Whitecap Resources- ANNOUNCEMENT THOUGHTS !!!
1) 9000 barrels added -
A) the best way to grow your company with out drilling is aquiring barrels . With drilling like a mad man considered taboo , restraint being the buzz word , all leading to less supply in the future , and the result is higher oil prices.
B) THE LABOUR MARKET IS BROKEN - most would Agree that drilling or the cost of drilling is going to see serious inflation , and it just might not matter how much you want to drill or willing to pay for a drill rig , there just might not be enough to go around.
C) the Drilled but not completed well inventory after the covid bloodbath was massive , and this allowed for companys to bring production on line . Example 11.6 Million last week in oil production in the states, highest since the crash , still 1.5 M below pre covid levels. So drilling is picking because the drilled not completed well , inventory has been depleted extensively .
D) Analysts point to drilling and indicate this uptick is needed to keep production at current levals , and growing production due to labour comtraints may prove challenging .
E) There is real concern that during the past few years of lower commodity pricing , that company's have used up the majority of Top Tier drill sites , and there may be some serious issues maintaining production for some of these companys due to this .
The one thing we all know for sure is when the price of oil goes up , drilling goes up , and cost to drill becomes expensive . However this isn't the only issue In the patch this time around , and what this means is you could offer to pay all the money in the world to get your wells drilled , and it won't be enough because there won't be the labour to drill .
So you all have read the same articles I have ,
and I just take that info and process it , and regurgitate it into my own words.
In summary I believe over all minus some bumps lIke the last few weeks , these prices for oil are here to stay , and what I get from this and what I take away from
all the info out there is ..........Even if the above scenario only half comes true , the COST TO DRILL will make these 9000 barrels seem like the steal of the century .
What I believe really happened the last few weeks wasn't that oil prices dropped , the share price fell , what happened was we found a floor . We just got hard , real hard evidence of where money steps in to buy in the worst news or case scenario , and big money steps in at 65 dollar oil . Finally big money stepped in for Whitecap essentially, rather safely at 6.50.
I believe we found a floor at 65 dollar oil , and we will never see the share price in the 6 dollar range again. I feel in a world where no one wants you to drill , that the way to grow your production is doing exactly what Whitecap did today , You don't need anyone to drill those barrrls for you. You know your cost . If you remember Grant bumped up Q1 2022 drill program to 4th Q 2021 to secure experienced , top tier rigs familiar with Whitecap , and as a investor knowing this should also provide comfort that Whitecap not only secured his drill rigs for 4th Q that likely I will bet he locked them up forever as long as can be possible.
Given all the above with regards to labour , depletion of Top Tier drill locations , global demand Coming on line , I feel 80 dollar oil really is the new normal and this just makes today's announcements that much sweeter
Good day for us !!!
Choo Choo
Craig