RE:You can dice it and slice itI am completely onboard with you on your points. I have been on the oil equity sidelines since early November (out of BTE since earnings date) as have been burned before and things were just not playing out in H2 like they were supposed to. I had a bad feeling, but nothing like the meltdown that has happened. I feel for those that are in and probably averaged down past 6 weeks.
masfortuna wrote: but at the moment there is not much to indicate a reversal in oil prices or an increase in BTE's sp. BTE will be fine at $70 oil which is at the lower end of the range I had placed oil this year. ($70-$90). I have 3 issues:
1. The issue I have with BTE is their delivery of the initial plan they had. 3 years ago when they were starting to develop Clearwater. It all sounded great as they planned to increase their production organically, reduce shares and pay down the debt. Instead. just as we were approaching a major debt target, they almost doubled the share count, and quadrupled the debt. This at a time when interest rates were rising and oil was dropping. Clearwater provided them with the reserves they need but off they went EMPIRE BUILDING and the sp is now where it is.
2. Structural supply was the explanation we got for possible higher oil prices. I don't think this is the case now as it appears that the US has more than covered any shortages and we now have an oversupply in the market. Will 2024 balance the market and cause an increase in the oil price? Highly unlikely with the present macro environment. Yes opec can trim output BUT as we can see, not everybody at opec apperas to be on the same page and other non opec producers can increase production due to presenr spare capacity available in the US. That's great that BTE is at 155 million boe but oil is trading 50% lower than where it was prior to the Ranger deal AND the 2.5 billion debt is looking more and more as a possible albatross for years to come.
3. Risk/reward. Looking at the possible factors that may increase demand, none of the short term solutions are appealing to me ESPECIALLY if OPEC FLOODS THE MARKET. I already experienced this once and I definitely don't want to see oil at $40. Will BTE survive an "oil winter"? I believe that BTE would survive and eventually rise to higher levels, but the timeline would be measured in years and the sp in the process would at depressed levels for that time period. And if we fall into a prolonged recession...
So I am presently on the sidelines and I am watching but there is nothing at the moment to convince me that oil regains $80, nevermind $90...