Join today and have your say! It’s FREE!

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Please Try Again
{{ error }}
By providing my email, I consent to receiving investment related electronic messages from Stockhouse.

or

Sign In

Please Try Again
{{ error }}
Password Hint : {{passwordHint}}
Forgot Password?

or

Please Try Again {{ error }}

Send my password

SUCCESS
An email was sent with password retrieval instructions. Please go to the link in the email message to retrieve your password.

Become a member today, It's free!

We will not release or resell your information to third parties without your permission.
Quote  |  Bullboard  |  News  |  Opinion  |  Profile  |  Peers  |  Filings  |  Financials  |  Options  |  Price History  |  Ratios  |  Ownership  |  Insiders  |  Valuation

Obsidian Energy Ltd T.OBE

Alternate Symbol(s):  OBE

Obsidian Energy Ltd. is a Canada-based exploration and production company. The Company operates in one segment, to explore for, develop and hold interests in oil and natural gas properties and related production infrastructure in the Western Canada Sedimentary Basin directly and through investments in securities of subsidiaries holding such interests. It has a portfolio of assets producing around 32,000 barrels of oil equivalent (boe) per day. Its operating areas include Cardium, Peace River and Viking areas of Alberta. Its Cardium asset is a fully delineated and de-risked asset. It is focused on manufacturing repeatable low-decline and high-netback light-oil wells across its Cardium land base. The Viking is a light oil, horizontal development play located in central Alberta. Its operations are focused in the Esther area. Peace River is a stable, cold-flow, base production asset. It operates on a contiguous and an acreage within the heart of the Peace River Oilsands region.


TSX:OBE - Post by User

Post by JohnJBondon Sep 22, 2022 5:41pm
213 Views
Post# 34980310

US Strategic Petroleum Reserve

US Strategic Petroleum ReserveThe US SPR has now declined 192.4 million barrels over the last 12 months (as of last week).

Biden agreed to release 180 million barrels back in March, over the next 6 months (April, May, June, July, Aug and Sept).

There were some prior scheduled sales before Biden ordered the release of those 180 million barrels (1 million per day).

As of last week, the US SPR had reduced its oil by 31.1% over the last year.

It contained 427.2 million barrels as of last week.

As you may know, the Biden SPR releases are on going.

Biden claimed on Sept 19/22 that only 155 million barrels of oil had been sold (less than the 180).     Makes you wonder where the other 37 million barrel went (maybe Biden is now excluding his prior 30 million release, which previously was claimed to be part of the 180).    

This Sept 19/22 statement also announced another 10 million barrels to be sold from the SPR for delivery in November.

All that being said, the SPR contained 427.2 million barrels as of last week.     At a withdrawal rate of 1 million barrels per day, the SPR is pretty close to falling to the 300's.   Psychologically 399 is a lot less than 400!

Those of you who watched Biden's interview on 60 minutes over the weekend may have noticed Biden claim that US oil producers would increase production by a million barrels by the Spring.     When he made the 180 million SPR release announcement, he then said US producers would increase production by 1 million barrels in 6 months - ie in October.

Now Biden is stretching that out - to be 1 million new barrels by the Spring.

In March 2022 the US produced an average of 11,701 million barrels of oil each day.

Its about 11850 right now (the weekly estimate is about 250,000 over the actual (revised) number that comes out 2 months later).

That is an increase in the US of about 150,000 barrels of oil per day over the last 6 months (15% of the 1 million claimed by Biden).

The data shows US producers are having trouble increasing thier oil production.   Even with $100+ oil, the US still couldn't do it.

The amount of gas being produced is going up - because the lower tier US wells currently being drilled produce less oil and more gas.

It seems to me that the US is having trouble replacing its declines - and is not capable of producing the additional 1 million barrels per day claimed by Biden

If US producers could produce more oil when prices were north of $100/barrel, they would have - but they didn't.

Am I missing something?

US horizontal drilling techniques improved - but all that did was extract what was left, faster.   

Increases in technology are great - but if all they do is speed up how fast you get to the finish line - all it does is make the race come to an end sooner.

I've been spending a lot of time reflecting on what happens next.

Is it a bad thing for OBE investors if global oil production has peaked?

or is that a good thing?

It seems prior oil crisis did not cause recessions.     The last 3 conincided with recessions, but they were called by central bank tightening, not increased oil prices.

Natural gas (LNG) in Japan/S Korea, has been at least $150 plus per barrel equivalant for this year.   Its been more in Holland.    Some industry in those places has declined - but not as much as the media has suggested.    Europe seems to have reduced its Aluminum production by about 10% (not the 100% as was suggested in the media).     Much of this is likely because natural gas pipeline costs would of been long term contracts, not the LNG spot prices.    

The risk always used to be that higher oil prices led to increased production, followed by rapid price decline.  

Now it seems that higher oil prices will not lead to increased production (increases in one place are equal or less than declines in another).     It follows the old risk no longer exists.

Now it seems the risk is that higher oil prices will lead to reduced consumer demand.     We've never had that happen before - so we don't have supporting data to determine if its real - ie will people will continue to buy oil regardless of price.   

I'm writing from Canada.    Here the price of gasoline and diesel is high - personally my driving habbits didn't change at all.    Did yours?

Some items (food for example) are apparenlty more expensive because of higher delivery cost (diesel).   I still buy them just like I did before.    If a bag of apples costs a $1 more at costco, that doesn't affect me.   Infact on my last costco visit, they didn't have apples (probabaly nothing to do with feul costs - and more to do all their apples had sold out).  

I'm starting to wonder if $150 oil will have any noticable impact on oil demand.    Which in turn is making me wonder if $200 oil will have any noticable impact.

There is no alternative to switch to - its not like you can switch from apples to oranges.

I can see how new vehicle consumers would include gas milage in their buying decision - choosing smaller vehicles rather than pickups or SUV's.    But that doesn't' have any impact on all the vehicles currently on the road.   Cars are smaller in Europe and Japan etc, and bigger in North America.    The shifting has already happenned.

In my area, you can see car dealers lots starting to fill up again (they were mostly empty earlier in the year) - now they look closer to full - and mostly full of trucks!

It seems to be that global oil production is peaking / tipping.    I don't think Biden is going to get his 1 million additional barrels out of the US by the spring.  

Thats 6 months from now - or another 180 million more barrels out of the SPR from now (I suspect Biden won't stop draining the SPR.  

If the US can't produce more oil, then what other choice do they have other than to keep draining the SPR.    They are running at a 1 million barrel per day oil deficit presently.

Here we are today, within a month of the US SPR going to 399 million barrels.    Imagine 6 months from now, and its going to 199 million barrels.     Whats left won't be enough to last the rest of the year.    What happens then?

What will stop that from happenning?

If the US could produce more oil - they would have done it over the last 6 months.    It didn't happen.

What if the US makes drilling for oil a national emergency (like making covid vaccines) - would that help?    Can it help?    How long would that take anyway?     Are the reserves there?    Do the drilling rigs exist?    If not how long do they take to build?    What about fracking sand - and rail access etc etc etc etc.

I'm still reflecting on answers.   

So far the only answers I'm feeling confident about is that Oil production appears to be peaking.   For the last 6 months globally it seems like Oil producers have been having trouble replacing declines.     That problem gets bigger not smaller. 

How long does it take to get a Rolls Royce modular mini nuclear reactor - ok 2029 at the earliest............thats not going to help!


<< Previous
Bullboard Posts
Next >>