Triangle Energy is a PRODUCER and not an EXPLORER that is a cash flow Positive company at all of .002 of a cent. For us as a PRODUCER its all about the POO.
We have a no debt and proactive management at TEG that are trying to turn this business from a Negative (Like some here!) to a Positive. This will not happen overnight.
I have taken this from the 88e thread as I thought it was an excellent read.
“There's no telling precisely how long the standoff will last. But the unavoidable conclusion is that shale production will drop and Saudi Arabia will cave”.
Special Report: 2016 Oil Price Forecast: How to Profit When Crude Comes Back
Has oil finally bottomed?
It looks that way.
No doubt, there are still a number of adverse conditions.
There's still a massive supply glut, Saudi Arabia and OPEC are playing games, and Iran is back in the fold.
But there are also signs that the bear market has run out of gas.
After years of rapid growth, U.S. shale production is finally starting to starting to decline. OPEC producers are crying uncle and calling for production cuts. And after dipping below $30 per barrel, oil prices have climbed back up to about $40.
And so, the worst is likely over. A rebound is on its way.
It's not going to happen overnight, but it's going to happen – gradually and with force.
In fact, this may be the rebound opportunity of a lifetime.
Here's why... Petro-Politics The key player, here, is Saudi Arabia.
As I said, the Kingdom has come under threat from increased oil production in the United States.
U.S. oil production has skyrocketed with recent technological advances in hydraulic fracturing (fracking) and horizontal and deepwater drilling.
Domestic production is now about 8.95 million barrels a day, which is 1 million barrels a day more than just a year ago and the highest level in nearly a quarter century. We're producing so much oil, in fact, that the International Energy Agency (IEA) believes we'll leapfrog Saudi Arabia and become a net exporter ourselves by 2035.
The added supply, and the subsequent decline in U.S. imports, is starting to squeeze OPEC, which is now watching its best customer transform into its chief rival.
But here's the thing: Fracking is expensive.
It takes a lot more money to produce oil from shale than it does traditional wells.
The cost of drilling shale and deepwater formations ranges from $85 to $115 for each barrel of oil produced, compared to $20 to $30 per barrel for traditional oil wells in Saudi Arabia.
So what does OPEC do? It raises production in the face of mounting oil supplies and cuts export prices to Asia.
It's essentially started a price war, full-well knowing the U.S. can't compete.
And it's working.
U.S. producers have cut so much spending that there were only 476 drilling rigs still active in the country, as of March. That's the lowest level on record.
As a result, U.S. oil production is falling faster than previously estimated.
U.S. crude oil production is expected to decline from 9.1 million b/d in the first quarter of 2016 to an average of 8 million b/d in the third quarter of 2017 — a reduction that would mark the first drop in U.S. output in eight years.
To an extent, the strategy makes perfect sense. But at the same time, it's totally unsustainable.
This drop in production is why oil prices have suddenly found a bottom.
However, for oil prices to rise further, OPEC needs to cut its production, too.
That should happen later this year.
Oil producing countries have already agreed on a freeze, as weaker members have been pushed to the brink of collapse.
In Russia, inflation is in double-digits, as the ruble careens to one record-low after another. Its economy is set to contract through 2017. Money is fleeing the country at a rate not seen since the fall of the Berlin Wall. And the central bank is burning through reserves like an arsonist.
Venezuela's economy contracted 10% last year, and is set to shrink another 8% this year. Its inflation rate is a mind-boggling 720%. The population is in a state of crisis, suffering widespread food shortages, with no international aid forthcoming.
As for Saudia Arabia, its economic model is failing, too. Its budget has been strained to the max, provoking unheard-of austerity measures and credit ratings downgrades.
Like Venezuela, the Kingdom squandered oil revenues on populist programs that returned no value other than borrowed social stability. And like Russia, it prioritized its military, with the third-largest defense budget in the world.
As much as these countries want to dismiss this as a temporary market downturn, it's not. As the Saudi Prince himself said, oil will never return to $100 per barrel. And yet that's exactly what these countries need to save their economies.
Oil at $50, $60, or even $80 per barrel simply won't do the trick.
Oil accounts for a whopping 92% of Saudi Arabia's budget.
As a result, the Kingdom needs oil at $93 per barrel for its budget to break even.
Other OPEC members are even worse off.
Iraq needs oil at $106, Nigeria needs it at $119, Venezuela needs it at $121 and Iran needs oil at $140 per barrel for its budet to break even. Russia, the largest non-OPEC producer, faces similar constraints.
Now, Saudi Arabia has a large stockpile of reserves, so the plan is to hold out as long as it can. But eventually, the government will need money. That will force the Kingdom to cut production, and oil prices will come back.
There's no telling precisely how long the standoff will last. But the unavoidable conclusion is that shale production will drop and Saudi Arabia will cave.
At that point, oil prices will climb higher, maybe not back to $100 per barrel, where it was years ago, but to $60, $70, or even $80 per barrel.
The above is my opinion only as always DYOR.
TEG Price at posting:
0.2¢ Sentiment: Buy Disclosure: Held
(20min delay)