Looking forward with AKK, page-4

Here's the part(s) where this gets "lost in translation" and of course minimal effect upon AKK anyway.

1. Why must oil head back over $60 (and I assume this is a Brent Benchmark as the reference is "global"). I would personally love for this to happen but am not making investing decisions on the basis of this.

2. The winners hands seem stacked with those with fortress balance sheets. The demise of weak E&P companies is just business and for some of them the restructuring is simply a transfer of wealth (ownership) from current equity to current debt owners by cancelling current equity and converting current secured debt to equity.

3. Kingdom of Saudi Arabia (KSA): Text in Italics are quotes taken from interview with Saudi Energy Minister Khalid al-Falih. Keep in mind KSA July oil output est was 10.67 million barrels of oil per day.

"Our crude programme is designed to maintain our capacity at 12.5mn b/d"

Do you foresee Opec restricting production ever again to try and balance the global market, acting as the global swing producer?
"I see a couple of scenarios here.

One is extraordinary, short-term circumstances, such as the global financial crisis, when the US Federal Reserve intervened and other nations took appropriate measures. The crisis led to a sharp fall in demand and Opec responded by cutting millions of barrels of oil production.
I believe Opec could respond to such short-term events.

The second scenario is the prelude to the price drop of 2014, when expensive oil was going gang busters, propelled by healthy prices and technologically advancements.

Just as Saudi Arabia and Opec responded to that situation by deciding to not cut production, I think Opec would not become a swing producer in such a long-term situation, which would amount to making room for expensive marginal barrels at the expense of its market share.

My hope is that the future price bracket in any case will be such that supply and demand will remain within reasonable balance, and the market will not be faced by the situation we did in 2014, for example, or during the financial crisis."

Interview transcript here. http://www.argusmedia.com/news/article/?id=1250725

4. What fiscal policy could the "yanks" so easily alter to make shale break even lower? A gov't handout?? What tax break are we looking for as they already get favorable treatment. Ad besides a Clinton presidency would be about as favorable to oil as Obama was to coal.

5. Oil is a global market. The KSA oil minister again...
"On the upside, the prices that we saw in the last decade meant that the large investment levels that were pouring into production increases — especially expensive oil — were not matched by demand growth, and the result was the 2014 price fall. So, I think the high end of that price level of the past decade may not be sustainable."

The balancing of production to be in step with demand is occurring. And with "RISK" being factored back into the capital markets, developing expensive oil isn't an option. What this does to supply in the longer term (say +5 yrs) is anyone's guess.



So I would agree - there is a new oil cycle in play - just not the one that we all want right now.

Looking forward with AKK there is an annual report due soon. Think I'll go start a new thread for that one shortly for those interested in FFA (Fundamental Financial Analysis).