Oil Below $40 - World Overflowing in Oil - And the Mermaid is Sinking, page-15

I decided to look at the impact the crude oil price crash has had on the big publicly listed oil companies and my findings are, to say the least, confusing! The impact is small…..



Firstly, please note that the prices are all in local currencies and not comparable; the relevant statistic is the change from early 2013….what do you see? A bit down, a bit up, a bit all over the place!!!

What is happening? Most, if not all, of the oil companies (not gas producers) are vertically integrated; i.e. they explore, produce, refine and sell. I suspect they have cut production from their own oil well facilities as much as they can and replaced that volume with oil from the pure crude oil producers, OPEC, Russia etc. etc. which is now SO cheap that it helps maintain their profitability. The other action these producers have done is slash costs. The biggest discretionary cost they have is exploration which is what we’ve seen with suppliers like MRM.

The organizations currently feeling the intense pain of the Saudi crude oil production/price strategy are the pure oil producers and suppliers to the big vertically integrated oil companies.

My take out? The Saudi strategy did not work! Again I say the Dec 4 OPEC meeting will be illuminating!!

Oh the other thing…. Look at Woodside and Inpex; the crude oil price crash has not impacted their share prices at all!! Another sign the link between offshore gas and crude oil is weak at best.