National Petroleum Reserve

[Akcabin]

Our tax structure is set up so only companies producing more than a certain amount. 50 thousand barrels a day. So only the majors pay a corporate tax. Along with royalty tax Smaller companies pay the royalty tax on oil produced.
Tax incentives in SB-21 incouraged reworking of wells. With modern technology much more oil is recoverable than when they were capped. This has increased production considerably and the state gets a higher royalty. And attracted a lot of smaller companies.
The NPRA was designated for oil and gas exploration so America didn't have to buy energy from other countries.
And it is being done in an invironmentally safe way. That is safe for their workforce.
There are also many more opportunities for biologists n other scientists from all over the world to study the arctic better.
Nothing is perfect. For a while longer the world will still need petroleum products. And science continues to find ways to use this energy in more efficient ways. While providing huge economic opportunities.
If memory serves the federal government takes 50% of the royalty. A tremendous amount of money that goes to help all Americans.
And with the cost of hunting going up like it is a good job is needed. Something like over 25-35 thousand bucks for a guided hunt. And I know a few guides n they aren't rich. Goes somewhere.
I don't have all the answers but try to stay informed

 

[AvidIndoorsman]

See @neffa3 . Push a few buttons and all this solid gold analysis pops out! Didn't even have to subscribe to a newsletter.
Good stuff wllm.

I think “other” AK Cook Inlet + North Slope… Utah, CA, Kansas, etc

 

[AvidIndoorsman]

Our tax structure is set up so only companies producing more than a certain amount. 50 thousand barrels a day. So only the majors pay a corporate tax. Along with royalty tax Smaller companies pay the royalty tax on oil produced.
Tax incentives in SB-21 incouraged reworking of wells. With modern technology much more oil is recoverable than when they were capped. This has increased production considerably and the state gets a higher royalty. And attracted a lot of smaller companies.
The NPRA was designated for oil and gas exploration so America didn't have to buy energy from other countries.
And it is being done in an invironmentally safe way. That is safe for their workforce.
There are also many more opportunities for biologists n other scientists from all over the world to study the arctic better.
Nothing is perfect. For a while longer the world will still need petroleum products. And science continues to find ways to use this energy in more efficient ways. While providing huge economic opportunities.
If memory serves the federal government takes 50% of the royalty. A tremendous amount of money that goes to help all Americans.
And with the cost of hunting going up like it is a good job is needed. Something like over 25-35 thousand bucks for a guided hunt. And I know a few guides n they aren't rich. Goes somewhere.
I don't have all the answers but try to stay informed

“In departing Alaska, BP is choosing to focus on higher growth opportunities elsewhere, including in U.S. unconventionals,”

On the downside, he noted, “an operation the size of Prudhoe will stretch a company the size of Hilcorp and likely will mean fewer jobs on the North Slope and less corporate income tax for the state.”


One other issue Myers raised is “what the state will need in bonding, and what guarantees Hilcorp can give the state. The state will have to carefully review Hilcorp’s balance sheet and not fully release BP from its obligations for long term field asset abandonment, removal and restoration.”

Changing of the guard on North Slope; no longer a mature basin - September 15, 2019 - Petroleum News

www.petroleumnews.com

 

[BigHornRam]

Don't forget the doom and gloomers prediction that the pipeline is going to sink into the melting permafrost, making it, and north slope oil a thing of the past.

 

[Akcabin]

I think in some ways that's really the entire issue Alaska has going forward.

There are basically 3 operators in the entire state.

Conoco = 4 rigs
ENI (Italian Public) =1 rig
Hilcorp (Private) = 1 rig

ENI is sun ~30,000 BOD and Conoco and Hilcorp are like ~200,000

A well declines over time so in order to keep your production even level you have to keep drilling, honestly I'm not familiar enough with North Slope decline rates/completion rates to tell you how many.
View attachment 211222

1 rig for ENI probably? increases production
1 rig for Hilcorp, I doubt increases production
4 rigs for Conoco? not sure

Go on ENI's website and try to find anything about Oil, like shell and other European operators they are waaay more green energy conversion train than US companies.

Hilcorp is private so I can't find out much about their plans.

So basically the fate of AK, which uses Oil and Gas taxes for everything, is entirely reliant on 1 company, Conoco. Conoco has said they are spending 1B in Alaska.

To compare to the lower 48, Colorado and Oklahoma produce similar amounts of hydrocarbons to Alaska. Here are the operators + rig count for OK. Now it's shale and therefore a steeper decline curve so it's not a 1 OK rig =1 AK rig... I'm not sure what it is as there is a ton of variability in even OK but... I think it demonstrates how much more diverse the operating environment is...

53 rigs with 7 public operators. Conoco is probably the size (market cap) of the first 10 (excluding XTO) operators combined.
View attachment 211232

But I think the not having all your eggs in one basket, close proximity to infrastructure, good tax and regulatory environment, and cheaper drilling costs means that with Oil prices the way they are we will see Oklahoma grow production more rapidly than AK.

North slope gas is wet and contains many other natural gas liquids. Petroleum products are valued on btu equivalents. Making for a more profitable product. Also helps in reducing the viscosity of the oil. Assisting in flow.
There may be more wells drilled elsewhere. Wells developed in AK last a long time. And technology continues to change the game. Petroleum companies could probably make money under most competitive tax regimes. Just don't keep changing the rules. Stable tax environment reduces risk.
Anyway I believe we can have responsible petroleum development and continue to have jobs and an economy. And more wildlife with better opportunities for management.
I respect our public lands and feel we can find a balance. I know I don't have all the answers.

 

[Akcabin]

“In departing Alaska, BP is choosing to focus on higher growth opportunities elsewhere, including in U.S. unconventionals,”

On the downside, he noted, “an operation the size of Prudhoe will stretch a company the size of Hilcorp and likely will mean fewer jobs on the North Slope and less corporate income tax for the state.”


One other issue Myers raised is “what the state will need in bonding, and what guarantees Hilcorp can give the state. The state will have to carefully review Hilcorp’s balance sheet and not fully release BP from its obligations for long term field asset abandonment, removal and restoration.”

Changing of the guard on North Slope; no longer a mature basin - September 15, 2019 - Petroleum News

www.petroleumnews.com

Mark Myers is a smart guy. Brings a lot to the table. Great geologist. And I certainly respect him. But that's his opinion. As he's basing it on his experiences. And he's a nice guy

 

[AvidIndoorsman]

North slope gas is wet and contains many other natural gas liquids. Petroleum products are valued on btu equivalents. Making for a more profitable product. Also helps in reducing the viscosity of the oil. Assisting in flow.
There may be more wells drilled elsewhere. Wells developed in AK last a long time. And technology continues to change the game. Petroleum companies could probably make money under most competitive tax regimes. Just don't keep changing the rules. Stable tax environment reduces risk.
Anyway I believe we can have responsible petroleum development and continue to have jobs and an economy. And more wildlife with better opportunities for management.
I respect our public lands and feel we can find a balance. I know I don't have all the answers.

and a basin like the Anadarko has dry gas on one side, heavy oil on the other a mix as it transitions allowing companies to kinda pick what they what a bit based on commodity prices. Further, it's all private with a flexible permit structure, meaning you can actually pivot and drill different wells within your foot print if for instance gas prices soar. Federal permits are ridiculously slow and cumbersome... OK you can change things up in a couple of weeks if necessary, on fed lands it's 6 months... maybe a year depending on things and the local BLM office.

Point being economics drives everything.

"I believe we can have responsible petroleum development and continue to have jobs and an economy".

Not arguing that one way or another, I'm more saying while there is better money to be made elsewhere Alaska will languish.

 

[Akcabin]

and a basin like the Anadarko has dry gas on one side, heavy oil on the other a mix as it transitions allowing companies to kinda pick what they what a bit based on commodity prices. Further, it's all private with a flexible permit structure, meaning you can actually pivot and drill different wells within your foot print if for instance gas prices soar. Federal permits are ridiculously slow and cumbersome... OK you can change things up in a couple of weeks if necessary, on fed lands it's 6 months... maybe a year depending on things and the local BLM office.

Point being economics drives everything.

"I believe we can have responsible petroleum development and continue to have jobs and an economy".

Not arguing that one way or another, I'm more saying while there is better money to be made elsewhere Alaska will languish.

Yeppers

 

[AvidIndoorsman]

@BigHornRam

New York Pension Fund To Dump Half U.S. Shale Firms From Its Portfolio | OilPrice.com

The third-largest pension fund in the United States, the New York State Common Retirement Fund, will sell stakes and bonds in half the shale companies it is invested in

oilprice.com

This this is a bit hyperbolic but I do wonder sometimes what happens when Exxon's EV/EBITDA hits .5x while Tesla is at 2000x.

@SAJ-99 am I correct in that the EV/EBITDA ratios of a lot of OG companies are pretty wacky compared to historic trends? Investment is down, and certainly people are thinking green, but we have literally zero options for energy for the next 20+ years. I'm not really ra ra oil and gas, I just think it's interesting.

​

 

[BigHornRam]

@BigHornRam

New York Pension Fund To Dump Half U.S. Shale Firms From Its Portfolio | OilPrice.com

The third-largest pension fund in the United States, the New York State Common Retirement Fund, will sell stakes and bonds in half the shale companies it is invested in

oilprice.com

This this is a bit hyperbolic but I do wonder sometimes what happens when Exxon's EV/EBITDA hits .5x while Tesla is at 2000x.

@SAJ-99 am I correct in that the EV/EBITDA ratios of a lot of OG companies are pretty wacky compared to historic trends? Investment is down, and certainly people are thinking green, but we have literally zero options for energy for the next 20+ years. I'm not really ra ra oil and gas, I just think it's interesting.

​

I don't look at New York for intelligent thinking. Just the opposite. If they want to chase unicorns, I hope it works out for them.

 

[noharleyyet]

I don't look at New York for intelligent thinking. Just the opposite. If they want to chase unicorns, I hope it works out for them.

 

[SAJ-99]

@BigHornRam

New York Pension Fund To Dump Half U.S. Shale Firms From Its Portfolio | OilPrice.com

The third-largest pension fund in the United States, the New York State Common Retirement Fund, will sell stakes and bonds in half the shale companies it is invested in

oilprice.com

This this is a bit hyperbolic but I do wonder sometimes what happens when Exxon's EV/EBITDA hits .5x while Tesla is at 2000x.

@SAJ-99 am I correct in that the EV/EBITDA ratios of a lot of OG companies are pretty wacky compared to historic trends? Investment is down, and certainly people are thinking green, but we have literally zero options for energy for the next 20+ years. I'm not really ra ra oil and gas, I just think it's interesting.

​

EV is basically Market cap minus cash/cash eqv, so the EV of O&G as a group is low by historical standards because no one wants to own them to look more ESG hence depressing market cap. There is no way to compare XOM to TSLA in terms of valuation. If investors want to make the market cap of TSLA $1T and the p/e 200x, then that is where it will be. While XOM sits are $350B and a p/e of 13x. Does that make them a good investment as @BigHornRam would argue? Only if everyone decides that it was a mistake and to buy the stock of XOM. What I'm hearing from execs on calls is there will be little growth until investors start to reward it (buy the stock at a higher price). CEO's get paid on the stock price, not whether or not people are happy about the price of gasoline.

 

[AvidIndoorsman]

EV is basically Market cap minus cash/cash eqv, so the EV of O&G as a group is low by historical standards because no one wants to own them to look more ESG hence depressing market cap. There is no way to compare XOM to TSLA in terms of valuation. If investors want to make the market cap of TSLA $1T and the p/e 200x, then that is where it will be. While XOM sits are $350B and a p/e of 13x. Does that make them a good investment as @BigHornRam would argue? Only if everyone decides that it was a mistake and to buy the stock of XOM. What I'm hearing from execs on calls is there will be little growth until investors start to reward it (buy the stock at a higher price). CEO's get paid on the stock price, not whether or not people are happy about the price of gasoline.

What I always struggle with understanding the market is the mechanics of public v. private evaluations.

Example:

Say there is a OG company whose net profit is 14B a year, that's a net above what it takes to maintain production, and acquire new assets for future running room. So 400MM and sustainable for 20+ years.

Then there is a Tech/green company that nets 1B a year, same general mechanics as the OG company.

Seems like the OG company is the better business, certainly if I was to own them 100% I'd want the OG company... but the market seems like it thinks that the Tech company is worth 100X what the OG company is worth.

Seems more like it's more about trading pokemon cards than running a business, when it comes to certain companies.

 

[BigHornRam]

What I always struggle with understanding the market is the mechanics of public v. private evaluations.

Example:

Say there is a OG company whose net profit is 14B a year, that's a net above what it takes to maintain production, and acquire new assets for future running room. So 400MM and sustainable for 20+ years.

Then there is a Tech/green company that nets 1B a year, same general mechanics as the OG company.

Seems like the OG company is the better business, certainly if I was to own them 100% I'd want the OG company... but the market seems like it thinks that the Tech company is worth 100X what the OG company is worth.

Seems more like it's more about trading pokemon cards than running a business, when it comes to certain companies.

You are a smart guy wllm. Listen to your gut.

 

[SAJ-99]

What I always struggle with understanding the market is the mechanics of public v. private evaluations.

Example:

Say there is a OG company whose net profit is 14B a year, that's a net above what it takes to maintain production, and acquire new assets for future running room. So 400MM and sustainable for 20+ years.

Then there is a Tech/green company that nets 1B a year, same general mechanics as the OG company.

Seems like the OG company is the better business, certainly if I was to own them 100% I'd want the OG company... but the market seems like it thinks that the Tech company is worth 100X what the OG company is worth.

Seems more like it's more about trading pokemon cards than running a business, when it comes to certain companies.

Markets tend to be confusing in that respect. You just have to assume it all works out in the end. Timing is always the difficult part, and the part that matters the most.
O&G has a problem in their product is viewed as causing the destruction of the planet. Americans are slowly coming to this realization, but Europe is a decade ahead. This doesn't mean that fossil fuels disappear in a decade, but you can look at the graph of coal use and see the future. Hard to acquire ownership in a company who's main product might have a shorter life than the equipment needed to create it.

 

[BigHornRam]

What do you think @wllm1313 ? Taxpayers going to get to bail out the New York Pension fund when it goes broke?

 

[AvidIndoorsman]

What do you think @wllm1313 ? Taxpayers going to get to bail out the New York Pension fund when it goes broke?
View attachment 211865

ESG investing seems morally tenuous for a pension fund. A cop can’t cash out and take his money elsewhere, like a 401k holder could, I think it’s unethical to not focus purely on balancing risk/returns.

 

[BigHornRam]

ESG seems the rage these days....it will work out.

Sustainable investing opportunities & ESG funds | BlackRock

From exclusionary screens to ESG-optimized and targeted impact funds, learn how to combine purpose and performance with BlackRock’s sustainable investments.

www.blackrock.com

 

[jchiles]

I hunt and fish here in the West. I have solar panels on my house an drive and electric car for commuting. I hardly ever by fuel for my truck as I only drive it to hunt and fish. Hunters can change our habits to help land that harbors wildlife. We don't need to be so dependent on oil and gas. You can feel pricked by this or actually look into it. My costs for energy and very low, save money and help wildlife.

 

[406dn]

I hunt and fish here in the West. I have solar panels on my house an drive and electric car for commuting. I hardly ever by fuel for my truck as I only drive it to hunt and fish. Hunters can change our habits to help land that harbors wildlife. We don't need to be so dependent on oil and gas. You can feel pricked by this or actually look into it. My costs for energy and very low, save money and help wildlife.

So by your own statement you hardly ever hunt or fish. Each of those takes a trip to the gas station usually.