FDM freedom oil and gas ltd

Not a whole lot has happened with this important meeting, other...

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    Not a whole lot has happened with this important meeting, other than agreement to talk again in Moscow June 18,19

    5P+1 = UN 5 Permanent Security Council Members + Germany

    Discussion Topic = Iran Nuclear Program = July 1 Oil Embargo


    Just as all the recession/demand destruction and US$ strength (flight to safety) has been driving Price of Oil (PoO) down to what looks like a possible trading trading of $85-$105 ish the Oil Embargo becomes a wild card for spike in the other direction IMO.

    What's happening?
    * China not going to be Iran's last resort importer
    * Primary Shipping Insurers not insuring Iranian Oil cargo
    * Banking networks making it really hard to exchange currency on Iranian Oil sales.

    Potential loss of 25% of Iranian Oil exports (going into storage - might be a problem later with supply, assuming it gets sorted out in a friendly fashion, since Iran economy is 90% dependent on Oil sales)

    Libya coming back on line faster than expected - but there is still a significant bblo gap to fill.

    Saudi says they can fill the gap - but for how long and did they say at what price (often say that $100 is about right)

    We know that the Canadian Oil sands producers begin to have 2nd thoughts at $85 WTI. The marginal shale producers get real worried at $75 WTI (at which one would expect to hear the Oil Sands guys are holding back). At $65, there are uneconmic oil wells everywhere (IMO), especially marginal players in the Bakken.

    Clearly the suppply/demand balance wont be in balance and that see-saw looks like it is going to be doing just that over the next 3-6 months.

    What's MAD position again??
    * WTI premium (+/- $18bblo)
    * low capex wells (<$300K) & rapid payback (pg 7 Mar Qtrly)
    * accelerating drilling in CY Q3 & Q4

    Potentially if PoO goes down "significantly", MAD can still drill aggressively and PROFITABLY. While net earnings per share increase may not happen during that time, when the cycle turns again and PoO goes back up who would you rather hold?

    (a) MAD who has had producing wells online the whole time with a continuing drill schedule (own their rigs)

    (b) A marginal producer who has been losing money and shutting off wells, suspending drilling and waiting for an economic PoO for their product.


    Hate to say MAD is a "trading stock", but it is and PoO plus volatility makes it so. Guess there will be plenty of opportunities for the proverbial buy on dips and sell into highs.

    GLTA
 
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