Hi All If you are in O&G stocks, and without trying to state the...

Hi All

If you are in O&G stocks, and without trying to state the bleeding obvious, we have all lost money - on paper anyhow. If you got caught out well what can I say your in good company as most of the world got caught out too. But that's ok if you have a long term view because this will be one of the best buying opportunities of O&G stocks ever.

Unlike our US cousins we (DLS) do not have the same debt problems and management have been prudent. I am sure they would have done a "what cause effect" risk analysis and one of the whats would have been oil goes below $60 bbl. So I am comfortable with this but have to say that the fall has been breathtaking. Those who are hurting are those who have borrowed and couldn't get out of the way quickly enough. I am sure there are winners out there too but you shouldn't gloat.

Talking about borrowing, and just to put this into perspective, it's worthwhile checking this video out plus also noting the posted articles below from The Australian. Santos is also taking a hit with a healthy dose of criticism to boot and even though our government doesn't own the assets they are hurt by the reduction of royalties and taxes. My point in all this is that it won't go on for long as forces will move to restore prices.

http://www.cnbc.com/id/102261689

Based on previous charts and falls I think $55 is the level oil will fall too and after that it will be all hands on deck as the panic starts to set in. I hasten to add I have no additional insight and could be completely wrong so what I state, along with everyone else, is nothing more than an educated (possibly uneducated) guess.

The only thing that is a positive (if you can call it that) is if you are US citizen you can go down to the shops a little more cheaply now and buy more stuff to support your 70% consumer lead economy. That sounds like a plan.

My feeling is that this is not normal and there is a bigger endgame going on behind the scenes apart from the ones being portrayed by all the media noise and hype. Seriously they can't get out of their own way trying to be the first to report.

Anyhow I believe the story is still intact for DLS and this, like so many other crises, will past.

Hang in there

Cheers
BW
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And then is heard no more. It is a tale
Told by an idiot, full of sound and fury
Signifying nothing.
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Plunge claims its first scalp as Red Fork Energy goes under
PAUL GARVEY ENERGY
The Australian
12 Dec 2014

THE collapse of Perth-based oil and gas play Red Fork Energy has reinforced the precarious outlook facing other Australian companies pursuing riches in the US shale industry.
Red Fork Energy has become the first Australian scalp from the oil price plunge, with the group sliding into receivership late on Wednesday. It had raised more than $125 million from investors during the past three years but collapsed after it was unable to refinance a $100m debt facility from US firm Guggenheim Partners.
Red Fork had been working aggressively to roll out oil and gas wells across its shale acreage in the US state of Oklahoma, following a similar strategy to many other players in the industry.
But it has become a victim of the sudden fall in the oil price, which has dropped by more than 40 per cent during the past six months amid a stand-off between traditional OPEC producers and the rapidly expanding US shale oil industry. OPEC recently decided not to support falling prices by cutting production, a move widely seen as trying to squeeze US shale producers.
The collapse of Red Fork will intensify scrutiny of other Australian companies working in the US shale industry. The industry is awash with companies that have borrowed money to fund the rollout of additional wells but the dramatic collapse in oil prices has left many companies battling to service debt commitments.
Several Australian-listed companies have joined the US gas rush in recent years. While each company has different levels of indebtedness, all are being squeezed by the current price downturn.
Red Fork was among the first Australian companies to take a position in the US shale oil industry, with the company owning a number of shale oil and gas fields in Oklahoma.
The fields had generated the equivalent of about 1795 barrels of oil a day during the September quarter, generating $US9.8m ($11.8m) in revenue, but the continued slide in oil prices in recent months appears to have forced Guggenheim’s hand.
Shares in Red Fork were worth as much as 38c a year ago but had plummeted to just 0.6c at the time of the group’s collapse.
It had raised more than $47m at 43c a share in mid-2013 and another $50m at 67c in September 2012 as it looked to pump cash into additional wells across its fields.
Red Fork had advised earlier that it was in breach of its debt covenants in the March, June and September quarters but had been able to obtain waivers from its lenders.
It had been working on refinancing the debt and said in early October that it had selected a preferred refinancing partner, but the continued slide in oil prices since then appears to have killed off those discussions.
Among the biggest losers from the Red Fork collapse appears to be Ashok Jacob’s Ellerston Capital, which according to Australian Securities Exchange disclosures emerged as a 10.9 per cent shareholder in the group earlier this year. Ellerston, which is 75 per cent owned by employees and 25 per cent by billionaire James Packer, had spent about $10m earlier this year building its position in the company.

Plus this

Oil price crash rips another hole in budget

• THE AUSTRALIAN
• DECEMBER 13, 2014 12:00AM

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David Uren

Economics Editor
Canberra
https://plus.google.com/111790188086700309806
THE collapse of the oil price is adding to the government’s budget problems, with expected returns from the new $200 billion LNG industry being slashed.
Although not a major blow to this year’s budget balance compared with the plunge in the iron ore price, Treasury was expecting a boost to the terms of trade as higher value LNG started coming on-stream from 2016 onwards, with tax revenue to start flowing a year or two later.
Deloitte Access Economics partner Chris Richardson yesterday said the budget outlook confronting the Abbott government had become worse, even since his firm released its review of the budget two weeks ago.
“The government is now in a position worse than anything that Labor dealt with because commodity prices are lower than anything it confronted, with either actually or in forecasts.”