Drill

Government Oil Co. vs Public Oil Co.

Government Oil Co. vs Public Oil Co.

Or it could be that since no one directly controls the prices and there are many people with differing ambitions all attemting to influence the price at the same time, you will get large fluctuations.

I still maintain the war in Iraq is the root cause of the oil spike.

John,

Would you as a company take the risk? Would you rather have the U.S. with a vested interest in Iraq production and good relations, or China? After all these are big reserve numbers. Is this securing furture reserves?

Our companies can not compete with foreign national oil companies. Different agendas.

Larry


Iraq invites oil investment but the majors stay away

Iraq is expected to invite bids to develop dozens of its oil fields this week, but the world's oil majors are still shunning the country. It will unveil its first licensing round since the war ended over five years ago.

The Iraqi oil ministry wants the big oil companies to contribute major investment, personnel and expertise to boost production. But the majors are refusing because the ministry is not offering production-sharing agreements that allow them to add Iraqi oil to their reserves and make more profit the more oil they pump.

Instead, on offer are limited 'technical service agreements' which pay a fixed amount to companies and involve training Iraqis overseas, providing equipment, scoping and consultancy services.

So far no oil major has stationed staff in Iraq because of the security situation - and because the financial rewards are not big enough. The oil ministry is expected within days to award six two-year service contracts to develop six giant fields to Shell, BP, ExxonMobil and Total.

Iraqi government fuels 'war for oil' theories by putting reserves up for biggest ever sale

The biggest ever sale of oil assets will take place today, when the Iraqi government puts 40bn barrels of recoverable reserves up for offer in London.

Access is being given to eight fields, representing about 40% of the Middle Eastern nation's reserves, at a time when the country remains under occupation by US and British forces.

Two smaller agreements have already been signed with Shell and the China National Petroleum Corporation, but today's sale will ignite arguments over whether the overthrow of Saddam Hussein was a "war for oil" that is now to be consummated by western multinationals seizing control of strategic Iraqi reserves.

There is no precedent for proven oil reserves of this magnitude being offered up for sale, said Muttitt. "The nearest thing would be the post-Soviet sale of the Kashagan field [in the Caspian Sea], which had 7bn or 8bn barrels." [** Russia solved this by controlling Georgia**]

"Why choose Shell when you could have chosen ExxonMobil, Chevron, BG or Gazprom?" he asked. "Shell appears to be paying $4bn to get hold of assets that in 20 years could be worth $40bn. Iraq is giving away half its gas wealth and yet this work could have been done by Iraq itself."

The Baghdad government says it aims to increase crude oil production from 2.5m barrels a day to 4.5m by 2013, but faces internal opposition from regional governors and political opponents.


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Great articles.

My guess is China National Petroleum Corporation will step-up to get a presents in the chance Iraq would have problems and they could secure the reserves for China. Public comporation must look to profits to the stock holders vs a foreign government controlled oil company that looks at securing production and reserves for their countries future. Basically Iraq may be choosing the direction of their country today. Future relactions/interaction with Democracy influence vs Communist.

Interesting! Looking at the negative side, the war was for oil. On the positive side the war gave a chance for a stable capitalistic government in that you are adding dollars for infastruture & economic growth for the country and raising the standard of living for the people. It is hard to hold your people down when building a strong economy and give them the chance of ownership in associated private business. China has a problem balancing a "control of their people", vs the thousands of people in China that now have money because of the "trickle down dollars" generated by the export of capital goods.
 
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Interesting! Looking at the negative side, the war was for oil.

I think deep down everybody always knew that.

I understand perfectly the unwillingness for our oil companies to shy away from agreements in Iraq for no other reason than the risk. Risk to their personnel, risk to their equipment, risk that the oil will become renationalized. After all, the only reason they even have the opportunity to bid for these contracts is because we started a war with them.

I'm sure they harbor no small amount of resentment of us for killing their people and destroying their country and would like to see their government get companies to rebuild and modernize their oil infrastructure then renationalize it and kick them out.

Also, in keeping with my argument that the oil price spike is solely the result of a war, making an agreement like this would make the assets whichever company buys, decrease in price depending on the SOFA, which is still unsigned. Another risk that would need to be priced in.

I'm looking for oil to drop below $60 a barrel in the next few months, eventually heading below $40 (inflation adjusted) within the year. I'll get out of DTO somewhere between those points unless I see a better opportunity before that.
 
I began short selling USO in July (post 150) I switched to buying the Exchange Traded Fund DTO when they put limits on short selling (9/18/08). I started selling my DTO today. I still believe crude prices will fall further, but more slowly and I think their are other opportunities to move into. If anyone followed my suggestion I just wanted to say I'm out of it now.
 
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I began short selling USO in July (post 150) I switched to buying the ETF DTO when they put limits on short selling (9/18/08). I sold all my DTO today. I still believe crude prices will fall further, but more slowly and I think their are other opportunities to move into. If anyone followed my suggestion I just wanted to say I'm out of it now.

John,

You were right. How low is this going to go. Crude oil hit $47 today a 3 1/2 year low. In August 2004, oil hit $45 and held steady.

Does anyone believe the oil companies have any controll over price?

Oil prices fall to 3½-year lows
 
What you need to know about oil depletion

What you need to know about oil depletion

Doing the numbers: what you need to know about oil depletion

Earlier this week, the Financial Times leaked the International Energy Agency’s figures that show the rate of decline in production of the 400 largest oilfields in the world - and they concluded that without large scale, above normal investment, the annual decline will be 9.1%.

It is hard to understand how important that number is, particularly given the situation we are in right now. In an excellent essay on the subject, Richard Heinberg observes,

“Considering regular crude oil only, this means that 6.825 million barrels a day of new production capacity must come on line each year just to keep up with the aggregate natural decline rate in existing oilfields. That’s a new Saudi Arabia every 18 months.”

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Great article and information everyone needs to understand.
 
Larry, I think crude oil prices will continue to fall until they reach their historic levels. That would be about 25-30 dollars a barrel, inflation adjusted price. I still maintain the war is the cause of the oil price spike and that the war is now functionally over because we don't have any legal (UN resolution) right to be in Iraq after Dec. 31 of this year without the express permission of the Iraqi government. The DTO stock I touted (Deutch bank double short oil)went from $38 dollars a share when I first mentioned it in this thread, to $120 a share in 3 months. I finished selling out of it at $103 and $108 a few days ago and it jumped after that. I expect it to be even more volatile in the next 2 months and hope to buy back at $95- $100 and ride it a bit further.

All that crap about peak oil and dwindling supplies and declining output is propaganda to keep people from rebelling over the prices, and to manipulate people into allowing offshore and wilderness drilling. I'm not saying there is no truth to the assertions, just that we are not anywhere near the time where it will come into play in a orderly marketplace. Wartime is not an orderly marketplace for oil.

The declining output argument ignores new wells, smaller wells, and new technology. It's the same as the BS argument about refiners. Sure there are fewer numbers of them, but they closed them because the remaining ones produced more and better product, cheaper. This country uses more gas now and it is supplied by about half the refiners we had years ago.

Where's all the people that claimed we needed to drill our way out of high gas prices? Where's all the people that wrongfully claimed the high gas prices were because of liberals not allowing enough refineries?

The fact is, the war caused the high gas prices and was a major contributor of the recession we're in now. It caused it because:

1. The costs of the war directly and indirectly have pushed the country to near bankruptcy. bush will leave office having more than doubled (and probably tripled) the the sum total of all the debt left him by every other president this country ever had !! . If instead of fighting the war, we instead simply gave 1 million dollars to the head of every household in Iraq we would have spent less money than we've already spent. About 1/8 as much as the war is expected to cost by the time we're done.

2. The increased costs of gas for all Americans amounted to one of the biggest tax increases of all time. In July I'd fill my tank about once a week and it cost me $80. Before the war it cost me $20 and now it's about $30. $60 a tank times 4 tanks a month times 12 months a year equals almost $3000 a year!! Those increases were paid by every driver in nearly every country in the world, and every factory, and every airline, and every shipper, etc. Add to that the fixed income/mortgage meltdown, and now the whole world's in trouble.
On the upside, I now fill up for $50 less than July and that means I now have more money to spend, same as everybody else in the world, so we can start to see sign's of a recovery.
 
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Larry, do you know anything about Pioneer Natural Resources? The stock ticker is PXD. It's a smaller independent oil and gas producer. The stock looks cheap right now.
 
Larry, do you know anything about Pioneer Natural Resources? The stock ticker is PXD. It's a smaller independent oil and gas producer. The stock looks cheap right now.

John,

Former Boone Pickens old company Mesa that got over leveraged when he was doing hostile take overs. After NGP purchase Mesa they rename the company Pioneer Natural Resources, and Ken Hersh fired Boone. The good properties in natural gas have probably been stripped out and sold.

http://www.buyoutsconferences.com/buyouts_texas/expert_speakers/kenneth_hersh.aspx

http://www.rotaryforum.com/forum/showthread.php?p=241898


Boone is back at it again. Buying companies high in natural gas.

http://www.gurufocus.com/news.php?id=49588
 
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Rig count

Rig count

Kansas Rig count was 112 rigs turning to the right the first of December.

Just got off the phone this afternoon with an Oil & Gas reporting service. We have 28 rigs drilling today down 84 rigs from December. 45 rigs are in the yards and 31 rigs are waiting on contracts (operators put on hold).

Kansas is mostly independent companies with private investors. It was thought in January at NAPE people were holding off investing until the Obama admin announced their budget and tax programs.

Today we started hearing details on taxes that affect the oil industry and investors.

Larry

Obama's Budget: Almost $1 Trillion in New Taxes Over Next 10 yrs, Starting 2011February 26, 2009 12:00 PM

President Obama's budget proposes $989 billion in new taxes over the course of the next 10 years, starting fiscal year 2011, most of which are tax increases on individuals.

1) On people making more than $250,000.
$338 billion - Bush tax cuts expire
$179 billlion - eliminate itemized deduction
$118 billion - capital gains tax hike
Total: $636 billion/10 years

2) Businesses:
$17 billion - Reinstate Superfund taxes
$24 billion - tax carried-interest as income
$5 billion - codify "economic substance doctrine"
$61 billion - repeal LIFO
$210 billion - international enforcement, reform deferral, other tax reform
$4 billion - information reporting for rental payments
$5.3 billion - excise tax on Gulf of Mexico oil and gas
$3.4 billion - repeal expensing of tangible drilling costs
$62 million - repeal deduction for tertiary injectants
$49 million - repeal passive loss exception for working interests in oil and natural gas properties
$13 billion - repeal manufacturing tax deduction for oil and natural gas companies
$1 billion - increase to 7 years geological and geophysical amortization period for independent producers
$882 million - eliminate advanced earned income tax credit

Total: $353 billion/10 years
 
Venezuela says signs new $16 billion China oil deal

President Hugo Chavez said on Wednesday Venezuela signed a $16 billion investment deal with China over three years to raise oil output by several hundred thousand barrels per day in the OPEC member's Orinoco belt.

Last week, Venezuela and Russia formed a joint venture to develop the Junin 6 field with a $20 billion investment. Venezuela says the project will produce up to 450,000 bpd
 
Snapshots from China

Interesting trip to Chinese cities: Beijing, Shenyang, Changchun and Jilin City.


There are a few statements that I found interesting.

In Beijing, it occurred to me that Chinese leader Deng Xiaoping’s famous saying, “I do not care if it is a black cat or a white cat as long as it catches mice” (meaning he did not care if policies were traditional Chinese Communist or market capitalism as long as they produced jobs and prosperity) had a long-term implication no one in the dictatorship understood.

If the thousands of people in the Forbidden City were now productive cats who were creating wealth and competing in a market economy, they were going to be harder and harder to govern.

The economic pressure the Chinese dictatorship feels to continue creating jobs can be captured by the fact that they need 24 million new jobs this next year just to break even.

Their fear is that without jobs unrest will grow and that historically in China unrest can rapidly become very destabilizing. This focuses their energy on jobs and the economy in a way no American politician can fully appreciate.


Bottom line, China has to work deals & increase energy reserves as their desire for economic growth requires energy.
 
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Keep going guys, I enjoy reading.
Will refrain from posting cause I may excite Preparation H Mike and he can close this thread too.
thanks
Heron
 
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