Premium said:

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So what effect will Harvey have on oil and gas? Oil isn't jumping at all...

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Most of the production lies south of Louisiana and as of now they are looking ok. If the storm were to head due north or northeast, then you might see some action. Shell, Anadarko, and XOM have curbed some production as a precaution. The refiners in CC will be more impacted than anyone. Traders have been buying up gasoline and selling crude.

nu awlins ag said:

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Premium said:

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So what effect will Harvey have on oil and gas? Oil isn't jumping at all...

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Traders have been buying up gasoline and selling crude.

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Which is a great trade.

Yup. Some of those refiners COULD be out/down for a bit if the storm is what some are saying. Higher fuel, lower oil.

Was at the Cheniere LNG in Sabine/Cameron today looking at some work. Never been there. That facility is impressive.

Carry on...

Goose06 said:

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Untimed Down said:

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nu awlins ag said:

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Premium said:

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So what effect will Harvey have on oil and gas? Oil isn't jumping at all...

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Traders have been buying up gasoline and selling crude.

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Which is a great trade.

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Some of the traders are making this trade, the other half are making the reverse trade. Trading is a zero sum game...

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That's a great point, but don't limit it to trading. All commercial activity is a zero sum game, isn't it? Somebody extracts a profit from somebody else, right? It all depends on how big you want to make the circle of who sells and who buys.

Look, the poker game at your local country club is a zero sum game -- winners extract value from losers in a straight up transaction in a well circumscribed universe of participants.

Any commodity trade is a bit more complicated, largely because of valuation of risk for each market participant.

The guys making the reverse trade, in this case, might do so to mitigate risk inherent in their underlying position.

I can guarantee you that the guys on the back of the crude for gasoline trade didn't enter into the trade just to give their counterparties money. Somebody bought risk and gained value, somebody derisked and gave value. The two aren't mutually exclusive at all.

Buck Compton said:

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No, all commercial activity is not a zero sum game. That is actually patently false in regards to economic activity in a capitalistic society.

But in a closed financial market, a trade between two parties at a set price at a set point in time - there is a clear winner and loser for that specific transaction.

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For clarity in why it isn't true in a capitalistic society (not that it truly matters):

• Company A extracts raw materials (or creates IP, etc.)
• Company B buys raw materials at cost plus a markup, then refines or transforms them in some way (value-added activities)
• ...
• ... there can be as many of these intermediate steps as you need in the value chain, with each company earning a profit
• ...
• Company C performs final value add activities and sells a final product to a consumer (who pays for it with earnings from one of these steps (included in the cost of one of these steps)

The reason companies originally began to vertically integrate was to capture the additional value at each step - not zero sum.

Untimed Down said:

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Goose06 said:

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Untimed Down said:

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nu awlins ag said:

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Premium said:

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So what effect will Harvey have on oil and gas? Oil isn't jumping at all...

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Traders have been buying up gasoline and selling crude.

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Which is a great trade.

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Some of the traders are making this trade, the other half are making the reverse trade. Trading is a zero sum game...

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That's a great point, but don't limit it to trading. All commercial activity is a zero sum game, isn't it? Somebody extracts a profit from somebody else, right? It all depends on how big you want to make the circle of who sells and who buys

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That's actually not true. An exchange of goods and services is not a zero sum game. It's one of comparative advantage where both are relatively happy with the outcome. It's like buying an apple at a grocery store. 1) it takes more effort than its worth to grow an apple tree for one apple, 2) it's probably cheaper to buy it a grocery store than to grow it yourself. They get money which is what they wanted, you get an apple for less money and effort than you yourself could do it, which is what you wanted. This is a foundation of economic exchange which allows economies to be built and quality of life to improve. The idea that there is a "winner and loser" in every financial transaction is just wrong otherwise there would be no purpose for a business to exist. An example of this in the oil industry would be how can an oil company make money off they have to buy all the goods and services needed to drill and produce a well? Because the oil company can make money by doing such a thing, does that mean all the suppliers of goods and services were unable to make money doing what they specialize in? Then it's not zero sum.

Trading on the other hand is not economic activity; it is in fact zero sum. That doesn't mean it serves no purpose; the actual point of trading is to help shield producers and consumers from low volume or local supply shocks by ensuring buyers and sellers can get matched up in a global marketplace... therefore stabilizing price. But trading *is* different than all commercial activity.

Side note. Would someone please educate The Weather Channel people the correct terminology for the offshore oil industry? Was watching it this morning with my wife, whose a petroleum engineer, and the statements Cantore was saying were so off the wall it wasn't even funny. I guess to the normal Joe it sounds "cool" but to us in the industry it sounds so stupid. Sorry, had to rant.....

What did he say?

Kept calling the "drilling rigs" when they are production platforms. He was talking about all those "drilling rigs" in the gulf. At least get some of it right.

One phone call to find out is all it takes....that all, just one.

TommyGun said:

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I think the only folks who call them production platforms are those of us who work in the industry. We'd have to educate tens of millions of people in order to change the common nomenclature. Heck, probably half of the people in the industry struggle to get the terminology right.

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I know, but it bugs the crap out of me when they do that. Hell CNBC commonly refers to oil companies as "fracers". "These shale fracers are really blah, blah, blah....". Really? Damn, you cover the industry and can't get the terms straight? Drives me crazy.....

It does bug those in different industries as well. I know it's minor.....

Untimed Down said:

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74OA said:

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All true, but the big energy companies wouldn't be rushing to complete five new export terminals at a cost of billions if they didn't see a robust overseas market for LNG. In addition to strongly growing demand in China, South America (both facilitated by the new Panama Canal) and non-pipeline countries in Europe (which is adding LNG import terminals), US domestic gas consumption appears to be growing by leaps and bounds, too: GAS

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Don't fall into the trap of thinking that if a big multinational thinks it's a good investment that the deal is bulletproof. There are plenty of multi-millionaires or more who have made their money taking advantage of the fact that the big energy companies reach for the big, high-capex fruit like Tyrannosaurus Rex and forget that their arm are too short to get all of the fruit off the tree.

XOM, Qatar, COP, Total, BP, Shell, BG, CVX all spent billions of dollars to import LNG into the US. Once Brother George Mitchell's concept of horizontal drilling into shale formations with precision and hydraulic fracturing was proven up -- and ***oshima got wiped out by an earthquake -- US energy prices fell so hard and so fast versus alternatives that there was no arbitrage between extracting worthless gas from some reservoir in some miserable backwater for export to the US. The national champions spent BILLIONS of dollars every year for the option to bring LNG into the US but never made a nickel to offset those fixed costs.

Charif Souki, who could sell ice to Eskimos and condoms to cloistered nuns, has made money on the LNG import craze in the 2000s and now the export craze. His customers are the importers who don't have local resources -- the idiot Spaniards, JKT, India -- all demand side. I include Shell via BG as demand side because of their JKT obligations and the gefucht supply deals they have with Equitorial Guinea, Nigeria and Egypt.

That's probably too much inside baseball, so let me just put this on the table: global LNG demand is a function of national GDP adjusted for carbon and filtered through infrastructure. Supply has historically been sourced from miserable backwaters in which methane is a waste product, only present because of extraction of higher value commodities like NGLs, crude or coal. Look at RasGas and Qatar and the Pars asset, Trinidad or Queensland. Baltics, Snoevit, Sakhalin.

Of those resources, all are remote without viable pipeline gas markets. US produces 70 bcf/d and burns less than that -- but retire a dozen coal plants and have an average winter that puts wind and solar out of the mix, then staple on a trailing hot summer -- US gas prices will make export absolutely inviable.

Which opens up another arbitrage opportunity. LNG can be a fun business if you're fixed costs are low, your charter brokers are good and you bribe the JKT cartel enough to see their tenders. The full path economics are tough to solve over any horizon.

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Untimed Down said:

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74OA said:

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All true, but the big energy companies wouldn't be rushing to complete five new export terminals at a cost of billions if they didn't see a robust overseas market for LNG. In addition to strongly growing demand in China, South America (both facilitated by the new Panama Canal) and non-pipeline countries in Europe (which is adding LNG import terminals), US domestic gas consumption appears to be growing by leaps and bounds, too: GAS

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Don't fall into the trap of thinking that if a big multinational thinks it's a good investment that the deal is bulletproof. There are plenty of multi-millionaires or more who have made their money taking advantage of the fact that the big energy companies reach for the big, high-capex fruit like Tyrannosaurus Rex and forget that their arm are too short to get all of the fruit off the tree.

XOM, Qatar, COP, Total, BP, Shell, BG, CVX all spent billions of dollars to import LNG into the US. Once Brother George Mitchell's concept of horizontal drilling into shale formations with precision and hydraulic fracturing was proven up -- and ***oshima got wiped out by an earthquake -- US energy prices fell so hard and so fast versus alternatives that there was no arbitrage between extracting worthless gas from some reservoir in some miserable backwater for export to the US. The national champions spent BILLIONS of dollars every year for the option to bring LNG into the US but never made a nickel to offset those fixed costs.

Charif Souki, who could sell ice to Eskimos and condoms to cloistered nuns, has made money on the LNG import craze in the 2000s and now the export craze. His customers are the importers who don't have local resources -- the idiot Spaniards, JKT, India -- all demand side. I include Shell via BG as demand side because of their JKT obligations and the gefucht supply deals they have with Equitorial Guinea, Nigeria and Egypt.

That's probably too much inside baseball, so let me just put this on the table: global LNG demand is a function of national GDP adjusted for carbon and filtered through infrastructure. Supply has historically been sourced from miserable backwaters in which methane is a waste product, only present because of extraction of higher value commodities like NGLs, crude or coal. Look at RasGas and Qatar and the Pars asset, Trinidad or Queensland. Baltics, Snoevit, Sakhalin.

Of those resources, all are remote without viable pipeline gas markets. US produces 70 bcf/d and burns less than that -- but retire a dozen coal plants and have an average winter that puts wind and solar out of the mix, then staple on a trailing hot summer -- US gas prices will make export absolutely inviable.

Which opens up another arbitrage opportunity. LNG can be a fun business if you're fixed costs are low, your charter brokers are good and you bribe the JKT cartel enough to see their tenders. The full path economics are tough to solve over any horizon.

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Interesting and such uncertainties are precisely why I asked about a LNG-focused mutual fund to spread the investment risk. Question: Regardless of whether LNG producers primarily sell internationally or to a burgeoning domestic market, they're still making money and being profitable either way, so there should be stock market products available which allow the ordinary investor to participate at reasonable risk, right? I originally asked if anyone had recommendations as to what those might be.

http://www.marketwatch.com/story/exco-resources-inc-borrows-remaining-undrawn-amount-of-its-amended-and-restated-credit-agreement-2017-09-07


Exco Resources next to file Chapter 11?

Ever since their Eagle Ford deal fell through, this has appeared to be inevitable.

Sanchez seeing a big bump after-hours trading.

ColinAggie said:

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Sanchez seeing a big bump after-hours trading.

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wonder what was announced.

There has been a large increase in oilfield traffic in LaSalle County over the past month or so.

ColinAggie said:

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Sanchez seeing a big bump after-hours trading.

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or not....

yup

HDY drilled another dry hole off west Africa

Shocker

Dry....or full of gas? Same thing, I guess.

Wow...HDY down 93% on Friday.

RK said:

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Dry....or full of gas? Same thing, I guess.

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They didn't even mention potential gas. There is a press release out there.

MAROON said:

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http://www.marketwatch.com/story/exco-resources-inc-borrows-remaining-undrawn-amount-of-its-amended-and-restated-credit-agreement-2017-09-07


Exco Resources next to file Chapter 11?

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That has been in the works for a while.

nu awlins ag said:

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MAROON said:

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http://www.marketwatch.com/story/exco-resources-inc-borrows-remaining-undrawn-amount-of-its-amended-and-restated-credit-agreement-2017-09-07


Exco Resources next to file Chapter 11?

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That has been in the works for a while.

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Since around 2011 or 2012...

Yep.