And there was much rejoicing in the land.... Gas Prices

[GrayStangGT]

People were just getting rolling again out here too.

[Trip McNeely]

Good time to work for a pipeline company.

[Captain Crawfish]

Steep declines in oil prices usually precede what? History usually repeats

[Broncojohnny]

There are some that'll weasel extra loans and get back out there. The amount of overextended companies operating in that field is staggering.

Once the rates get high enough that party ends. The spreads on junk are already very close to where they were when oil was at the bottom months ago. It is going to be harder to keep the boat floating this time.

On a positive note it looks like you guys might be able to get some Raptors after all...

[Broncojohnny]

If we get Raptors, who cares about anything else?

I just want to buy all of the Colt Pythons the oilfield guys have been buying up.

[Captain Crawfish]

Cheaper oil?

I guess we will see.

[Broncojohnny]

Good time to work for a pipeline company.

It is, the pipeline companies are still catching up on the infrastructure that natural gas needs.

[Trip McNeely]

It is, the pipeline companies are still catching up on the infrastructure that natural gas needs.

Absolutely. As long as I have been in this business I have experienced its very cyclical nature. Especially up here where there isn't much infrastructure, but such a huge market. Hell we are starting to reverse flow and run lines down south which was unheard of 10 years ago. We also export our LNG, so that's a plus.

Not only that, but there are several Co-Gen plants being built and old ones converted to NG. Shell is working on a cracker plant, which basically turns NGL's into plastic products for manufacturing. Lot's of good future for NG. Just too much of it and no where to run yet. I figure by 2017 there will be a great bull in the market. The stronger companies who are frugal and smart will thrive after being in survival mode for so long.

[Strychnine]

Steep declines in oil prices usually precede what? History usually repeats

You tell us what happened at the bottom of each arrow. I'm not getting it...



1868 - ?





1874 and 1879 - ? and ?





1931 - ?





1986 - ?





1999 -





Late 2001 - This was the GWOT kickoff





2008 - ?

[Snatch Napkin]

Ah... orange arrows are to follow.

This man gets it.

[Strychnine]

So I met SVO's dad this week.

I got to have drinks and some dinner conversation with a guy who is now a geopolitical consultant to the energy industry. He is a retired Marine Corps Colonel (27 yrs), Top Gun trained pilot who did aggressor training for the US military and then had a private company that also did aggressor training. He's flow F14, F18, A6, KC-130, etc... COO of an oilfield supply company, cattle rancher,

Here are SMALL pieces of this guy's resume just from his USMC time... his post military is equally impressive:

Colonel, U.S. Marine Corps and Commanding Officer
Commanded over 1,500 Marines and Sailors in a complex operational aviation organization during a time of war. MAG-41 encompassed a Group headquarters staff, two operational aircraft squadrons (12 F/A-18A+ Hornet aircraft and 14 KC-130T Hercules aircraft), an Aviation Logistics Squadron (intermediate aircraft maintenance capability), an Air Traffic Control Unit, and an Aviation Support Engineering Unit. Flew the F/A-18 and KC-130 aircraft while in command.

Marine Corps Advisor and Air War College Faculty
Served as an Air War College Faculty member in the Departments of Joint Military Operations and Leadership and Ethics.

Chief of Operations, Plans, and Policy, European Division, Defense Threat Reduction Agency

Air War College
Master of Strategic Studies, Strategic and Political Studies, Distinguished Graduate

Flew 45 F/A-18 combat missions during the Gulf War, dropping 128,000 lbs of ordnance...

This is one of those dudes who fucking COMMANDS a room when he's speaking.

His insight on China, Russia, and the Middle East was pretty interesting. Summary:

The US saving $180 billion on energy this year is nothing but a false boost for rest of economy.
If Russia doesn't get froggy in the next 5 years they won't have the ability to. Demographically and economically their time is running out.
In the middle east Saudi Arabia is a big watchout. With their under the table backing of terrorists groups (because they have no military to speak of), and the unrest with other groups being funded by Iran... it could get very interesting as they will start to need higher oil prices to balance their budget. With Iran supporting the Shia and Saudi likely backing ISIS a proxy war cannot be ruled out. ISIS is the biggest thread to US national security since WWII and our current strategy will prove to be completely ineffective.
China is seeing their slowest growth rate in 24 years

[Ruffdaddy]

So I met SVO's dad this week.

I got to have drinks and some dinner conversation with a guy who is now a geopolitical consultant to the energy industry. He is a retired Marine Corps Colonel (27 yrs), Top Gun trained pilot who did aggressor training for the US military and then had a private company that also did aggressor training. He's flow F14, F18, A6, KC-130, etc... COO of an oilfield supply company, cattle rancher,

Here are SMALL pieces of this guy's resume just from his USMC time... his post military is equally impressive:




Flew 45 F/A-18 combat missions during the Gulf War, dropping 128,000 lbs of ordnance...

This is one of those dudes who fucking COMMANDS a room when he's speaking.

His insight on China, Russia, and the Middle East was pretty interesting. Summary:

The US saving $180 billion on energy this year is nothing but a false boost for rest of economy.
If Russia doesn't get froggy in the next 5 years they won't have the ability to. Demographically and economically their time is running out.
In the middle east Saudi Arabia is a big watchout. With their under the table backing of terrorists groups (because they have no military to speak of), and the unrest with other groups being funded by Iran... it could get very interesting as they will start to need higher oil prices to balance their budget. With Iran supporting the Shia and Saudi likely backing ISIS a proxy war cannot be ruled out. ISIS is the biggest thread to US national security since WWII and our current strategy will prove to be completely ineffective.
China is seeing their slowest growth rate in 24 years

Sounds like an awesome guy. Ive been thinking that the oil prices will only come back for some geopolitical conflict.

Oh and Saudi definitely has a military...and they have a massive amount of US equipment for both SANG and the royal forces.

[Strychnine]

So I met SVO's dad this week.

I got to have drinks and some dinner conversation with a guy who is now a geopolitical consultant to the energy industry. He is a retired Marine Corps Colonel (27 yrs), Naval Fighter Weapons School (TOPGUN) trained pilot who did aggressor training for the US military and then had a private company that also did aggressor training. He's flown F14, F18, A6, KC-130, etc... COO of an oilfield supply company, cattle rancher...

Here are SMALL pieces of this guy's resume just from his USMC time... his post military is equally impressive:

Colonel, U.S. Marine Corps and Commanding Officer
Commanded over 1,500 Marines and Sailors in a complex operational aviation organization during a time of war. MAG-41 encompassed a Group headquarters staff, two operational aircraft squadrons (12 F/A-18A+ Hornet aircraft and 14 KC-130T Hercules aircraft), an Aviation Logistics Squadron (intermediate aircraft maintenance capability), an Air Traffic Control Unit, and an Aviation Support Engineering Unit. Flew the F/A-18 and KC-130 aircraft while in command.

Marine Corps Advisor and Air War College Faculty
Served as an Air War College Faculty member in the Departments of Joint Military Operations and Leadership and Ethics.

Chief of Operations, Plans, and Policy, European Division, Defense Threat Reduction Agency

Air War College
Master of Strategic Studies, Strategic and Political Studies, Distinguished Graduate

Flew 45 F/A-18 combat missions during the Gulf War, dropping 128,000 lbs of ordnance...

This is one of those dudes who fucking COMMANDS a room when he's speaking.

His insight on China, Russia, and the Middle East was pretty interesting. Summary:

The US saving $180 billion on energy this year is nothing but a false boost for rest of economy.
If Russia doesn't get froggy in the next 5 years they won't have the ability to. Demographically and economically their time is running out.
In the middle east Saudi Arabia is a big watchout. With their under the table backing of terrorists groups (because they have no military to speak of), and the unrest with other groups being funded by Iran it could get very interesting as they will start to need seeing higher oil prices to balance their budget. With Iran supporting the Shia and Saudi likely backing ISIS, a proxy war cannot be ruled out. ISIS is the biggest thread to US national security since WWII and our current strategy will prove to be completely ineffective.
China is seeing their slowest growth rate in 24 years and they will soon run out of manpower for their massive growth. (1)

In the end we need to look at the current downturn differently than all other downturns in the past. This is not the oil crash of the '80s. The world is fundamentally changing and the energy industry MUST adapt to this... and as usual, a war will change everything overnight.




(1)This might already be starting. China's coal consumption is falling... which is somewhat surprsing given the fact that they produce 48% of the world's coal and consume just over 50% (with the difference coming from Australia)

"Our research finds this latest data out of China reflect a significant government focus on forcing a structural economic shift away from energy-intensive sectors like construction and toward less energy-intensive service and consumer industries."

The US, for the first time in 20 years, brought home more manufacturing jobs than were sent out:

"Sixty thousand manufacturing jobs were added in the U.S. in 2014, versus 12,000 in 2003, either through so-called reshoring, in which American companies bring jobs back to the U.S., or foreign direct investment, in which foreign companies move production to the U.S., according to a study from the Reshoring Initiative. In contrast, as many as 50,000 jobs were “offshored” last year, a decline from about 150,000 in 2003. Why is this significant? 2014’s net increase of at least 10,000 jobs was the first net gain in at least 20 years"

[Strychnine]

The panel discussions I was audience to this week were quite interesting. Here are some high points from a presentation by a Fidelity fund manager.

When it comes to middle east countries and what price/bbl the need to balance their budgets... they're all fucked.
Sustainable level of crude prices for budget balance:
Lybia - $180
Iran - $130
Saudi - $100. They have trillion cash reserves, but this is not sustainable
Opec in general is bust
It's likely that only Qatar, Kuwait, and UAE are sustainable currently.

It's expected that $150 billion will be invested into Iranian oil and gas in the future as sanction are lifted (assuming they don't go full retard)

Energy stocks now, relative to S&P, haven’t been cheaper in almost 100 years
If you isolate oil services and e&p (higher risk components), they are cheaper relative to the market now than at the bottom of the '08 market.

Everyone should be patient - we are in a "healing period" for the oil and gas market. During this time oil could go <$30 but not permanently. Even with Iranian oil the market should stabilize between $40-60 by 2H2016

Shale has permanently transformed the US energy market - there's a shitload of economic gas and it will be prolific for a long time at low prices. It's definitely not a supply constrained market.

It will take $150 billion in infrastructure investment over the next 10 years to get the US to a point where we can really export LNG and one day crude.

Out to 2025 crude will become slightly less important domestically as gas becomes more important to displace coal.



And as usual, regarding the current situation and a "black swan event"... "The longer we’re down here the bigger the risk of something destabilizing"

[Strychnine]

You met him twice?

Shut your face.

Can I blame autocorrect?