says that drilling in the Permian and Eagle Ford ( both near Houston) are still profitable even at $50/bbl oil because price of drilling rigs has collapsed . They get less for their product (oil) but costs of producing the product have declined too. Technology continues to reduce the time needed to drill these wells as well as well as the cost of services.
and another article suggesting gulf coast refiners are doing fine
Both Eagle Ford and the Permian wells were the most profitable fracked wells even before the collapse The former produces lots of distillates too(needed in the chemical business)
Usually I ignore Cramer but this AM when taking my usual quick peak at CNBC while dressing he talked about this. At some point, buying the right oil stocks is going to be very profitable. Because oil booms and busts date back to the 1860’s. Too bad there is no good way to buy crude itself ( the offered ETF have problems)
At some point, buying the right oil stocks is going to be very profitable. Because oil booms and busts date back to the 1860’s.
Hi Mauser96,
I have an analyst friend (not at TMF) that suggests the bottom won’t be in until the Saudi’s drop production. In my mind that may never happen since I subscribe to the theory that when oil is no longer needed there will still be some in the ground so I have fixated on a price of crude to trigger my buying.
After reading many articles and having very little investment in the oil sector, I intend to buy my first 1/3rd of total investment when crude breaks/approaches the $40/bbl level. $50 came fast but $40 may take a bit longer. I do have my stocks all picked out with target prices on them.
I also think the low prices could go on a lot longer than this most recent uptick would suggest so what’s the rush? And wouldn’t I kick myself if I bought now and then the upcoming pullback hit? Even if XOM at $89 is a bargain, who wants to sit there for a year or more, waiting for an up move?
JMO
Mykie
I too am going to use the $40/bbl mark as an initial trigger. But if too many people expect $40 to be the bottom, it won’t be. I make no attempt to predict oil prices, only react to them, $40 may not come, if it does it may not be the bottom. Because this is partly a Soros reflexivity thing.
It’s hard to pick a good oil company because in fact only insiders know what their leases are worth. It is all very opaque to an outsider. Oil company statements are tinged by the fact that all good oil men are optimists by nature.