Monday, January 9, 2012

CNBC Talking Head to Discuss $200 Oil

Update

January 10, 2011: see additional comments suggesting KEG is a fracking company.  And now this link from 2011:  Key Energy buys fracking companies for $300 million
Key Energy Services, Inc. has reached a definitive agreement to acquire Edge Oilfield Services, L.L.C. and Summit Oilfield Services, L.L.C. for a consideration of approximately $300 million.

Edge primarily rents frac stack equipment used to support hydraulic fracturing operations and the associated flow back of frac fluids, proppants, oil and natural gas. It also provides well testing services, rental equipment such as pumps and power swivels, and oilfield fishing services. Following the close, Edge's results will be reflected within Key's existing Fishing & Rental Services line of business, which is included in its U.S. reportable segment.
Same day: See comment re: KEG -- whether or not it's a fracking company.

Here's the link to Cramer's site:
The Houston-based company is what’s known as a well servicing contractor, meaning it does pretty much everything needed to keep oil wells working, including maintenance or repair. With 787 rigs in operation, It’s actually the largest operator of onshore well service rigs in the U.S.

Cramer likes Key Energy Services because it’s engaged in hydraulic fracking, which is the controversial drilling technique performed in oil-rich shales. Fracking is a crucial part of horizontal drilling, a method that’s more complicated than traditional drilling. The oil wells created by horizontal drilling are up to five times more service intensive than conventional wells and that means more business for Key Energy Services.
So, it appears Cramer was being a bit ingenuous -- KEG might not be a "fracking company," per se, but rather "engaged in hydraulic fracking."

Pending further corporate comments, I will remove KEG as one of the fracking companies in the Bakken, but leave it at the post with an asterisk and an explanation.

Original Post
Segment on CNBC
  • $200 oil if Iran shuts the strait
  • 15 million bopd through the strait
  • scenario to get to $150 to $200/bbl
  • but it won't last long
  • response within 2 weeks
  • would response cause price to go up?
  • talking head says once shooting starts (as part of the NATO response) the price would start to come down
  • assuming no major conflict; short term price, next 3 - 6 months --> the EU is going to embargo imports from Iran; Saudi will make that up; but bullish for the markets --> less spare capacity --> that takes us up to $125; but could get to $150
All in all, a pretty unremarkable segment.

Later: Cramer recommends Key Energy Services (KEG), a fracking company. Cramer says KEG is moving to the Bakken; I haven't verified that.  I will add it to my list of fracking companies until I sort it out.  [Update: yes, indeed, Frac Tech may be in the Bakken -- see this link which I posted some time ago.]

12 comments:

  1. Bloomberg article out today. Fracking moritorium urged by doctors (The Experts) Do they ask the API for input on kidney transplants ect...http//www.bloomberg.com/news/2012-01-09/fracking-moratorium-urged-by-u-s-doctors... I think they should poll the Siera club also

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  2. Incredible. I'm just about had it with non-experts weighing in. To the best of my knowledge there has not been one death due to fracking in the context in which we are discussing.

    However, you and I both know there are untold number of physician-error deaths -- only some of which patients know about, and even less that end up going to court. And seldom is a physician charged with a criminal offense when it happens.

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  3. Key has been around for many decades. It did workovers and such. Still does. One of the big ones at that.

    But, did Cramer really say that? I am not buying it. Key sold their frac business in 2010. They are not a frac company. Leave them off the list. (They do related fluid handling - tanks, trucks, etc.)

    http://www.prnewswire.com/news-releases/key-energy-services-announces-sale-of-its-pressure-pumping-and-wireline-businesses-to-patterson-uti-energy-97838934.html

    info:

    http://www.keyenergy.com/index.php?id=120

    anon 1

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  4. Some are getting very nervous because they are coming to the realization that there is a oil and gas revolution going on, it will continue and it is not going to be the bust they had hoped for. Often called the quiet revolution because it is so poorly reported by the national media.

    The hype about renewal energy is what is in a full blown bust. Supported by the administration and its fellow travelers it is now clear for all to see what works and what does not.

    I see a change in the attack on hydrocarbons from hoping it will go bust and not giving it the due recognition it deserves, to it must be further regulated and controlled. Read kill it. The above example with the doctors as an example.

    From his public statements the chairman of the Williams County commission is being used by the slow it down and control it crowd in media reports. One thing the outside media, that is against oil, is good at is to smelling around for negative comments about the rapid development and use those people as useful fools. If the same person makes a positive comments they are not published.

    With the energy sector creating 3 out of 5 jobs since the recession started in 2008 the push will be to control it, because for it continue is an embarrassment to the federal governments energy policy and the faux environmentalist. After all how can energy development benefit the reelection of the current administration? It doesn't they are at war with conventional energy.

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  5. Wow, you have a great memory. Thank you.

    See my update above.

    The reason I will leave KEY on the post is because some folks looking for a job in the oil patch might be helped.

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  6. A great comment; thank you.

    I think folks will learn a hard lesson if they think they can "slow" the boom without killing it.

    The "Keystone XL" is a microcosm. A delay of several years for administrative reasons could kill it completely. Likewise, "slowing" the permitting/fracking process could kill the boom. Lots of empty buildings -- boom and bust towns like Dickinson know what I'm talking about.

    Great Britain is learning a hard lesson and all they did was raise taxes on the off-shore oil companies.

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  7. KEG has already been in Minot for a few years. At least I
    have seen their fracking equip etc on Burdick and just west of nash finch.

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  8. Thank you. I found a link that suggests Key is back it the fracking business. Thank you.

    Note the update.

    I wish I was back in the Bakken to check some of this stuff out first hand.

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  9. Key bought Leader Energy in Minot a few years ago (that is the lot on Burdick in Minot). They are not fracking but are acidizing and cementing wells in the bakken.

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  10. Thank you. Regardless of what it does, it's another big market cap company in the Bakken. Thank you for taking time to comment.

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  11. Key has been in Williston since the 70's and are located just off 2-85 across from the International Inn. They are also building a new facility in Williston (I believe west of town) and just completed a big new facility along hwy 2 in Tioga. But with the Bakken boom, I'm guessing they are expanding into other communites in ND to service the different regions of the Bakken?

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    Replies
    1. I did not know that Key was across from the International Inn; I know exactly where you are talking about. I need to get back out to the Bakken to see all that is going on. Thank you for taking time to comment.

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