Friday, June 20, 2014

Why Schlumberger Is Up Almost 2% Today

Disclaimer: this is not an investment site. Do not make any investment decisions based on anything you read here or think you may have read here.

XOM has started to pull some of its workers out of Iraq, but Schlumberger, according to news reports, has not....yet.

But that's not the story.

I see SLB is up almost 2% today, trading at a new high. There at least two things to consider.

First, there is no question that an uncivil war in Iraq just might possibly perhaps to some extent interfere with oil production from Iraq. It's possible by the end of the day the Sunnis and Shi'ites, with the ISIS mediating, will sit down on the banks of the Euphrates and call the whole thing off, and simply go with Mr Obama's suggestion to call for "early elections" which the mainstream mess is now referring to as "regime change." I think I read somewhere that Iraq used to account for up to 60% of OPEC's crude oil exports. Saudi Arabia, days before the horde from the north swept through Mosul and Tikrit, said SA had no plans to increase production (more accurately, OPEC would not increase production) despite the IEA suggesting the global demand for oil will increase by the end of the year; the IEA almost begged OPEC to increase production. This opens the door for increased drilling elsewhere in the world, and that opens the door for oil service companies like Schlumberger, and may account for SLB trading at new highs, up almost 2% in early trading.

The second thing to consider is this. If the uncivil war is the best last chance for the Kurds to "go rogue," they might just do it. The word on the Muslim street is to leave the Kurds alone. As unlikely as it seemed ten years ago, there are indications now that Turkey will ally with the Kurds (as long as the Kurds observe existing international borders with Turkey, at least to some extent) and a) give the Kurds a safe conduit for their oil; and, b) militarily provide the Kurks protection on their flanks (and rear). By the way, the Turkish/Kurdish border issue gets more ink than it probably deserves: has anyone really looked at the border area between Turkey and northern Iraq? It's the Swiss Alps without the trees, the tourism, and the banks. It does have the remains of Noah's Ark, but it's inaccessible to tourists, sitting near the top of some remote mountain.

The Kurds could use this opportunity to go flat out, "ears pinned back," as Harold Hamm would say, to develop their oil fields ... again with a lot of help from westerners, like Schlumberger.

And, why oh why would the Kurds need to increase their oil production? Fox News answered that question yesterday: Kurds, outgunned by fanatical ISIA, hope looming Baghdad battle buys time for weapons upgrade.

Maybe if we're lucky, we'll get an analysis from Motley Fool later today explaining why SLB is up today.

Hey, by the way: quick -- what religion "are" the Kurds? From wiki:
As a whole, the Kurdish people are adherents to a large number of different religions and creeds, perhaps constituting the most religiously diverse people of West Asia.
Traditionally, Kurds have been known to take great liberties with their practices. This sentiment is reflected in the saying "Compared to the unbeliever, the Kurd is a Muslim."
The religion of pragmatism.

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