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http://www.proactiveinvestors.co.uk/companies/stocktube/1038/edison-investment-research-talks-about-the-increase-in-interest-surrounding-the-falkland-oil-story-1038.html

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http://www.telegraph.co.uk/finance/comment/liamhalligan/9105796/Soaring-oil-prices-will-dwarf-the-Greek-drama.html

Monday 27 February 2012


........................While the escalation of any kind of tension in the Middle East is obviously a serious matter, I don't accept that is why crude prices are high. The real reason –perhaps less interesting, but no less important for that – is simple demand and supply. Global crude use is soaring, while the most important oil wells on earth are rapidly depleting.

In 2001, the world consumed 76.6m barrels of oil a day. Last year, just a decade on, global oil use was a hefty 89.1m barrels daily, 16pc higher. In 2011, the world economy was sluggish, with global GDP growth of 3.8pc, down from 5.2pc the year before. Yet world oil use still rose almost 1pc in 2011, with crude averaging $111 a barrel, more than 40pc up on 2010.

The International Energy Agency (IEA), the energy think-tank funded by oil-importing Western governments, tells us that crude demand is "declining remorselessly throughout the OECD [countries]". Given that the Western economies remain weak and the eurozone is heading for recession, the "advanced economies" are consuming less crude.

The fine print shows, though, that even IEA demand projections, which tend to be under-estimates, show OECD oil use falling just 0.9pc in 2012. Demand among the non-OECD countries, meanwhile, including the emerging giants of the East, is forecast to rise 2.8pc. Total global crude consumption, then, is still set to increase by another 1pc this year, mimicking the trend of 2011.

The "demand destruction" thesis is useful for Western governments desperate for cheaper oil – and it used to be true.

Not so long ago, OECD oil use was so important that a Western demand slow-down was enough to lower global crude prices, so helping us recover. But rampant non-OECD demand now accounts for half the world total – and rising. Chinese oil consumption has recently surged at an astonishing 7pc-8pc per annum and the People's Republic is now second only to the US in terms of overall oil use. Misguided Western attempts to print our way out of trouble using QE are also boosting crude demand and pushing up prices, as savvy investors seek an "anti-debasement" hedge.

On the supply side, while attention focuses on geopolitical flare-ups, the important trends relate to geology and finance. Since the 1960s, the discovery rate and size of new oil and gas fields has fallen markedly. More than four-fifths of the world's major fields are beyond peak production. The output of the world's largest 580 oil fields is declining at a 5.1pc annual average. Strategic oil traders now worry aloud about falling pressure at Saudi's Ghawar, Cantarell in Mexico and other giants fields. The credit-crunch, meanwhile, severely cut investment in exploration and well development, which is likely to have long term supply implications.

While there's lots of hype about tar sands and shale fuels, these new technologies often expend more energy than they create, while causing horrendous environmental and water-supply problems. Conventionally-produced crude will remain absolutely critical, and demand for it will spiral, until mankind bans the internal combustion engine, outlaws ammonium-based fertilisers, dismantles the global pharmaceutical industry and learns to live without plastic. I can't see that happening anytime soon.

Geo-political issues are important, of course. A major Gulf conflict would obviously see oil prices spike. But crude is now expensive not due to political argy-bargy but because of the fundamental truths of demand and supply. Meanwhile, Western share prices keep rising...................

Nice little back test, hopefully got a load of weak holders to sell off. Got to get them out before higher rises are possible.

Some muppets are pretending they know whats happening. They have sold and started putting out rumours of problems, to try to get others to sell so they can buy back cheaper.

Normal muppet goings on - anything material the company would HAVE TO issue an RNS.

Beware of the liars on these high impact drills, they want to swing the price both ways.

no one has any need to deramp as you so like to put it ..... the facts are

problems on board the rig

chances of making any strike, let alone a meaningful one, are 5/1 at best and probably 10/1 to be more realistic

markets in general are weak

Pro
I find that last post of yours very rich coming from you...............pot and kettle spring to mind

The rumours are not trouble on the rig. It appears some minor issue occurred with the BOP unit and a replacement part was sent out on Thu 23rd last week. End of.

At most a weeks delay to drilling and given the original 45 day plan will have had at least a week built in for delays - its all very trivial. Results in 2 to 3 weeks.

As for the target, with strong avo response and flat spots - all very good DHI's - the CoS is actually very high - but yes, the official CoS is 1 in 4 chance. You will see what I mean when I say "shooting fish in a barrel in the South Falklands" soon enough...... and I will re-quote this post to you.

i merely observed as to why BOR sp remains less than excited .... frankly, if BOR do fluke it, then i'll be delighted as that will impact RKH far more than the relatively small amount i shall lose on BOR short, assuming i'm still holding (BOR) when the result comes in

Pro's can't be getting a fee on this one.,.

WDIC .... as it stands, my BOR short remains gently in the money

Well, its day 30 now of the drill, out of a 45 day program which includes testing and P&A.

If rumours are to be believed they lost a week whilst a component was replaced on the BOP, which puts it at day 23 actual.

You would expect perhaps 9 days of the 45 to be for testing, sampling and P&A, so day 36 would be your TD date.

So, if they did lose a week we are 13 days from potential news.

If they did not lose a week we are 6 days from potential news.

Got to watch BOR volume from next week, from 5th of March, any leaks of good or bad news should see rampant buying or rampant selling either next week or the week after.

3 million volume or over on a single day will be worth looking into.............

Going to be fun now.

Yep, sure will. Just a case then of wishing we had bought more if they hit, or wishing we had sold earlier if they don't!

Looking quite strong on the bid side, could be the run up through 80p is underway now.

Buying is strong on BOR and FOGL, not looking like PI's, they seem to be the sells.

Possibly now, as its getting in target range of BOR result, a few II's opening up long CFD positions - which should lead to gradual teasing up of BOR and FOGL now, fingers crossed.

With the sudden increase in buying yesterday I am intrigued.

Normally the rig stays within a 5M zone of the drill site, but yesterday she went off for a circuit around the site, perfect square, twice, now she is back on the drill site and within the 5M zone.

Looks like the rig did re-entry yesterday and is now drilling ahead again, if you zoom in on the link.

http://www.marinetraffic.com/ais/default.aspx?mmsi=308243000¢erx=-57.75184¢ery=-51.57723&zoom=10&type_color=9

So the buying of yesterday could be an indication as the map shows, drilling ahead again after the BOP pipe issue.

That would mean 2 weeks lost due to one of the pipes being broken on the BOP.

16th Feb to 29th Feb downtime.

13 days of no drilling.

Taking the 45 day schedule and saying day 36 should be TD ahead of testing and then P&A and we are now at day 31.

If 13 days lost we are looking at being on day 18 real time. That would mean 18 more days to go or a target for TD of circa 19th March.

Therefore volume increases should be watched out for from Monday 12th March onwards IMO.

Anything over 3M volume on BOR will be a leak IMV.

What figures does anyone have for risked and unrisked values for Darwin ?

Not that risked figures mean anything now with the drill bit in action.


Mine are :

Darwin : RISKED = 162 pence per share

Darwin : UNRISKED = 1103 pence (11 pounds) per share

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whatever MrP may think, the market clearly has severe reservations - which of course is not to say that he is wrong

I am actually surprised at the lack of research people have not been doing.

There are very very good DHI's at Darwin, including an extended flat spot, gas chimneys and strong avo response. They also have 3D which means they can target the fat portion of the potential sands to ensure maximum pay, if there is any pay.

I will be surprised if Darwin has no oil or gas.

no doubt there are many experts and analysts who have indeed thorough homework but clearly reach different conclusions from you

And some just read the threads but don't bother posting their thoughts and research. I'm long on both BOR and FOGL for the record and have been for some time. Both futures in the money with trailing stop losses.