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IEA’s 2030 Outlook – I Don’t Even Know Where To Start

June 15, 2024

IEA’s 2030 Outlook – I Don’t Even Know Where To Start

Summary

  • IEA predicts global oil demand will peak by 2030, leading to an 8 million b/d surplus due to Electric Vehicle and energy transition movement.
  • IEA’s outlook shows a disconnect between GDP growth and oil demand growth, with unrealistic assumptions about EV penetration and gasoline demand drop.
  • Despite IEA’s flawed projections, there are insights in the report suggesting peak oil supplies this decade, particularly in US shale production.
  • We see an oil market that’s going to be in a sustainable deficit by 2030.
  • Looking for a helping hand in the market? Members of HFI Research get exclusive ideas and guidance to navigate any climate. Learn More »
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Roman Mykhalchuk

IEA published its latest 2030 outlook yesterday, and I don’t even know where to start. The big headline from the IEA medium-term outlook is that global oil demand will peak by 2030, and oil producers are going to face a

An Alarming Trend Is Developing In US Shale Oil Production

May 8, 2024

An Alarming Trend Is Developing In US Shale Oil Production

Summary

  • U.S. oil production is currently around ~13 million b/d.
  • But despite the overall meaningful decrease in Lower 48 gas production, associated gas production remains strong.
  • In addition, EIA’s reported weekly NGL production continues to outpace crude production growth.
  • The market still falsely believes that US shale will continue for many years to come, but we think the reality is different from that.
  • I do much more than just articles at HFI Research: Members get access to model portfolios, regular updates, a chat room, and more. Learn More »
Red Electric Megaphone on Red Background Stock PhotomustafaU

EIA oil storage report was fairly bullish today, with the crude draw of 6.4 million bbls outpacing our forecast of -4.33 million bbls. More importantly, in these weekly reports, we watch just how accurate we are at estimating U.S. crude production. And so far, things are

Is the U.S. Banking System Safe?–15 Years Later

March 16, 2023

IS THE U.S. BANKING SYSTEM SAFE? – 15 YEARS LATER

“We’ve got strong financial institutions…Our markets are the envy of the world. They’re resilient, they’re…innovative, they’re flexible. I think we move very quickly to address situations in this country, and, as I said, our financial institutions are strong.” – Henry Paulson – 3/16/08

The next financial crisis: Why it looks like history may repeat itself Silicon Valley Bank is shut down by regulators in biggest bank failure since global financial crisis

“I have full confidence in banking regulators to take appropriate actions in response and noted that the banking system remains resilient and regulators have effective tools to address this type of event. Let me be clear that during the financial crisis, there were investors and owners of systemic large banks that were bailed out . . . and the reforms that have been put in place means we are not going to do that again.” – Janet Yellen – 3/12/23

With the recent implosion of Silicon Valley Bank and Signature Bank, the largest bank failures since 2008, I had an overwhelming feeling of deja vu. I wrote the article Is the U.S. Banking System Safe on August 3, 2008 for the Seeking Alpha website, one month before the collapse of the global financial system. It was this article, among others, that caught the attention of documentary filmmaker Steve Bannon and convinced him he needed my perspective on the financial crisis for his film Generation Zero. Of course he was pretty unknown in 2009 (not so much anymore) , and I continue to be unknown in 2023.

The quotes above by the lying deceitful Wall Street controlled Treasury Secretaries are exactly 15 years apart, but are exactly the same. Their sole job is to keep the confidence game going and to protect their real constituents – the Wall Street bankers. And just as they did fifteen years ago, the powers that be once again used taxpayer funds to bailout reckless bankers. Two hours before the only solution the Feds know – print money and shovel it to the bankers – Michael Burry explained exactly what was about to happen.

…click on the above link to read the rest…

If You Believe

November 3, 2022

IF YOU BELIEVE

If you believed they put a man on the moon
Man on the moon
If you believe there’s nothing up his sleeve
Then nothing is cool
REM – Man on the Moon

The REM song Man on the Moon, released in 1992, is a haunting melancholy tune, with Andy Kaufmann and his life and death as the focal point. For me, the lyrics always bring me back to the simpler time of my youth, when our antenna TV could get about eight channels, we had one rotary phone, one old used station wagon, lived in a row home, and a family of five could be raised on a truck driver’s income, with a stay-at-home mom.

It’s the references to the Game of Life, Risk, Monopoly, Twister, checkers, and chess, which invoke what we did for fun when we weren’t out riding bikes, playing stick-ball, roller hockey, or touch football in the streets. Were bad things going on in the world? Sure. The Vietnam War, Watergate, gasoline shortages and rationing, stagflation, and a myriad of other damaging challenges confronted the country, just as they always have throughout history.

One of the supposed historic moments in human history was the moon landing in July 1969, when I was six years old. I remember sitting on the floor in front of the TV and thinking how cool it was and how cool that I was allowed up at 11:00 pm to watch it. Another 600 million people were also watching. At the time, no one questioned what they were watching live on their TVs. It was the penultimate human achievement, with the goal set by JFK during Camelot before he was murdered by his own government, proving our technological superiority to the evil Soviets. To fail in this mission would have been too embarrassing to the leaders of our empire, only two decades into its infancy….

…click on the above link to read the rest…

Lack Of New Fossil Fuels Investment May Trigger A New Financial Crisis

November 20, 2021

Lack Of New Fossil Fuels Investment May Trigger A New Financial Crisis

I am an oilfield veteran of 38+ years. Retired from Schlumberger since 2015. My background is drilling and completion fluids. I have authored a number of technical papers on completion topics. I have worked around the world- Brazil, Russia, Scotland, and the Far East. I still maintain a training and consulting practice and am always willing to help people who want to learn.

Summary

  • As much as a trillion dollars of upstream investment has been delayed or canceled in the last few years. We discuss the reasons for this and the possible ramifications.
  • We think the parallels to the financial crisis of 2008 are very real, and the lack of upstream investing could exacerbate impacts to financial markets.
  • We recommend investors look carefully at the balance sheets of domestic shale companies vs. those of the Euro oils transitioning to green energy.
  • We’re bullish on oil and gas and believe it will continue to play a vital role in global energy security for decades to come.
  • Looking for more investing ideas like this one? Get them exclusively at The Daily Drilling Report. Learn More »

 

Shocked and surprised boy on the internet with laptop computer
BrianAJackson/iStock via Getty Images

Introduction

I’m a proponent of fossil fuels investment. I write articles on companies that engage in this activity on this site virtually daily. In this article I intend to rebut some conclusions reached recently in recent article. I consider that the global energy mix has become too skewed toward “renewables” and we’re on the path toward a rediscovery of the energy security that traditional sources bring. The very early steps of that path, to be clear. Failure to make these investments could precipitate a severe and long-lasting financial crisis. We may already be beyond the point of no return, but I will avoid speculation on that score and let you draw your own conclusions.

…click on the above link to read the rest of the article…

The Global Economy Is Rapidly Slowing Down

October 27, 2021

The Global Economy Is Rapidly Slowing Down

Summary

  • Between a domestic real estate bubble bursting, the Evergrande debt crisis, electricity power outages, plus negative service and manufacturing PMIs in September, China’s economic slowdown has been very swift.
  • The practice of defaulting on foreign debt and trying to restructure domestic debt is common in emerging market countries, so China has clearly failed to graduate to a reliable industrial economy due to its selective debt payments and brazen neglect of U.S. dollar-denominated debt.
  • In the U.S., economic growth has also slowed dramatically. The Atlanta Fed is now estimating only 0.5% annual third-quarter GDP growth, down from its previous estimate of near-6% annual GDP growth.
Delivery of agricultural products to the port for unloading. Trucks waiting their turn.
Nikolay Malshakov/iStock via Getty Images

China’s National Bureau of Statistics announced that China’s GDP grew at a 4.9% annual pace in the third quarter, down from a 7.9% annual pace in the second quarter; but I am skeptical that China’s GDP managed to expand by even 4.9% last quarter, since the latest PMI data signaled a recession. Between a domestic real estate bubble bursting, the Evergrande (OTCPK:EGRNF) debt crisis, electricity power outages, plus negative service and manufacturing PMIs in September, China’s economic slowdown has been very swift.

I should add that Evergrande’s bonds denominated in Chinese yuan made some recent interest payments and $2.03 billion in U.S. dollar-denominated bonds finally paid $83.5 million in interest payments that were almost 30 days late, so Evergrande’s U.S. dollar-denominated bonds technically avoided a default.

Nonetheless, Evergrande is clearly taking care of its Chinese investors first, while postponing payments to international investors. This is not a surprise, since Evergrande is likely taking orders from the Chinese Communist Party authorities on how to restructure its assets and related debts. However, this action by Evergrande on payment of its tardy interest coupons will now likely hinder other Chinese companies that want to sell U.S. dollar-denominated debt. Overall, Evergrande still has over $300 billion in debt.

…click on the above link to read the rest of the article…

Peter Schiff: ‘The Fed Is Like Mr. Magoo! We Are Headed For A Massive Financial Crisis’

April 27, 2018

Peter Schiff: ‘The Fed Is Like Mr. Magoo! We Are Headed For A Massive Financial Crisis’

Peter Schiff has been saying that even though the stock market is on a slow downward slide, the biggest problem is actually in the bond market. Last week, Schiff warned us to be wary of the calm before the storm, and this week, he said most, including the Federal Reserve, are oblivious to the upcoming crash.

Yields have risen to levels not seen since before the 2008 crash. More significantly, the yield curve is flattening, according to Schiff. 

According to Seeking Alpha, Schiff pointed out, if you go back to the Second World War and look at average bond yields, these low rates are an aberration. They’ve been low for a long time, but they aren’t going to stay low forever. And yet the market seems to think it’s going to go on for another 30 years.

“Clearly, the market assumes that interest rates on 10-year government bonds are going to stay just barely over 3% for the next 20 or 30 years. I mean, that is crazy. Why would anybody think that?”

Just consider the deficits as well. The federal government is running $100 billion per month budget deficits – and this is during a supposed economic expansion. What’s going to happen when we hit a recession? And of course, rising interest rates just compound the problem. As Treasuries come due, the government has to replace them with higher interest rate bonds. This expands the deficit even further.

Also compounding the problem is the money printing scheme the Federal Reserve has taken to.  Why in the world would any rational person assume inflation will remain low?

…click on the above link to read the rest of the article…

Shale Company Defaults On $175 MM In Bonds Without Making A Single Interest Payment

March 5, 2015

Shale Company Defaults On $175 MM In Bonds Without Making A Single Interest Payment

Update: And just to prove that people are indeed, idiots, moments ago this hits:

  • ENERGY XXI GULF COAST, INC. PRICES UPSIZED PRIVATE OFFERING OF $1.45
    BILLION OF 11.000% SENIOR SECURED SECOND LIEN NOTES DUE 2020

We set the odds at 75% that not even odd coupon payment will be made in this case either.

* * * * *

It was just this past June when a report on Seeking Alpha quizzically asked, “Can American Eagle Energy Corporation Fly High Like An Eagle Over The Next Months?”

The answer, it turns out, is no.

According to a Bloomberg report, the Colorado oil producer, whose stock is now trading at a very sub-eagle $0.20, or about $6MM in market cap (the stock was at $6.00 when the Seeking Alpha report came out) has announced it will not make even one coupon payment on its bonds issued less than seven months ago.

Bloomberg reports that after raising $175 million in a junk-bond offering, American Eagle Energy Corp. said Monday thatit wouldn’t make its first interest payment on the debt. And instead of fulfilling its naive bondholders dreams that they will collect an 11% annual coupon for the next 5 years and then get repaid in full, the company hired bankruptcy advisers, Canaccord Genuity and Seaport, to negotiate a restructuring plan with the bondholders. Said bondholders now have two options: give the company more time to try to become profitable (i.e., hope that oil somehow soars from here) or push it into default, and become the new equity holders following a debt for equity.

 

…click on the above link to read the rest of the article…

Olduvai IV: Courage
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Olduvai II: Exodus
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