TSX:HSE.PR.B - Post by User
Comment by
onec007on Mar 23, 2020 6:49pm
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Post# 30839661
RE:RE:RE:RE:RE:DIVIDEND
RE:RE:RE:RE:RE:DIVIDENDSo lets step back for a second and look at the scenario here and try to determine some logical outcomes. Low prices is absolutely killing the entire industry including Russia, Saudis and all of their OPEC brothers. Low prices across the Arab nation is absolutely NEGATIVE and the leaders know it why? Arab spring. Guess how the Saudis avoided it last time by giving money and increasing spending to their citizens.
* TARP like structure for the Canadian oil sands
* Do we expect that the coronavirus and oil war to last a year?
* Companies are all cutting capex like crazy - Exxon, Oxy, refineries are cutting capacity, Shell, CNQ, EOG, Pioneer, Apache and the whole permian basin is being abandoned like the plague.
If MBS persists with this low strategy, he could significantly alter the dynamics of global energy markets. By keeping prices depressed, Saudi policy will not just drive more expensive forms of oil production out of the market; it will also make it harder for renewable energy to compete with fossil fuels – at least in the near term. They are looking at transitioning to a more dynamic economy to avoid their reliance on oil. They are SO DEEP in the red and behind their target and each day these low prices happen it is absolutely killing their wealth fund. Given how severe the low prices are they can hold out for what 2 years but are they stupid to just drain it to nothing?
There is lot of panic right now. Again I read CK's reporting on Husky and they are still asking them to cut costs further, but have highlighted their finanical strength.
So lets look at the real possibility here... We know that this is not going to be a winner take all scenario. Will ALL of our oil come from either Saudi or Russia? Absolutely not. So, if that is not the case which companies will survive? The Exxons, BP, Shell, Chevron, Suncor among others. We calculated the worst case scenario which is BAD, but lets put it into context is it probable?