Commodities / commodity company backgrounds for a successful
Commodities / commodity company backgrounds for a successful oil investment
Guest Author: Jrg Schulte | 03.15.2016, 15:59 | 193 | | 5
Why invest now in the oil market?
As an investor, you are always looking for opportunities, a gain that a time or information advantage. A special opportunity could currently offer the oil market. Having got used to the sector over a number of years at prices above USD 100 per barrel, the laments at a level of below USD 40 per barrel is correspondingly large.
The oil industry has been courted at the level of over $ 100 per barrel by the financial sector and supplied with enough cash. Both sectors went hand in hand - you can say maliciously, it was like a marriage of dealer and junkie. The relatively high price of oil players have often applied production technologies in oil-bearing formations that were not particularly sustainable. Not infrequently, the rate of funding of a new occurrence decreased by up to 90% within the first 12 months. Of course, these games are only worthwhile if production volumes at the beginning are particularly high and an attractive margin remains.
About four years listed oil prices above USD 80 per barrel. So you could get used to it and demonstrate appropriate margins, which were then used for further financing. A deceptively perfect foundation for a house of cards with many facets emerged. From Profit delusion driven the debt ratio escalated in the balance sheets of many companies. Nobody liked to remember that the oil price could fall below the 80 USD mark again. How could they, the Saudis as the dominant oil power have even built an oil price-based budget, which also requires a mark of about USD 80 per barrel in order not to lead the country in deficit.
With increasing oil output fell the mathematical formula of production and debt in an imbalance and oversupply in the oil market made increasingly for discounts. A vicious circle sat in transition and proceeded escalating. With falling oil prices heavily indebted companies had to provide more liquidity to meet the payment of interest and repayment to the banks. It does not take a mathematical genius to see through to that the oversupply of oil thus had to continue to increase.
With a stock in the US of around 522m barrels of oil stocks for the season are on an all time high. Whoever thinks that it is going now so endlessly and the price of oil really should continue to fall, which should use yet another number, which is also of historical dimensions: with currently only 396 new oil-drilling industry reached the level of 2009. in 2014 and in the top of the oil policy of expansion in the US, there has been drilled at the same time more than 1,600 times for oil.
Obviously, companies do increasingly the money for new wells in the US or the inferred resources are not lucrative at the current level. It is probably a mixture of both. But what happens next? The price of oil has recovered from its low of around 26 USD per barrel to around 36 dollars per barrel, but is still not clear for the banks and oil companies are.
Thus the price of oil may continue to rise, it has to come to a throttling or a natural decline on the supply side. In addition, should consider to collect fresh capital to withstand a throttling itself can oil companies. Ultimately, each barrel of oil sold in the soil only once and then the margin should be high. Who currently produces a loss is actually in a liquidation and it can free itself only by a rise in the price of oil or by new equity.
Those who want to position themselves in the oil, so it must hold for companies it who does not have high production costs and managing their debt with the banks involved. One can also look for companies that are active in the oil field and act without debt.
In the past we have already reported more frequently on Saturn Minerals Inc. The company (ISIN: CA80410K1012 / TSX.V: SMI) has announced the discovery of oil in the northeastern part of the, Williston Basin 'in Saskatchewan in February 2016th Since the next oil producer is around 250 km active, is for the company now the potential train to train to become a regional oil player. Ultimately, no one there currently more information about the ground and the formations as Saturn Minerals. For investors the opportunity in a company in the sector has to enter, that is without debt and calculated with a low oil price from the start. The share of Saturn Minerals is listed on XETRA and in Toronto.