APC

Why the Collapse in the Price of Oil is Reminiscent of Previous Financial Bubbles

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Bubbles all have the same characteristics of unrealistic expectations but are incredibly difficult to recognize until after the effect. Prices in an economic bubble can fluctuate erratically, and become impossible to predict from supply and demand alone. While some economists deny that bubbles occur,  the cause of bubbles remains disputed by those who are convinced that asset prices often deviate strongly from intrinsic values.-Wikipedia 2008 housing bubble and ensuing financial market rout “We recognized that, despite our suspicions, it was very difficult to definitively identify a bubble until after the fact,” -Alan Greenspan 2000 Dot Com bubble In  2000, AOL purchased Time Warner for US$164 billion. Shortly thereafter the bubble burst and technology stocks suffered a remarkable … Read more

The blatant injustice of US Government oil policy

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If China was dumping a product in the US market, and businesses in the US were not allowed to sell a similar one in the Chinese market, politicians would be up in arms at the injustice of it all.  Well, that’s exactly what’s happening in the oil market now. To provide some perspective, this is not a new issue.  Back in 1999, The U.S. Commerce Department on 9 August dismissed an antidumping and countervailing duty petition filed by a coalition of independent U.S. oil producers against Venezuela, Mexico, Iraq and Kuwait, saying that there was not enough industry support for the petition … Read more

‘s mine

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It’s hard to find the contrarian view in the oil patch these days but some of our contrarian observations are: A barrel of oil is worth far more in the U.S. than in other parts of the world. The U.S .is the most stable place in the world with large proved reserves. Most discovered deposits of oil are in politically unstable countries or in hard to reach locations with undeveloped infrastructure like the Arctic or ocean floor Large oil and gas exploration companies like Exxon, BP, Royal Dutch, etc. plan capital budgets for decades out. If the price of WTI … Read more

Crude oil in free fall creates long term buying opportunity

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I think the sharp drop in crude and the decline in some US centric shale plays creates a buying opportunity.  We bought Anadarko, Apache, Continental Resources, EOG, a little Chesapeake and quite a bit of Occidental today.  It’s a falling knife for sure but we are probably a lot closer to the bottom than the top. We don’t pretend to be able to portend the future price of crude. I don’t think the CEO of Exxon can do that.  What is clear though is that the US has become the most reliable, safest place in the world to explore and … Read more

Notes from Enercom 2012

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First of all men’s suits are back in force.  Everyone is wearing a suit.  My big takeway besides men’s haberdashery is that every single company presenting (and there are a lot of them- just about every oil and gas company you never heard of plus a few majors like APA, APC, Petrobras, etc.) is talking about how they have aggressively switched away from drilling for natural gas to oily liquids.  Everyone is bragging about how fast they are making the transition.  Considering it is currently against the law to export raw crude from the U.S, there will undoubtedly be a … Read more