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Strategies & Market Trends : Dividend investing for retirement -- Ignore unavailable to you. Want to Upgrade?

To: Steve Felix who wrote (17951)	12/17/2013 9:26:20 AM
From: Aggie	2 Recommendations Recommended By chowder JimisJim Read Replies (2) \| Respond to of 34328

This is a significant development for the Major Integrated oil companies. It has been a long time coming, like a very large, slow train. The Cantarell supergiant field has been slowly watering out now for years, placing Mexico on an ever-tightening budget basis with respect to their oil revenue. The prospect of an under-appraised region such as this SW'n part of the GOM being up for grabs, at this particular moment, is very significant. Many of these major companies are smarting from their experience in Latin America - in Venezuela - CVX is still hemorrhaging money there, Exxon won a pittance in arbitration, Conoco has pulled out, etc etc. Quite a few drillers and service companies still have equipment locked up there (H&P, Tidewater, etc). And in Brazil, where companies are forced to partner with Petrobras, a terrible combination of insular government-run bureaucracy and arrogance (they are extremely difficult to partner with). The point is, with Mexico they have a friendly neighbor with analogous prospects to the ones they are already producing from in the GOM. The subsalt potential, which has already been explored in Brazil with crashing success, is still maturing in the GOM region. You can bet that the majors have been wooing and laying groundwork here for years for an entry. American service companies like Baker and Halliburton have already been providing expertise and full-field management solutions here, again for years. In addition, Mexico could become the location (my prediction) to a modern refining industry, as a welcoming host. Most of the stakeholders with positions in refining here in the US are moaning about the age, limited size, and most importantly, restrictive policy/regulatory environment that prevents them from expanding capacity and infrastructure in order to be able to accommodate the new production coming in from the USA fracking boom. With Mexico bordering the US, it's not hard to envision a lot of this production going a little further south to be refined and then sent to market. One thing to remember: Oil is still a product that is a whole lot easier to manage than gas. With all of this oily production heating up here at home, some of these LNG mega-investments might start to look like green fruit at the top of the tree by comparison. Shell might be starting to wonder if Prelude is really such a good idea after all.... Positions in CVX, COP, XOM, KMI/P, EPD, ENB, RIG, SDRL, all of them long term. Regards to all Aggie

To: Steve Felix who wrote (17951)	12/17/2013 2:34:19 PM
From: JimisJim	Respond to of 34328

Yes, the macro calls can be dangerous... before the shale gas production explosion, most were talking about ng shortages looming in No. Am. -- now it seems as if we have all the ng we'll need for a few decades. I wouldn't get to excited about ng exporting just yet. I've got some (just some) money deployed along those lines, but there are many obstacles between here and ng exporting, not the least of which is capex required and time required to build the capability... the first few who get to the export starting line first may make out like bandits, but the picture gets cloudier for me beyond that. Because certain industries depend on ng for feedstock and/or their own power generation, there is a mini-boom in some industries relocating manufacturing to the US because of that price advantage between here and say Asia. As we see ng prices very slowly climb back to more normal levels, I'm not 100% certain there will be a huge amount of ng exporting 5 years out -- there very well could be, but not a slam dunk, IMO. Oil is a very different beast. Although technically it is not illegal to export crude, you do have to get permission to export it. Rather than do that, right now we're seeing exports of refined products surging. We are exporting a LOT of diesel and gasoline right now. Coal switching is slowing down quite a bit. The only thing keeping it going is the difficulty in getting approvals for new coal generation plants. Otherwise, we are at or near the break-even pt. for using ng vs. coal for baseline power generation. And Forbes has one thing right. Eventually US oil production will level off and/or decline again -- unless another disruptive technology comes along like rotary steerable tools (new) combined with older technologies (primarily used offshore, but now onshore as well) like horizontal/directional drilling and multi-stage frac'ing that unlocked the shale fields for both oil and gas. Remember that more than half of all oil ever discovered throughout history remains right where it was found -- either it can't be produced at all, or not economically... yet... some day, though, someone may figure out a way to drain an oil field 100% and then suddenly we have twice as much to three times as much recoverable oil ALREADY FOUND and we won't even have to go looking for more.