Energy / Energy-General

• Why Income-Seeking Investors Should Consider MLPs

  In these days of ultra-low interest rates, investors who are looking for or need income from their portfolios are struggling. A roughly 2.5 percent yield on the U.S. Government 10-year note means that it is hard to get any kind of decent return from an average person’s available funds at retirement. This has led many to look at alternative means of deriving income: dividend paying stocks, riskier high yield, or junk, bonds and others. The oil and gas industry provides another such instrument, and one that I believe should be utilized by most investors -- Master Limited Partnerships, or MLPs.An…

• The Debt Double Standard For Canadian Vs American Energy Producers

  The 49th parallel isn't just a border between Canada and the United States. It also represents an important line for the amount of debt investors are willing to tolerate in their energy producers.Investors and CEOs have both learned the hard way. Canadian producers with more than 2X debt to cash flow–sometimes even 1.5:1–get no love from the stock market. Typical conservative Canadian investors–they have almost no tolerance for debt.South of the border, energy producers can carry big debt relative to their cash flows and still get high valuations from stock investors.Comparing the recently acquired North Dakota Bakken producer Kodiak Oil…

• Things Continue To Get Worse

  It is difficult to see any positive interpretation of the changes and conflicts that are increasingly filling the headlines of the press. Fluctuating optimism over the return to credible export production from Libya, to take but one example, is no sooner reported when the news comes of increased fighting in Tripoli, including the international airport. At the same time violence is Without a strong central government it is likely that the conflicts in that country will continue into the foreseeable future, with continued negative impacts on the export of oil from the country. Transient attempts to maintain a cease-fire and…

• Africa Transforms, But Confused US Policies Push it Toward China

  The US Obama White House seeks to retain Western influence over Africa — partially through its Africa Leaders Summit — while ceding strategic “authority” to France. But the plan has backfired, giving stra-tegic opportunity to China, and opening the gates to African change. And what of the secret PSD-11 policy paper which defines US approaches to the Middle East and North Africa?  The global strategic framework has changed beyond recognition in the past decade, even if the majority of the world’s population cannot grasp it. The face of Africa, however, is changing as we watch, and will transform beyond recognition…

• Why Canada Would Rather Export Oil Than Refine It

  Canada has always been known as a “hewer of wood and drawer of water” for its reliance on natural resources for economic growth, and nowhere is this more apparent than the way the country handles its extraction of oil. Despite boasting one of the highest proven oil reserves in the world -- second only to Saudi Arabia at 175 billion barrels-- a high percentage of Canadian crude is shipped across the border for refining in the United States. This has led to charges that Canada is selling out its vast oil resources to the U.S. and failing to uphold the…

• Keeping Oil Production From Falling

  Production flows from a given oil field naturally decline over time, but we keep trying harder and technology keeps improving. Which force is winning the race?An oil reservoir is a pool of hydrocarbons embedded and trapped under pressure in porous rock. As oil is taken out, the pressure decreases and the annual rate of flow necessarily declines. A recent study of every well drilled in Texas over 1990-2007 by Anderson, Kellogg, and Salant (2014) documents very clearly that production flows from existing wells fall at a very predictable rate that is quite unresponsive to any incentives based on fluctuations in…

• As Russia’s Isolation Grows, Oil Companies Caught in Middle

  The confrontation between Russia and the West took a turn for the worse with the downing of a Malaysian airliner on July 17, and that could spell trouble for several major oil companies operating in Russia. Just one day earlier, U.S. President Barack Obama slapped sanctions on Russia over its ongoing role in the destabilization of Ukraine. The sanctions prohibited American banks from issuing loans with a maturity of over 90 days to four key Russian companies – Rosneft, Novatek, Gazprombank, and VEB. “Because Russia has failed to meet the basic standards of international conduct, we are acting today to…

• The Biggest Energy Trading Disaster In History

  As someone who made a living in dealing rooms around the world for nearly 20 years, the reactions that traditionally greet highly publicized dealing disasters never fail to cause a wry smile to pass my lips. The reaction of the public, politicians and, most of all, of those charged with overseeing traders is almost always reminiscent of Captain Renault in Casablanca. They are shocked, shocked they tell us, to find that trading had been going on at the trading desk.The simple fact is that trading involves risk. Bad risk management happens every day to individual traders who blow up their…

• More Nuggets on the US Energy Boom

  I didn’t intentionally seek out these nuggets on  the US energy boom – especially so quickly after my recent involvement with Miley and Mr Bieber - but they were just conveniently there. Fast food if you like. As crude oil production hits a new 28-year high and natural gas continues to achieve higher and higher record levels of production, these morsels were too tasty to pass up. Bon appetit!1) 26% of the world’s rigs are in one US state….Texas2) Nearly 50% of US oil production now comes from Texas and North Dakota, and specifically the Bakken, Eagle Ford and Permian…

• Libya Has Resumed Oil Exports, But Will It Last?

  When Libya announced that it had reached a deal with a group of rebel fighters led by Ibrahim Jathran who were blockading its oil export terminals, the energy markets reacted with relief. Oil prices went down to under $103 following the news. The end of force majeure at the country’s eastern ports came just as production from the massive Sharara oil field ramped up, which is expected to bring Libya’s total production quota at some 1 million barrels per day (bpd) by the end of the year -- from the current low of 325,000 bpd. If you add to the equation the…