Mart Resources Inc MAUXF

RE:RE:RE:RE:Post Umugini financial performance

[vestor111]

It is difficult to say where and how long things will "stablize".     

Tight Oil in the US is largely over leveraged which is hammering the junk credit market - which will dry up capital needed to roll forward production with more drilling.  November drilling permits were reportedly off 40%.    Tight Oil depletion rates are epic.   So between depletion, the brakes on drilling and the capital needed for many operaters function drying up quickly, we will  see a decline in supply in the US over the coming months.  (it is a "will" not a "could" situation.)  Defaults are possible which will further increase the cost of capital to the sector - further curtailing development.  

The other driver the pundits point to is the strong dollar (which some Fed/currency watchers call the cleanest dirty shirt).   Part of the strong dollar story is the US economy is rebounding on paper - based on figures largely generated by the USG - like unemployment and inflation - which even a child can see through (Could it be because Obama appointed a card carrying commie to run BLS?  Piff.)    

Part of this meme is that the Fed will have to allow rates to rise "soon" which will further hammer the debt market - like the junk bond market flowing into tight oil...  Not to mention, the USG cost of borrowing will rise either forcing cut backs (LOL) of accelerated debt/deficit increases, while dampening business.   (Oh BTW did I mention Tight Oil was the biggest driver in the US economic story short of gubamint spending?  Ooops. 

But if the Fed doesn't act early next year, as was reported by bond traders in Europe just yesterday in the FT (or the Teelgraph) - their credibility will be shot.  (Like have a 90 times leveraged balance sheet wasn't enough?  The world awaits how they will unwind that.  Bernanke had three or four suggestions laughed at when he guessed at how they would do the unwind...PHD's don't trade apparently.)  

Look at it this way...do you really think the Saudis really want to give away their oil for dollars the Fed has printed in the trillions?   (Pre-2008 there was about $820B in USDs running around the planet.  In six short years, that number is over $4T. )    

So when the pundits point to the strong dollar - take a deep breath and say "ok sure..."   We will see.

BTW When you look at deep cycle oil prices as a guide, none of those cycles had the amount of printed paper money floating around.   Just a guess - if you are paying with something you have already shown the world you are perpared to print in staggering quantities - how long before price move back up?   

Food for thought.