LWP Research Lounge

Lately I have seen some uptrend with Oil/Gas and Trump. Fracking and it's players seem positioned well for 2017/2018 in my personal view......

From LWP:

One of the main reasons why we decided to accelerate the upgrade of our joint venture fly ash proppant plant in Pune, India, to move to 24/7 production – rather than wait until we had secured buyers for the production – was the renewed optimism around the oil and gas sector.

Last month, the Organisation of the Petroleum Exporting Countries (OPEC) decided to limit production to 32.5 million barrels a day, representing the organisation’s first output cut in eight years.

This month it has been reported that OPEC members – including Saudi Arabia – are willing to cut 4% from their peak oil output. This would tip the supply balance – and that’s helping to improve sentiment around oil prices.

Bloomberg recently set out the startlingly low level of new oil discoveries, which is running at a 70-year low, and signalling a supply shortfall ahead. It might seem paradoxical but that’s good for drilling activity and thus proppant use.

Low oil prices put downward pressure on exploration as well as production, and the number of rigs in action usually falls as well. But when oil prices recover, as they have done from January’s US$36 low, it triggers exploration activity, with the rig count typically lagging prices by three to four months.

On the famous rig count number maintained by US oilfield services company Baker Hughes – the most closely watched proxy for activity in the sector – US drilling activity has turned upward.

After peaking at 1,609 in October 2014, low oil prices put downward pressure on production and the US active rig count fell sharply, to 404 in May. But it is up just over 10% since then, to 443.

The US gas rig count, at 108, is up 27 per cent from May levels around 85.

Broker Morgan Stanley expects the uptrend to continue.

That’s great news for us because more drilling activity means more demand for proppants.

We’ve seen for ourselves that the industry environment is improving.

At a number of oil and gas conferences we’ve attended in the US this year, we noticed that activity is on the upswing and there is huge interest in our proprietary low-cost proppants.

We know there is an unmet need and we’re confident that coming into full production at Pune in late 2017 will find strong market demand.

We’re also very encouraged by the potential demand for both high-strength and low-strength proppants within India itself, driven by the country’s increasing demand for oil and related products.

Our Pune plant is ideally placed for the “Make in India” initiative being driven by the Indian Government, and strongly supported by Indian business.

The plant at Pune is a hive of activity and we’re very excited by what 2017 holds for our local joint venture partner, Hallmark, and us.

http://lwptech.com/news-media/lwp-blog-improving-oil-gas-mood-great-news-pune-plant/