Banks are Increasing Price Decks Given the last month’s increased hydrocarbon prices (approximately +18% for gas and +11% for oil), banks are increasing their price decks for evaluating loans to E&P companies.  In a recent Wells Fargo Securities Equity Research Report1, the table below shows their current oil price decks for both WTI and…

WTI and Brent Crude Oil’s Prices Continue to Diverge Over the last week, WTI oil prices have increased between $2.00 and $3.00 per barrel and Brent Crude prices have increased by $3.00 to $4.00 per barrel.  The increase in the Brent (North Sea) oil prices was in part due to a supply disruption in the…

Lower Crude Futures Driving S&P 500 Declines Stocks around the world extended losses Wednesday, affected by lower commodity prices and a weaker dollar.  A key factor in this week’s 3% fall in crude prices was the American Petroleum Institute’s “surprise” report that U.S. inventories had increased in crude oil and gasoline. The IEA also cut…

Electric Cars Impact on Oil? The electrification of powertrains continues as automakers roll out everything from subcompact compliance cars to electrified supercars to improve efficiency and optimize power. Tesla’s Model 3 is just the prong on the charge cord of available plug-in vehicles. BMW, Mercedes-Benz, Ford, Volkswagen, Volvo, and Hyundai have all announced electrification plans…

A New Way to Method for Determining Value of Shale Acreage and Value of Operating Companies1 Credit Suisse recently developed an algorithm nicknamed “SAM” to analyze large amounts of data from shale production. This tool assesses the value of the shale mineral acreage and of operating companies for those fields.  Credit Suisse claims their SAM…

Drilling Rigs’ Day Rates Pricing According to a recent Bank of America Merrill Lynch research report,1 “High-spec” day rates have remained flat for two months.  The term “High-spec” refers to rigs with powerful top drives, hoisting systems and pumps.  According to industry sources, rigs with larger (+1,000) horsepower ratings account for an estimated 60 percent…

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One of the Reasons That Oil’s Price Recovery Has Stalled Over the long-term, US active drilling rig counts and oil prices have moved reasonably in sync.  As shown below, over the last ten years, there has been a high degree of correlation, as basic economics would suggest. Recently, however, this relationship has reversed, at least…

Recent ISIS Threats to OPEC On June 7th, armed assailants in Tehran attacked both the Parliament building and the tomb of its revolutionary founder.  These attacks were the worst to hit the Islamic Republic in years, shattering Iran’s self-proclaimed image of calm in a turbulent region. Iran’s Islamic Revolutionary Guards Corps blamed both Saudi Arabia…

Future Oil Usage to Join Cigarette Smoking? The growth in demand growth for oil and gas has been curbing within developed nations for several years. Developments in greener energy sources and increased efficiency of energy-thirsty products like vehicles and cell phones have offset the increase in demand driven by population usage growth.  Similar to cigarette…

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