Tips for surviving a correction

[vbin]

@fenders53 how do u know it's not feasible. What's the production cost for Saudis and Russia?

[vbin]

http://graphics.wsj.com/oil-barrel-breakdown/ here is breakdown. Saudis can sustain it more.than anyone else.

[fenders53]

(03-09-2020, 12:47 AM)vbin Wrote: @fenders53 how do u know it's not feasible. What's the production cost for Saudis and Russia?

Oh they can sell it cheap.  What they don't have is other ways to make money, and SA government is now committed to a lot of social spending.  Russia has a few more natural resources, but no real economy either.  It depends who you ask but I've heard they can break even around $20 with all costs included.

And yes they won't mind if shale goes away.   They have to be tired of tightening, so the shalers can double their production.  Shale is in deep trouble fast if they keep prices down low.  The small operations with debt will be defaulting on loan payments in a quarter if what I read is correct.  Some of them were shutting down before this happened.  Fracking wells fade from full capacity quickly, then you have to use special techniques to extract which isn't free of course.  In any event shale is going to drop way off for this cycle.  No chance oil gets expensive anytime soon.  They say low oil prices cure low oil prices.  The cycle will repeat, but not soon enough. Have to kill off shale, and big oil will suffer too. They will live to fight again though.

[divmenow]

Wow crazy!! Send the Missiles in!! I can’t believe BP is at $25 now in pre-market. Buy at $20?? Well at the least gas prices at the pump will be cheap lol . .. looks like a recession is coming!

[NilesMike]

CVX oil cost is $28/bbl

[divmenow]

who's buying CVX, RDS.A, CVX or BP this morning. Any brave takers lol

[NilesMike]

Regarding hedges, I have recently allotted a portion of portfolio to this (3 months or so) https://engineeredportfolio.com/2018/05/...investing/

the main goal was simplification going forward or upon my demise.

First 2 months were down, first small caps then back to S&P, third month March indicated a switch to bonds. Pheww that's up 20% by time today is over.

It may be of interest to some, especially us older folks.

[kblake]

RIP OXY..... Wow this is at $16 right now. Unbelievable!

[NilesMike]

On the bright side, maybe I will be able to pick up some cheap rental properties and muscle car prices will come down from the stratosphere.

Building my lemonade stand here, got plenty of lemons I suspect.

[crimsonghost747]

(03-09-2020, 07:08 AM)divmenow Wrote: who's buying CVX, RDS.A, CVX or BP this morning. Any brave takers lol

I might nibble a bit on Shell, they will survive this.

While the Saudi's can of course pump more and cheaper than anyone else, it's basically their only income source. They can, and might want to, keep the price down for 6 months or so to drive US shale out of business but their country just cannot survive at it's current state with oil around $30 for years.


The longer these low prices last the uglier it will get for western oil companies, but at some point the prices will go back up to a level where Shell is profitable and they can cover the dividend.

Shell, for a long time now, has not been a bet on oil price going higher. It's a bet, that currently yields something like 11%, that they can maintain that dividend.

[kblake]

I'm buying a few names this morning. In 5 years these will all look like bargains. At least I hope so lol

[EricL]

(03-09-2020, 08:11 AM)crimsonghost747 Wrote:

(03-09-2020, 07:08 AM)divmenow Wrote: who's buying CVX, RDS.A, CVX or BP this morning. Any brave takers lol

I might nibble a bit on Shell, they will survive this.

While the Saudi's can of course pump more and cheaper than anyone else, it's basically their only income source. They can, and might want to, keep the price down for 6 months or so to drive US shale out of business but their country just cannot survive at it's current state with oil around $30 for years.


The longer these low prices last the uglier it will get for western oil companies, but at some point the prices will go back up to a level where Shell is profitable and they can cover the dividend.

Shell, for a long time now, has not been a bet on oil price going higher. It's a bet, that currently yields something like 11%, that they can maintain that dividend.

Might want to look into Shell's exposure to LNG. That market has tanked as the US ramped up LNG production, and Shell has bet very big on the sector.