sell! sell! sell!

[PatsFan1283]

SBR pretty much taxed same way as REITs right?

What do you think of the offshore drillers?I mean it isn't like offshore drilling is going away. With equipment, rig costs there is massive barrier to entry in this business and no one is going to disrupt them anytime soon. Just a matter of how much $55 oil kills them.

As far as getting in I wish I could time VDE (vanguards energy ETF) It has lost nearly 1/3rd of its value in 6 months. Problem with most ETFs is they market weight so your essentially just buying the big players. Oil fundamentals just look awful right now though....Independent of Shale, pretty much everyone doesn't want to cut back. At some point I think people will get rich going long RIG or SDRL but that bottom doesn't even seem close now.

Shale boom was basically born out of peak pricing which Saudi's tried to discourage for years. The Saudi's know that they need stable prices to curtail alternative energy (shale being 1 of them)

 

[PatsFan1283]

Another thing about shale is how much of it is available globally? I've heard varying opinions of this but it does seem like it is mostly is a matter of technology issues at the moment. Seems like there is more shale outside the US than inside it.

 

[tiznow]

There is gobs of oil out there problem is most isn't economical unless prices high.. Shale been known for a long ass time... Just like most alternative energy isn't economical unless oil high.... I'm sure people lining up to trade in small cars for SUVs as we speak.. Anyway I digress

Decline rates on shale wells in general huge .. Meaning after few years way more tougher to get it out of ground... Was a near term bubble in financing partially due to cheap QE money and Saudis saying enough is enough.. So gonna snuff them out

Techology costs money/input costs.. Bulk of the technology is applied towards better spotting/pinpointing the places to drill... Not reducing extraction costs/more efficient etc...

 

[PatsFan1283]

yeah probably good time to steal a Prius off the lot if you do a lot of driving.

What do you think of the offshores though? The problem with royalty trusts is they F you in taxes (I know the corp doesn't pay anything but still it is taxed at earned income levels once distributed...atleast REITs you can own them in deferred accts)

Actually what is your opinion on REITs? I know most of them are susceptible to debt (especially retail)

The problem with the ETFs is they are all diversified, can't really just target multi-family or office. I do think multi-family is pretty sound right now from what I understand

 

[tiznow]

No clue on offshore driller rig equipment type too tough a industry to gauge ..

Get depletion deductions on royalty trusts.. Sabine been saying has 8-10 years of oil left since it formed back in early 80s.. Lots of land royalty rights and as price increase along with technology advances long term (obviously big near term noise of late)... More becomes economical... It has no end date unlike most.. End date when the land is spent and producing near nothing royalties..

no clue on reits really...

 

[PatsFan1283]

Stupid question but how do you know it doesn't have 8-10 years left and has no end date? I tried to research this and mostly what I found is if the trust terminates they just sell off land for cash.

 

[eek.]

Hard to say which way anything will go. Oil crashed down in the early 1980s and triggered the stock market boom
Nowadays however, there is China etc and TONS of debt floating around, constipating the system if rates increase

I would guess at 50 for oil and sluggish economic movement

I would also prefer bitcoins over gold

 

[eek.]

The big fly in the pie is renewables. Scotland gets 40% of its power from wind turbines now
They are like Texas donkey pumps, they go 24hrs a day and they make energy money, but unlike a donkey pump a wind turbine never runs dry.
Once you produce 100% of your basic needs you can export energy overseas via interconnectors, or offer new energy hungry industries cheap energy or build up an electrical train/car/ bus transportation system.

Those age old fossil fuel supply and price problems become a thing of the past

 

[eek.]

Official National Grid figures show 43% of Britain’s homes were powered by wind last Sunday

Clean energy produced more power in Scotland than nuclear, coal or gas for the first time

 

[eek.]

The usa china etc will compete with cheaper dirty energy but fossil fuel is finite, whereas renewables dont deplete, its like having a nuclear power station which gets bigger and bigger and runs forever

I suppose its a bit like the tortoise vs the hare

 

[tiznow]

Stupid question but how do you know it doesn't have 8-10 years left and has no end date? I tried to research this and mostly what I found is if the trust terminates they just sell off land for cash.

The trust does not have a specific end date. There are, however, some events that could cause the trust to terminate:
If there are two successive fiscal years In which the Trust's gross revenues from the Royalty Properties are less than $2,000,000 per year,
vote of unit holders (if they'd decide better to just sell the land off vs continue to let others pump oil/natty gas and get a cut)

They do well over 2 mil per month ... Natty gas production been pretty much steady/slight increase shale /advances etc... They on fertile ground in Texas/LA... Every year for past 10+ years their estimated reserves stays about the same... It will end at some point but highly doubtful in our lifetime

 

[tiznow]

Official National Grid figures show 43% of Britain’s homes were powered by wind last Sunday

Clean energy produced more power in Scotland than nuclear, coal or gas for the first time

That's nice 60-70 mil outta 7 billion people get decent amount of power from wind that live in a very windy locale ... Wind can only help with a small fraction of the worlds power needs which keeps increasing ... Nukes cheapest/easiest way to go by far but nobody likes having a plant in their bank yard .. Japan/china/India have no other choice .. Uranium/nuke plays dirt cheap and worth a punt right now too...

 

[tiznow]

The usa china etc will compete with cheaper dirty energy but fossil fuel is finite, whereas renewables dont deplete, its like having a nuclear power station which gets bigger and bigger and runs forever

I suppose its a bit like the tortoise vs the hare

fossil fuel theoretically finite but not really ... More of it boils down to economics ... At some point it will get too expensive/hard to extract due to supply limits to compete with other energy sources but that day won't be seen by any of us ...

 

[tiznow]

Market near term flooded with oil .. saudi just protecting its market share they still run the show.. OPEC guys can't keep things stable on home front with sub 60 oil long term... But they will to take the hit to halt NA exploration.. as most uneconomical below 60 and many that depend on high oil to be profitable funded by low interest debt... That cant be paid back unless prices high...Current budgets in ME don't allow sub 60 oil anymore to keep the populace from uprising... It's not a cost of production thing it's cost of a few people owning the countries only wealth source and distributing it to the masses that is always increasing...

obviously my 60 is random number and way more complex but...

 

[tiznow]

World population roughly increases a UK/Scotland per year ... 75 mil...

 

[tiznow]

Also wind power isn't free once built it has operating expenses/upkeep etc... Most alternative energy is bunk and totally uneconomical without government subsidies.. Especially with oil sub 60....

nukes only obvious way to go for bulk of worlds needs... Has Clean emissions too for the global warmists...

------------
http://instituteforenergyresearch.org/wp-content/uploads/2013/10/Giberson-study-Final.pdf


The NREL Cost of Wind Energy Review employed an $11 per MWh estimate for annual operating expense, with possible values ranging from $9 to $20 per MWh.22 Carrying over the adjustment in capacity factor from 38 percent to 33 percent but keeping other assumptions the same results in a slight increase in the estimates operations and maintenance cost, from $11 per MWh to $12 per MWh. Changes in the discount rate do not affect annual operating expenses.
The estimate of $11/MWh may also be biased downward. The most recent Wind Tech Report indicated a $10 per MWh average cost for annual operating expenses for projects built since 2000, but it added that this estimate is likely below actual average operation and maintenance costs. The Wind Tech Report stated that most wind power operators consider operating and maintenance cost data information to be commercially sensitive and prefer not to disclose it. As a result, the annual operating cost estimates reflect only one-fifth of the capacity included in the installed capacity cost calculation.23
In addition, Berkeley Labs reported that the data collected was not standardized across sources. Some operators reported operation and maintenance costs including insurance, local taxes, administrative overhead, wages and materials, but in other cases the data submitted included only wages and materials.
Significantly, the two wind power projects for which Berkeley Lab has the most complete information showed annual operation costs averaging over $21 per MWh, about twice the $11 average employed by NREL.24 If a more reasonable estimate of the installed cost of capital is $88 per MWh and operating costs are $21 per MWh, we can estimate a reasonable LCOE for wind power near $109 per MWh rather than NREL’s estimate of $72 — a more than 50 percent increase.

 

[PatsFan1283]

Battery improvements the best way to power homes better. Musk building that plant in Nevada is basically betting on that not happening though, sounds like they're just gonna mass produce lithium.

 

[snoop]

I'm thinking we won't see any meaningful resistant until $40s level, WTI/Brent $45/$48.

 

[PatsFan1283]

Me either really....The Saudi's aren't going to cut production until they can achieve their goal.

 

[snoop]

COP is a real temptation, but maybe I can add them @$55 instead of $62.