Oil Crashing

[jack88]

Highway 63 looked like a ghost town last night. Way too quiet for a Sunday.

[TLCC]

Originally Posted by chasingtail

Great song for the times were in.

https://www.youtube.com/watch?v=TLyes-bixzY

or another: https://www.youtube.com/watch?v=8UE5HOBj1s8

[pikeslayer22]

CNRL Slashes 2015 Budget By $2.41 Billion; Conventional Oil, Gas, Thermal Oil, Hardest Hit
JAN. 12, 2015 – VIEW ISSUE

Citing “previously discussed capital flexibility” in its $8.6-billion budget released last fall, Canadian Natural Resources Limited has cut planned 2015 spending by $2.41 billion to $6.19 billion.
While Canada’s biggest oil and gas producer also has oil operations in the British North Sea and offshore Africa, those areas fared relatively well with only $80 million in reductions from the original 2015 budget.
The rest of the $2.41 billion in spending cuts announced this morning are in Western Canada.
Conventional oil spending hammered
Spending on western Canadian oil (excluding thermal oil and Horizon oilsands mining and upgrading) has been cut by $870 million to $980 million, down from the $1.85 billion announced in the original 2015 budget announced last November.
Last year, CNRL described itself as Canada’s biggest producer of primary heavy oil with output expected to top 140,000 bbls a day. Canadian Natural is also a major operator of waterfloods in Western Canada and operates Canada’s biggest polymer flood at Pelican Lake in northern Alberta.
Gas spending gutted
Spending on western Canadian natural gas and natural gas liquids has been chopped by $430 million to $490 million from $920 million in the original 2015 budget.
CNRL is one of Canada biggest gas producers, especially after a $3.13 billion acquisition of gas-weighted conventional assets from Devon Energy Corporation (DOB, Feb. 19, 2014).
While plummeting oil prices have grabbed the headlines, North American gas prices are also sagging as U.S. shale gas producers, especially in the huge Marcellus play, continue to set production records. At the height of the winter heating season when demand has historically been strongest, the benchmark Alberta AECO price has been languishing below $3 a gigajoule.
Thermal oil slashed
Hardest hit is thermal oilsands, where spending will be reduced by $675 million to $460 million from the $1.135 billion announced last November.
Canadian Natural will defer spending of $470 million related to the Kirby North Phase 1 SAGD project until oil prices improve. The company now plans to spend only $105 million on Kirby North Phase 1 this year, down from $575 in the original budget.
This is the first major deferral of spending on a specific oilsands project to be announced since the reductions to previously announced producer capital budgets began last month.
Planned spending on Primrose cyclic steam stimulation (CSS) and future projects has been reduced by $195 million to $300 million from $495 million. Kirby South spending is being trimmed to $55 million from $65 million.
Horizon spending least affected
However, the original budget for CNRL’s Horizon oilsands mining and upgrading operation emerged relatively unscathed with reductions to be achieved through targeted cost efficiencies, the company said.
Capital spending on Horizon projects has been trimmed by $250 million to $2.2 billion from $2.45 billion in the original 2015 budget.
Planned 2015 capital spending at Horizon now includes $55 million for Directive 74 tailings ponds reductions ($130 million in the original 2015 budget), $45 million for Horizon Phase 2A (unchanged from the original budget), $1.21 billion for Phase 2B (down from $1.37 billion), $550 million for Phase 3 (down from $565 million) and $340 million for “owner’s costs and other” (unchanged from original budget).
As well, sustaining capital spending planned for Horizon this year has been cut by $55 million to $300 million from $355 million.
Dividend intact
CNRL is now targeting production growth of roughly seven per cent, down from 11 per cent in the original 2015 budget.
However, the company said it believes its current dividend level is sustainable at existing commodity prices.
It said spending cuts are mainly in drilling and related facility capital, mostly in conventional operations.
“Capital flexibility to quickly increase or decrease activity in the conventional operations remains an option for Canadian Natural, depending on the economic and pricing environment,” the company said.
Canadian Natural said its strategy to transition to a longer-life, lower-decline asset base while providing growing and sustainable free cash flow remains intact.
The company said its Horizon project is the major component of this transition, and expansion activities remain on track to add a targeted additional 125,000 bbls a day of light, sweet synthetic crude production capacity — consisting of additions of 45,000 bbls a day of capacity in late 2016 and 80,000 bbls a day of capacity in late 2017.
These additions are designed to achieve greater reliability, redundancy and operating cost savings for Horizon. Canadian Natural said this expansion was about 55 per cent completed exiting 2014 with about $7 billion spent to date. Total planned spending of about $6 billion in 2015, 2016 and 2017 will boost synthetic crude production capacity by 125,000 bbls a day.
On completion of this Horizon expansion to 250,000 bbls a day of synthetic crude production capacity in late 2017, CNRL expects all-in operating costs at Horizon to fall to $25-$27 a bbl.
Horizon production in the fourth quarter of 2014 averaged 128,200 bbls a day with December 2014 production averaging 136,000 bbls a day — a new production record highlighting the benefits of the staged expansion strategy, the company said.
Pelican Lake is a component of the transition to long life, low decline assets and operations remain on track with the production ramp-up progressing as scheduled and operating costs of $7.50-$8.50 a bbl, CNRL said.
Canadian Natural’s thermal in situ portfolio has vast resources to develop with a growth plan to take production capacity beyond 500,000 bbls a day in a staged development plan once oil prices rise to levels that justify these investments, with operating costs of $11-$13 a bbl, the company said.
As a result of the reduced spending targets for 2015, CNRL has revised its 2015 targeted annual production levels before royalties to average between 1,730 and 1,770 mmcf a day of natural gas and between 552,000 and 592,000 bbls a day of oil and natural gas liquids.
The company said it has significant additional capital flexibility in 2015 to further curtail capital spending if required, or to increase spending if commodity prices strengthen.

[Bigwoodsman]

Originally Posted by jack88

Highway 63 looked like a ghost town last night. Way too quiet for a Sunday.

Just what our government needed another excuse to not finish the twining of this hiway all the way to the Henday!

I think it was in 1914 that the railroad went to Waterways (now Fort McMurray) maybe it was 1904. (What's 10 years when your talking 100 years ago.) It took 4 years for them to push a railroad grade and line into this community, our present day "know-it-alls" have been after this for the past 2 decades and still aren't half way complete.

Things that make you go WTF!

BW

[79ford]

Originally Posted by Bigwoodsman

Just what our government needed another excuse to not finish the twining of this hiway all the way to the Henday!

I think it was in 1914 that the railroad went to Waterways (now Fort McMurray) maybe it was 1904. (What's 10 years when your talking 100 years ago.) It took 4 years for them to push a railroad grade and line into this community, our present day "know-it-alls" have been after this for the past 2 decades and still aren't half way complete.

Things that make you go WTF!

BW

It probably costed 10 million to build a 10 million railway in 1904...... now it costs 2.3 billion to build a 500 million$ road lol. Maybe now that oil is crashing the government can get some infrastructure built without paying triple or quadruple what it should.


On the bright side billions in spending cut backs will mean less mods and stuff travellig up 63,

[jungleboy]

Originally Posted by Bigwoodsman

Just what our government needed another excuse to not finish the twining of this hiway all the way to the Henday!

I think it was in 1914 that the railroad went to Waterways (now Fort McMurray) maybe it was 1904. (What's 10 years when your talking 100 years ago.) It took 4 years for them to push a railroad grade and line into this community, our present day "know-it-alls" have been after this for the past 2 decades and still aren't half way complete.

Things that make you go WTF!

BW

Just for the sake of argument . 100 years ago The train probably went 30 mph at best and had no traffic to deal with . Today's rig rock will barely stay running at speeds less than 92mph . What I am saying is, safety is part of the equation when building a road that will be driven like a cross country raceway when complete . Safety and lawyers and engineers and union labor and gov't kickbacks and cost overruns take time.

[roper1]

Just spent a little time on CAPP's web-site. This thread has better opinions & more hands-on exposure than the industry spokespeople. Go figure. FWIW my experience is every CEO talks high-priced hedging profits but in reality rarely hedge more than 50% because they have shareholders to please. Not to be more negative, but I think this thing is going to get a lot uglier. All the best!!

[stefk]

Seems to me that the boom cycle lasts 4 years to the second, uncanny how it similar it is to the bust of '08-09….

[hayseed]

Sigh... alright.. a lot of us live in this doom and gloom, I run a rig movin outfit in central AB, and I will tell ya what.

Lets quit the barkin an whining folks, holy hell you guys, if you have a good company, get out there and bust your ass to keep it, repeat work, safety on the job, customer relations go along way folks!!

Sure we are rackin rigs, but we are sure movin them to new locations as well... there is a pile of work out there, just sayin.

early bird gets the worm, and so does your price.... how low you wanna go??

[From The Hip]

Originally Posted by stefk

Seems to me that the boom cycle lasts 4 years to the second, uncanny how it similar it is to the bust of '08-09….

That bust was combined with the Financial Crisss and right after the fallout of Asset Backed Commercial Paper which was the harbinger to the Financial Crisis.To say the least there were a lot more irons in the fire then.

I am no expert but if people keep their heads and dont panic this will pass and the price of oil will climb back up just like it did in 08/09 but not as fast.

FTH

[hal53]

Originally Posted by hayseed

Sigh... alright.. a lot of us live in this doom and gloom, I run a rig movin outfit in central AB, and I will tell ya what.

Lets quit the barkin an whining folks, holy hell you guys, if you have a good company, get out there and bust your ass to keep it, repeat work, safety on the job, customer relations go along way folks!!

Sure we are rackin rigs, but we are sure movin them to new locations as well... there is a pile of work out there, just sayin.

early bird gets the worm, and so does your price.... how low you wanna go??

^^^^ This.....talked to a Bud of mine today who has worked downtown Calgary for 30 years, asked him what the pulse was like.....
"same as every other time...young guys think the world has come to an end....oil co.'s want service outfits to work for nothing, Me?...I say relax..."
FWIW

[rugatika]

Originally Posted by hal53

^^^^ This.....talked to a Bud of mine today who has worked downtown Calgary for 30 years, asked him what the pulse was like.....
"same as every other time...young guys think the world has come to an end....oil co.'s want service outfits to work for nothing, Me?...I say relax..."
FWIW

Yup, just spent half an hour trying to find rooms. Hotels are all booked up still.

[Bergerboy]

Originally Posted by rugatika

Yup, just spent half an hour trying to find rooms. Hotels are all booked up still.

Stay by the airport. That's what I do during busy times. I just cab it down town and back after meetings. Its nice as the you can hit the highway home fast.

[dutch_m]

I just seen this and i still can't figure out why it's dropping so fast , $46!

makes you really wonder if those guys on Wall Street or TSX knew , just like the housing blow up in the USA ,

Who do you believe about the canada homes being over valued , the bank of canada saying 10 to 30% , or that overseas report saying 60% , that will crush allot of people ,
Even at 30 % on a $500,000 home , that's a kick in the nuts to loose $150 grand overnight ,

Just who do you trust , now we have them oil kings saying we will never see $100 barrel again , read it below

http://money.cnn.com/2015/01/12/inve...dioil1240story

[DiabeticKripple]

Originally Posted by hal53

^^^^ This.....talked to a Bud of mine today who has worked downtown Calgary for 30 years, asked him what the pulse was like.....
"same as every other time...young guys think the world has come to an end....oil co.'s want service outfits to work for nothing, Me?...I say relax..."
FWIW

We already discount 65% of our price on our tickets. Red deer is losing money actually, GP is barely in the black as it is.

[martinnordegg]

WTI now at 44.70.

[RavYak]

Lots of people with really short memory on here... Look back 6 years and remember what happened last time oil dropped this low... Hopefully it rebounds as quick or quicker then it did that time.

[martinnordegg]

Originally Posted by RavYak

Lots of people with really short memory on here... Look back 6 years and remember what happened last time oil dropped this low... Hopefully it rebounds as quick or quicker then it did that time.

Most indicators are it will be a longer downturn. That being said there are too many issues in play to really get a handle on it. I would call the people with short memories either optimistic or in the twilight of their career.

[levigne25]

I work in oil and gas and we are swamped with work for all of 2015

[martinnordegg]

Originally Posted by levigne25

I work in oil and gas and we are swamped with work for all of 2015

That's great!. Maybe you can help some of the guys that are layed off get a job.

[dumoulin]

The sky isn't falling...

http://www.businessinsider.com/chart...ce-1861-2011-6

[levigne25]

Originally Posted by martinnordegg

That's great!. Maybe you can help some of the guys that are layed off get a job.

I think people are getting paranoid for no reason , I'm gonna stay positive and say it's gonna climb back up . As far as work , I'm a union member so they do the recruiting there and must go to trade school

[martinnordegg]

Originally Posted by dumoulin

The sky isn't falling...

http://www.businessinsider.com/chart...ce-1861-2011-6

You are right by the year 2011 the sky wasn't falling. Interesting chart though.

[79ford]

Originally Posted by RavYak

Lots of people with really short memory on here... Look back 6 years and remember what happened last time oil dropped this low... Hopefully it rebounds as quick or quicker then it did that time.

Last time oil bit the dust in 2008 opec cut 2.7 million bopd production..... thats why prices went back up.

The place i work for actually ramped up capex by billions in the last week and i get a 12% raise. Thankfully not all companies are leveraged up during the good times and cutting duri g the bad times.

I think down stream and midstream will do fine, its the construction and upstream section that will get hit... The raw producers.

[dumoulin]

Originally Posted by martinnordegg

You are right by the year 2011 the sky wasn't falling. Interesting chart though.

http://econintersect.com/a/blogs/blo...l-prices-carry

[martinnordegg]

Originally Posted by dumoulin

http://econintersect.com/a/blogs/blo...l-prices-carry

You are getting closer but your chart still only goes to 85 buck Brent. That publication is from Nov. 14.

[blgoodbrand1]

Originally Posted by 79ford

Last time oil bit the dust in 2008 opec cut 2.7 million bopd production..... thats why prices went back up.



The place i work for actually ramped up capex by billions in the last week and i get a 12% raise. Thankfully not all companies are leveraged up during the good times and cutting duri g the bad times.



I think down stream and midstream will do fine, its the construction and upstream section that will get hit... The raw producers.

Cool and good on ya. They value you and want you to stick around. I know the companies need to have the resources but to push forward during a slow down only makes sense long term. Take advantage of low prices and available man power and come out swinging in the next upturn.

[martinnordegg]

Originally Posted by blgoodbrand1

Cool and good on ya. They value you and want you to stick around. I know the companies need to have the resources but to push forward during a slow down only makes sense long term. Take advantage of low prices and available man power and come out swinging in the next upturn.

Exactly. Counter-cyclical investors usually do very well. Unfortunately there is a shortage of companies that either have that mentality or resources.

[thunderheart]

Originally Posted by hayseed

Sigh... alright.. a lot of us live in this doom and gloom, I run a rig movin outfit in central AB, and I will tell ya what.

Lets quit the barkin an whining folks, holy hell you guys, if you have a good company, get out there and bust your ass to keep it, repeat work, safety on the job, customer relations go along way folks!!

Sure we are rackin rigs, but we are sure movin them to new locations as well... there is a pile of work out there, just sayin.

early bird gets the worm, and so does your price.... how low you wanna go??

best post in the thread .. thanks

[levigne25]

Currently in redwater , where building a new refinery , it's the first refinery being built in the last 30 years . Sitting in orientation I was just told there work here for 10 years. This is a deisel refinery we are building here will produce 50,000 barrels a day in phase one , there will be 3 phase of 50,000 barrels a day. The emissions produced here will be sent elsewhere to help produce more oil .8.54 billion dollar budget for phase one alone .