Sunday, June 20, 2021

What Is This All About -- Anas Alhajji -- June 20, 2021

Link here

If it's a rhetorical question, and I'm sure it is, fine; but if Anas really does not know, he's not reading the blog. LOL. Yes, he knows. 

But there are at least two story lines in that graphic. An answer with "restraint" in it is not an answer at all. If true, that this is due to "restraint," why the "restraint"?

Additional observations:

  • the first trend back in 2016 - 2017:
    • whatever the reason, it came after the trillion-dollar-Saudi mistake, the Saudi surge, 2014 - 2016, and then Saudi's response
    • one can argue that the first trend identified is simply nothing more than it takes a bit of time for the rig count to catch with reality
  • same thing with the 2020 - 2022: it takes awhile for the rig count to catch up with reality, and there are multiple reasons why it takes awhile for the rig count to catch up
  • apparently, the difference between the two periods; the price of oil plateaued before the rig count caught up; in the second period, the current period, the price of oil continues to rise quickly despite the rig count rising, and then inexplicably (for some) the rig count seems to be plateauing


  1. -Banks and others are not loaning a lot of money after the number of defaulted loans in the 10s of billions of dollars.
    -Banks and many large fund not investing in oil production due to ESG movement and CO2 reduction efforts.

    I'm holding my upstream oil stocks.

    1. I agree: this is not the time to be selling holdings in upstream companies.

      I have accumulated shares in a number of upstream companies and depending on the time frame, they have been a terrible investment. However, over the long term, I am thrilled with what I have.

      The shares will all go to our daughters/granddaughters and for me, it's the steady revenue stream (dividends) that has become absolutely remarkable.

      I would be more surprised than disappointed if we don't see some dividend increases this year.

      I think the free cash flow for the majors is going to be crazy.

  2. I wouldn't forget the impact of the election. Companies look at geopolitical risk also, even for the US.

    Things like the leasing stop, permit stop, pipeline decisions. These can affect companies considerations on risking marginal projects. Not a doubt in my mind that there would be more drill baby drill if Trump had won.

    1. Unfortunately we will never know, but I agree wholeheartedly with you. With Trump, we would be drilling more.