Gear Energy Ltd T.GXE

Resource Limits

[Roscoe747]

For those of you who are inclined to follow into a more or less esoteric rabbit hole, the subject today is 'resource limits and their macro but unavoidable effect on markets. Resource limits are defined as the economic barriers between expectation and reality.

In the case of hydrocarbons, resource limits are the dichotomy of the economically affordable price of oil and the reality that the costs of production, including the opportunity cost of "climate chang" imposed by politicians is greater than its price.

For the metals, rare earths and chemicals required to realise a "green future", it is the dichotomy of the required volumes of these resources and the realisation that the earth may not contain sufficient quantities to fulfill politicians' dreams at either an economic price or an environmentally acceptable cost.

Resource limits imposed on developed countries may be politically manipulated until the cost is unbearable but the third world will not allow fanciful OECD "climate change" ideolgy to hinder their survival. They value survival more than they value first world notions of 'saving the planet'.

The point this dichotomy presents is that the resource limits of any commodity will inexorably raise its future price and that suppliers are foolish to sell at low price now for commodities that will provide a greater future return.

Hence the 'no growth' model for oil we now find ourselves in whereby producers return capital to shareholers rather than to 'growth at any cost'. Demand will come from those wanting a better life and willing to pay for it, not the dystopian purveyors of "climate change" and their willingness to sacrifice others.

No matter what political meddlers attempt, the absolute of resource limits will enforce economic reality.

[tylerreddick]

Except that with the production cuts from OPEC+, there is a lot of spare capacity in the system. That will keep a lid on any short/medium term price increases.

[Roscoe747]

True to a point. It depends, like most oil issues, on whether your glass is half full or half empty. These 'voluntary' cuts are only removed from inventory as long as the proponents have the will to maintain them. One must decide for themselves whether ABS or Biden has the hammer. One must also ascertaine the accuracy of western data as well as the reality of China's economy. There

[DivLover]

Now that Roscoe was an excellent post , many times 3rd World Nations have it right when it comes to survival and trying to better themselves. Correspondly many European nations and both countries in North America just like to shoot themselves in the foot by electing far left governments whose sole purpose is to pander to the brainwashed young, the special interest ecoidiot groups and assorted

[lashing]

Yeah this is all hot air. The world isnt working on facts or logic. Law is being abused, Climate religion is hard and fast in at least half the populations heads. We had a fake proxy war that people support. Climate hyteria people support, race divides people support, nonsense like what a woman is people support. There is no fact based economy anymore. Soon the grid will be out too. Reality is

[tylerreddick]

It is funny to watch people try to rationalize their terrible investment decisions. Another 2 months of dividends lost today, even as WTI rises. Anyone getting the hint?

[21salming]

The only hint I get is that you are a day trader and not an investor. I on the other hand, look forward to price drops while the truck is backed up. 

[tylerreddick]

You mean your "garbage" truck?

[Roscoe747]

That comment says much more about you than it does about the investment decisions of others.

[snootchybootchy]

I find it very appropriate that conspiracy theorists also have crazy conspiracy theories about why they are bad investors.

[Roscoe747]

[Roscoe747]

It this environment, only the terminably stupid will refer to high beta producers attempts to maintain liquidity and its shareholders attempts to derive any direction from all the conflicting noise as conspiracy theories. Investing in GXE at this point takes a cast iron belief that demand growth will outpace supply growth. There is also no guarantee that micro caps will even benefit from such an

[tylerreddick]

Sounds like you sold at a loss, again.

[Roscoe747]

Sounds like you are desperate for attention. Should be an update in a day or two and CEO Gilmore needs to step up with more depth to his report on operations. He needs to stop the attrition by restoring faith in GXE's ability to succeed. We shall see if insiders are aligned with shareholders or not.

[Roscoe747]

Can't argue with that opinion, lashing. The only premise to hang one's hat upon is "fundamentals don't matter - until they do". Investors can no longer trust government data because everything is manipulated. We must assure ourselves that saudi and Russia have the desire to stay the course, that the EIA monthly data 'revises' to the draw side, that Biden isn't

[tylerreddick]

" Reserves and ARO obligations are worrying and Gear's perpetual reliance on 'enhanced recovery' does not translate into growth. In my opinion, it merely slows decline. " Well Roscoe, you just pointed out the precise reasons to not buy GXE, at any price.

[Roscoe747]

Yeah, maybe, but one person's loser is another person's buying opportunity. Given the  market dynamics today, Gear will likely succeed on fundamentals but it is not likely it will rerate without significantly higher oil prices. Except for updates, we must wait for the Q3/23 financials specific to Gear and positive sentiment generally.

[tylerreddick]

Inregards to the over-used term "rerate", I agree it won't apply here. First, their assets are substandard, so nothing to "rerate" there.  Second, the share price is already over-priced, so how could it "rerate", unless it was to the downside?

[Roscoe747]

Fundamentals, especially cash flow, book value and p/e

[tylerreddick]

P/E is meaningless for oil/gas producers. Anyone with any patch experience knows that.

[Roscoe747]

Thats why I put CF first P/E is still a useful metric for decision making