that it's not that great.

But on the heels of what we saw overnight and into this morning, it's at least a small glimmer that things went down further than they should have. Time will tell, and it wouldn't be first time you saw a bit of a rally after a decline and then it really cratered (have a look at the S&P over the last few weeks if you're not sure what that looks like...)

OldDutch · 03-09-2020, 10:09 PM

Just curious about the differences between 1998-99 Calgary when WTI was around $15 (even hit $13) and today. Oil companies survived back then. I was a high school grad at the time.

Is it the operation type from conventional to SAGD/Mining that changes the game? That there is much less conventional today? Is it that overhead costs in general mean the game is totally different that 20ish years ago.

Just curious to get perspective. I remember reading the Herald back then and seeing oil go over $20 and it was good times.

peter12 · 03-09-2020, 10:13 PM

Yeah I'm wondering about this too. What's changed? Expenditures? Costs?

chemgear · 03-09-2020, 10:37 PM

20 years of inflation?

keenan87 · 03-09-2020, 10:47 PM

Quote:

Originally Posted by chemgear

20 years of inflation?

Also, there isn't a lot of "conventional" or easy to access oil left.. so gotta spend more to extract through fracking etc.

burn_this_city · 03-10-2020, 07:38 AM

The Russians and Saudis are back talking apparently, with the Russians meeting their oil companies this week. Hopefully they make a deal and everyone else keeps capex down to balance the market by fall.

Leeman4Gilmour · 03-10-2020, 09:05 AM

WTI is up, but WCS is still getting hammered.

https://oilprice.com/oil-price-charts

It's a 9 hour delay, so perhaps it's not as bad as I'm reading, but $16 is no good. That's $10.70 in 1999 $

CliffFletcher · 03-10-2020, 09:09 AM

Quote:

Originally Posted by OldDutch

Just curious about the differences between 1998-99 Calgary when WTI was around $15 (even hit $13) and today. Oil companies survived back then. I was a high school grad at the time.

The revival of energy companies (and Alberta's economy) in the 90s was kickstarted by natural gas.

Lubicon · 03-10-2020, 09:21 AM

Quote:

Originally Posted by GGG

Debt is always a problem and covenants that are associated with it. Though the big guys should be immune to that. They are probably concerned with Dividend cuts.

It’s all the service guys that end up losing big. With the price the way it is production expansion doesn’t make sense so any active drilling is likely deferred until there is more certainty.

Maybe it's because this is the industry I am in but to me this is the bigger issue. The service companies (where most of the jobs are) are the ones getting killed by the slowdowns. And when they disappear there is no way for the operators to ramp back up when prices recover. It's not like we can flip a switch and go back to normal when prices recover - there are no trained personnel left to work whatever equipment is left that hasn't rusted out or left the country. Already several of our clients have cancelled or scaled back their drilling programs for the remainder of the year. There may not be much of an uptick in activity coming out of break up.

Quote:

Originally Posted by CliffFletcher

The revival of energy companies (and Alberta's economy) in the 90s was kickstarted by natural gas.

Good point. Right now oil and gas are both in the toilet (gas has been that way for quite some time now).

Flash Walken · 03-10-2020, 09:41 AM

Quote:

Originally Posted by CliffFletcher

The revival of energy companies (and Alberta's economy) in the 90s was kickstarted by natural gas.

to reach our climate goals, gas is going to be incredibly important and should be something to buoy the province in the future.

OldDutch · 03-10-2020, 10:24 AM

Quote:

Originally Posted by chemgear

20 years of inflation?

Thanks.

$15 oil in 1999 is $22 today.

My question is why the sheer panic today when there was far less to none 20 years ago.

Prices are approximately the same with inflation.

crazy_eoj · 03-10-2020, 10:41 AM

Quote:

Originally Posted by OldDutch

Thanks.

$15 oil in 1999 is $22 today.

My question is why the sheer panic today when there was far less to none 20 years ago.

Prices are approximately the same with inflation.

Marginal cost of production is much higher today.