Ann: Quarterly Activities and Casflow Report, page-22

Hi

Good to hear the hero of BYE and the voice of reason battling it out and in high spirits. Just wondered what both of you thought about this news:

On Monday, the U.S. Department of Energy (DOE) said it would sell 26 million barrels of oil from the SPR, which is already at its lowest level since 1983, a release that had been mandated by Congress in previous years.
Source https://www.cnbc.com/2023/02/14/oil-prices-fall-on-us-crude-reserve-release.html

US to Sell 26 Million More Barrels From Strategic Oil Reserve. Energy Department to offer sweet crude from two storage sites. The Biden administration plans to sell more crude oil from the Strategic Petroleum Reserve, fulfilling budget directives mandated years ago that it had sought to stop as oil prices have stabilized.
Source https://www.bloomberg.com/news/articles/2023-02-13/us-to-sell-26-million-more-barrels-from-strategic-crude-reserve

The WTI oil price is currently at $78.74 (oilprice.org) and 26M barrels is about the US oil production for 2 days (12.30M bbl/d for Wk of Feb 03 2023 source https://ycharts.com/indicators/us_crude_oil_field_production).

The badger take is that this puts a further hard line under oil being over $68. If the price drops below this, the US reserves will buy it off the market to restock and therefore support the price.

Badger's eyes were drawn to this quote "Energy Department to offer sweet crude". Sweet crude? How sweet? and more importantly how light? Google tells me that the API gravity for Diesel is between 30-40 (*0). WTI is 39.6 (*1). Light Louisiana Sweet is 35.6 (*1) with Karachaganak Condensate (The first condensate on the wiki page) at 44.7. So when a random page says Eagle Forge is 46.2 (*2), I hit the I believe button. Anyone know the API of petrol/gasoline? I have a working figure of an API of 70. (*3) Which apparently is octane.

Now the rules of refining are, as I understand them, is that you can crack hydrocarbons into smaller pieces. But it's hard to add them together. Meaning Eagle Forge condensate (API 46.2) is great for petrol (API 70) but sucks for diesel (API 30-40). This may explain why diesel is 25c more expensive at my local hydrocarbon pumping shop.BYE produces Light Louisiana Sweet, which would seem to be good for Diesel and Petrol.

Back in the day we had this thing called peak oil. It was common knowledge we were going to run out of oil and it was prices accordingly (read high prices). And then along came Fracking, in the US, and it saved us from high prices. KSA decided to strike back and dropped the cost of oil, worldwide, to try and kill the shale revolution. It didn't work, and by the way thanks for all the cheap oil (read low price). But that was yesterday. Today the western world has a problem with Russia, (John McCain: Russia is a 'gas station masquerading as a country') which produces a heavy oil. And the KSA main customer is China not the US. America on the other hand is over producing light condensate. Good for cars but not for tanks and trucks. (read heavy industry). My point is that If share traders are using the last decade as a bias for future oil prices. Then they may price them on the low side.

Conclusion. The US needs to import heavy oil and exports condensate from fracking to balance it off. Selling off the sweat crude in the reserves is a good betas this can be replaced predominately by domestic oil production from fracking and as a side effect might make world wide oil prices, for heavy oil, lower. BYE is drilling for "traditional oil", an important part of the US energy mix.

All Disclaimers. Don't trust articles written by the furry one. His eyes are blood shot red. Especially the morning after.

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//Sources and notes

(*0) (google.com - api gravity of diesel)

The API gravity at 60°F (15.6°C) for No. 2 diesel fuel is between 30 and 42.

(*1) https://en.wikipedia.org/wiki/List_of_crude_oil_products

WTI is 39.6
Heavy Louisiana Sweet is 32.9
Light Louisiana Sweet is 35.6
Karachaganak Condensate is API 44.7°

(*2)Eagle forge is 46.2 (https://www.researchgate.net/figure/Oil-API-gravity-values-by-Eagle-Ford-zone-type-top-left-and-the-corresponding-heating_fig11_303592051)

(*3)Octane at 70http://railsback.org/PGSG/APIGravityvsSpecificGravPlot02.pdf