Morning Thoughts – Oldinvestor

I keep hearing this same report 20 times now. Shell is playing a numbers game to make things look horrible for the industry. Not that things aren’t horrible for the industry, but… 22Billion in “write downs”. I’m not entirely certain of what that means, but it certainly isn’t operating costs in the last 3 months. I’m betting it has more to do with projected costs and “proven reserves”. I also hear an LNG tanker and car carrier collided, that’s scary but almost funny. Australia is not making enough money selling LNG, bla…

In short, the narrative is still LNG vs Production. Both are on edge. Associated gas production will still have some impact if oil recovers, which doesn’t look to be happening for a while. Dry gas is, in fact, going to continue to decline until prices support a reversal. The LNG global market is still flooded with boats looking for places to offload. I don’t know which will happen first, but the longer time drags on the greater chances are in favor of an LNG recovery.

As time goes on, and drilling is near non-existent, production falls behind on just maintaining production levels where they are, let alone expand. As time goes on, demand grows from low prices. Covid19 will most likely either evolve away from something so deadly or humans will have found new ways to live with it. Either way, people can’t seem to keep their hands off of each other and making babies, so demand will grow as populations continue to grow. Without some expectation of demand, supply would not have a reason to exist. I’ve got to stop

My position

UNL – 80% in with and average of $7.4

I’m still waiting for the next big move. It may take a while now that summer demand is picking up, prices may actually hold here. The longer the better for a rebound in the next year. I may be holding UNL that long at this point. Good luck