Monday, March 2, 2015

Low Oil Prices Could Be "Permanent" -- RBN Energy Guest Editorial -- March 2, 2015

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Rents coming down in the Bakken. Reuters is reporting:
Prices, which only last year rivaled levels in New York City and Geneva, have slipped about 15 to 20 percent in the past two months as dozens of new apartment buildings opened in Williston, Watford City and other oil hub cities.
Growth in demand has slipped because the plunge in crude oil prices has led to cuts in capital spending by energy producers.
There are still about 1,800 energy-related jobs unfilled in the No. 2 U.S. oil-producing state, and there is still demand for apartments. But the accommodation shortage is nothing like it was when the state's oil boom began six years ago. As new developments start leasing, tenants are able to negotiate lower rents.
Active rigs:

Active Rigs119192184205168

RBN Energy: I'm not sure what to make of today's guest "editorial" over at RBN Energy. If this is not tongue-in-cheek or satire, I'm not sure what to make of it.
Alan Greenspan coined the phrase "irrational exuberance" during his tenure as Federal Reserve chairman. He used it in a 1996 speech in reference to the excessively high prices of "dot-com" companies. He worried that assets were overvalued. Four years later, the dot-com bubble burst, confirming his concerns. Presently we are observing the last gasps of irrational exuberance in petroleum. Call it "petro-exuberance." This malady became apparent during a session on oil market issues at the World Economic Forum in Davos, Switzerland. Some panelists clearly had a case of irrational exuberance, an overenthusiasm no different from what we saw at the end of the dot-com and the housing crises.
Claudio Descalzi, chief executive of Eni, and the International Energy Agency's Fatih Birol showed the most distinct symptoms. Both seem under the illusion that oil price levels today are temporary rather than characteristic of a new ceiling that producers will welcome in a year or two. In his remarks, though, Descalzi unintentionally advanced an explanation for recent developments and the likely way forward for global oil markets: "What we need is stability. ... Opec is like the central bank for oil which must give stability to the oil prices to be able to invest in a regular way." His observation, if correct, promises a prolonged period of low prices and a harsh climate for those producing oil.
Much more at the link; a must-read.

For Investors

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There's a bull market somewhere. No less than 23 companies have announced increases in divideds today.

Magnum Hunter misses by $0.03 : Reports Q4 (Dec) loss of $0.24 per share, $0.03 worse than the Capital IQ Consensus Estimate of ($0.21); oil & gas revenues fell 27.5% year/year to $46.3 mln.

Dakota Plains announces operational and corporate updates. Co announced:
  •  Dakota Plains will bring its crude oil and sand transloading operations in-house effective June 1, 2015, and August 1, 2015, respectively. 
  • Construction of a third 90,000 barrel crude oil storage tank is ahead of schedule and remains on budget; the project is fully funded. The storage tank is expected to be operational by summer 2015 and will increase the storage capacity at the Pioneer Terminal from 180,000 barrels to 270,000 barrels.

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