Thats it, we're closed !

[Lightningmike]

Heavy oil at $19.00 for all lift costs...don't kid your selves they are making money. Reliable un named source. Pizzez me off everyday they want discounts on everything from all of us.


Sent from my iPad using Tapatalk

 

[freeflorider]

Also buying sled registration stickers.

From what I'm hearing all the unemployed albertains are now being hired to becoming c/os to inforce the registration here in BC up bolder mountain.

 

[timmus]

Yep , and the rest of BC are shopping at Costco and buying fuel . Lol
Like I would be .

Explain

 

[Vertical-Extreme]

Heavy oil at $19.00 for all lift costs...don't kid your selves they are making money. Reliable un named source. Pizzez me off everyday they want discounts on everything from all of us.


Sent from my iPad using Tapatalk

Maybe for conventional wells, but you don't get oil out if the ground using SAGD or CSS for 19 bucks. Its more like 40. And so much
Of our production comes from sagd / css. Thats why almost all new construction in FT Mac / Conklin, Bonnyville has been shut down. Its not worth it.

 

[800HMX]

There are no supply costs at $19/bbl in Canada. The heavy oil guys are getting $19/bbl for their oil. Cost is much closer to $50/bbl. Except for strategic investment (mineral expiry), there will be no activity. In fact, many are letting go mineral land because price recovery is just too far away.

Investment is moving to markets where the cost is lower and access to market is better.

QUOTE=Lightningmike;2209164]Heavy oil at $19.00 for all lift costs...don't kid your selves they are making money. Reliable un named source. Pizzez me off everyday they want discounts on everything from all of us.


Sent from my iPad using Tapatalk[/QUOTE]

 

[fredw]

in 1988 our lifting cost at AEC was 9/barrel, we hit as low as $12 at the pump and still ran all wells and still made money.. don't think they cant make money now.. they need to get rid of the fat, and get back to numbers that are more normal.. 100 dollar oil is not sustainable and has only hurt the industry in the long run.. get back to basics

 

[rzrgade]

Things were just a wee bit cheaper in 1988..... But don't let that alter your mindset....

 

[800HMX]

I agree Fred. But that was almost 30yrs ago. Costs just aren't nearly the same now especially in Canada. The USA is much more closely aligned to those costs and that is the reason why so much of the spend is moving south.


Sent from my iPhone using Tapatalk

 

[Lightningmike]

There are no supply costs at $19/bbl in Canada. The heavy oil guys are getting $19/bbl for their oil. Cost is much closer to $50/bbl. Except for strategic investment (mineral expiry), there will be no activity. In fact, many are letting go mineral land because price recovery is just too far away.

Investment is moving to markets where the cost is lower and access to market is better.

QUOTE=Lightningmike;2209164]Heavy oil at $19.00 for all lift costs...don't kid your selves they are making money. Reliable un named source. Pizzez me off everyday they want discounts on everything from all of us.


Sent from my iPad using Tapatalk

[/QUOTE]
Believe what you want buddy. I am basing this on our area of heavy oil. Never said all areas were the same...like I said I have a "very" reliable source. Heavy oil thermal projects.

Sent from my SM-G870W using Tapatalk

 

[800HMX]

Not too sure who your buddy is but he certainly isn't involved in any part of development or production accounting. If it wasn't for the necessity to keep SAGD wells flowing, many projects would be shut in below $50.


Sent from my iPhone using Tapatalk

 

[800HMX]

If a SAGD well costs $8,000,000 to drill, complete and construct, and an average well produces 700bbls/day for the first year. Now if it costs $15/bbl just to operate the well (water, natural gas -steam). At today's heavy oil price of $20/bbl, it would take a very long time to just pay out the drilling cost not to mention the cost of pipelines, production facilities and simple overhead. Think about well performance over time (it doesn't get any better). So really no chance to ever recover the investment let alone build any equity to drill the next well that would simply replace production that is lost over time.

This is no different with any other project, just that heavy oil requires additional inputs (well pairs, water and natural gas) when compared to more traditional production. The double bad is that heavy oil suffers a discount to WTI of about $15/bbl.

When we think about supply cost, we need to consider the cost of capital (drilling, completion, construction, facility), the cost of production and the overall G&A (overhead -interest cost, equipment, office, labor) cost to the company. There needs to be room for profit (or the shareholders will go somewhere else) to fund the programs.

In the end $100 oil provides for all these things including royalties, taxes, very good wages and company profits across the board. Move to $70 and it will still work (it needs to) but there will be concessions across the board in profit, labor costs, equipment costs, taxes paid and recovered. Move to $50 and we might be covering costs, but with sharp concessions and limited options to fund the next program. Now move to today's price of $35 and governments, companies and people all go broke -it's just a matter of time.


Sent from my iPhone using Tapatalk