Official (Alberta) Oil Discussion Thread

[Slava]

Originally Posted by Fuzz

https://boereport.com/2023/01/23/meg...cted-end-2023/

Nice.

Impossible. I've been told dozens of times on this site that it would never be built and Trudeau bought this specifically to kill it.

[burn_this_city]

Not to throw a bit of rain on the parade, but so long as Russian crude sells for next to nothing to China and India, we will be down to supplying the US west coast, Japan, Korea mainly. Should help close the gap a bit between Brent and WTI discounts, but the differential will remain stubbornly high so long as sanctions remain.

[Lubicon]

Originally Posted by Azure

Do the pipeline operators make more money if the oil prices go higher in a year, or is it a set contracted transport rate?

If they do, could be a good few years ahead as prices are expected to stay higher.

It's been a long time since I worked that side of the industry but at least where I worked it was a fixed rate regardless of oil prices. But that also protects the pipeline when prices are low.

[Mr.Coffee]

Originally Posted by Azure

Do the pipeline operators make more money if the oil prices go higher in a year, or is it a set contracted transport rate?

If they do, could be a good few years ahead as prices are expected to stay higher.

It’ll be on a contract by contract basis but typically in most scenarios it’s based on a fixed toll. I’d be very surprised if there were variable tolls in those contracts but theoretically it’s possible. I just don’t see the producers giving any upside to the pipeline operators, and in my experience it’s very difficult and unlikely to get upside in the contracts as typically pipeline operators/ midstreamers are very risk adverse and don’t want any downside.

[Yoho]

https://twitter.com/user/status/1628781186813407243

Meanwhile in the US.

[GGG]

Originally Posted by Lubicon

It's been a long time since I worked that side of the industry but at least where I worked it was a fixed rate regardless of oil prices. But that also protects the pipeline when prices are low.

The other thing is their are take or pay provisions which charge the tolls regardless of whether you are shipping oil in the pipe.

There is also a regulated rate component to non-pre sold space on pipelines which is based on capital and opex and a % profit margin.

[Ironhorse]

Originally Posted by Yoho

https://twitter.com/user/status/1628781186813407243

Meanwhile in the US.

But, but, we were told there is no business case for LNG!

[Rutuu]

Originally Posted by Yoho

https://twitter.com/user/status/1628781186813407243

Meanwhile in the US.

Alpine macro are great...how did the bot get ahold of this?

[RockLicker]

Curious how bonus season has been at operators this year? Lots of pretty eye popping financial numbers out there, how is that trickling down to the working slobs?

Heard about CNR, would be nice to hear about some big bonuses to balance that mess out.

[Weitz]

Originally Posted by RockLicker

Curious how bonus season has been at operators this year? Lots of pretty eye popping financial numbers out there, how is that trickling down to the working slobs?

Heard about CNR, would be nice to hear about some big bonuses to balance that mess out.

I did hear that CNR had below average bonus. But their raises were more than expected.

[fotze2]

Spartan Delta folks will have all there stuff vest. Nice bonus for them.

[GGG]

Originally Posted by RockLicker

Curious how bonus season has been at operators this year? Lots of pretty eye popping financial numbers out there, how is that trickling down to the working slobs?

Heard about CNR, would be nice to hear about some big bonuses to balance that mess out.

Isn’t CNR just straight stock so the % of salaries don’t change just how the stock performs over the next 3 years is what matters? They all did really well last year when the stock hit record highs. For people with stock based bonuses it’s usually during the year of the profits as opposed to the end of the fiscal year that you get really good bonus.

[Leondros]

Originally Posted by RockLicker

Curious how bonus season has been at operators this year? Lots of pretty eye popping financial numbers out there, how is that trickling down to the working slobs?

Heard about CNR, would be nice to hear about some big bonuses to balance that mess out.

Most E&Ps will have some semblance of a stock option/unit plan for most of their Corporate employees. Take a look at the Company proxies/management information circulars on SEDAR/their websites which should be coming out in the next 2 weeks where it shows their executive compensation payouts. If you look at what those paid out as versus what they were granted 3 years ago you should get a decent idea of the payouts.

Ie. Usually it will say on the proxy what the executive target is - typically 100 - 200%. So if they are making $300K per year its roughly $300K worth of options. If they got paid out $900K if would be 3x their target which trends similar to the rest of the company.

If someone who is not an executive is making $200K and their PSU/Options issued at that time was a 50% target, then they would have $50K worth of options. Going above the logic of the 3x, then they would have had a $150K bonus on the options/PSUs.

Its not a definite science as that targets change by positions and the 3x in our example would be based on individual, company, and stock performance typically. But it would give a rough idea of how the general payouts were this year as most stocks are very much above their issuances in 2020 when it felt the oil and gas industry was ending.

[Weitz]

Originally Posted by fotze2

Spartan Delta folks will have all there stuff vest. Nice bonus for them.

How so? It wasn’t a takeover.

[Weitz]

Originally Posted by GGG

Isn’t CNR just straight stock so the % of salaries don’t change just how the stock performs over the next 3 years is what matters? They all did really well last year when the stock hit record highs. For people with stock based bonuses it’s usually during the year of the profits as opposed to the end of the fiscal year that you get really good bonus.

CNR bonus is stock, options, and cash.

[Zarley]

Interesting that oil and gas producers in Europe were hammered by 'windfall' taxes yet traders (that contribute to price volatility without actually producing a product) were exempted...makes you think.

https://twitter.com/user/status/1641506710622724102

[Leondros]

Originally Posted by Zarley

Interesting that oil and gas producers in Europe were hammered by 'windfall' taxes yet traders (that contribute to price volatility without actually producing a product) were exempted...makes you think.

https://twitter.com/user/status/1641506710622724102

Vitol, Trafi, Gunvor, Glencore, all the them are the same. They make money by moving commodities and finding participants. Ultimately they don't really care where they are finding those commodities or who they sell them to. King of Oil is a great book about Marc Rich as the first Oil Trader and sheds some light on how all of these guys work.

A windfall tax would be moot for these guys as it just gets passed up and down the line and they never get caught holding the ball. Ultimately they will pass it to the producers or the consumers.

The reason they are experiencing record high profits is commodities are as volatile as ever and supply and demand are as complicated as ever globally. It is likely the best time in history to be a trader.

[Delthefunky]

Originally Posted by Azure

The US is making a ton more money by restricting Canadian oil & gas.

The entire anti Canadian oil campaign has been a massive success economically & financially for the US, and for American companies who are now seeing record production & record profits.

Buffet has taken advantage of that I'm sure.

In 5-10 years when they want to build a pipeline from Alaska across Canada we should just say "nah"...

[bizaro86]

Originally Posted by Delthefunky

In 5-10 years when they want to build a pipeline from Alaska across Canada we should just say "nah"...

Alaska has a coastline. They'll never build a pipeline across Canada, they just go to the coast. Also, TransAlaska has like a million+ bbl/d of spare capacity.

[Delthefunky]

More oil ships through the inside passage, what could go wrong. I hope Leonardo DiCrapio will be there scrubbing ducks.