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Crude oil is a feed stock of refineries. When crude oil price falls and product maintains, profit increase. If crude oil price decrease and oil product price decrease as well, then it is not so good.
I think oil stocks are naturally volatile so there should be no panic until it breaks 4.60 technical support level.
As expected... SPC is on downtrend!
I think SPC is on a downtrend, i can't see any upside unless they found more oil along the IDR coast! It will be a field day for those shortists definitely.
Hi S'poregal, i think that would mean lower refining margins for SPC when oil price drops? For discussion sake, I think SPC would have hedged against any oil price increases ? I am wondering does it cost more for SPC to hedge against oil price rises or SPC has spent more to hedge against any price decrease?
I'm no oil or FA expert... but I would presume that there is a direct positive co-relation to oil price.
Can anyone advise if there is a correlation if oil price drop, the share price of oil companies also drop or there is no direct relationship? Seems like oil price has dropped to $67 a barrel and SPC today also dropped to $4.88.
I remenber SPC was trading about 70 over cents like 5 years back. What a phenomenal rise for this counter. Is there anyone out there still holding it around this price?
No doubt SPC's Fy06 results will be quite credible but eps may not match FY05 cos of dilution.
If it is for divident play, do note that traditionally pays only final divident. FY05 divident xd was 10 May so if one vests now, it is a good 8 months wait for divident. So, there is sufficient time to bottom fish. My guess is divident will be between 25-27cts per share....tax free...5-5.5% yield at today's price....very decent yield.
I believe SPC will trade sideways as dividends has been paid out. However, i think a good entry point would be around $4.80 which I think will probably take a few lull weeks to happen.
Business Times 7 September 06 - Is The End Of The Oil Age Nigh?
Proponents of a geologic theory known as peak oil say global oil production is now at or near its zenith. Once the flow crests and starts to decline - and some geologists say it already has - oil will no longer be able to alke the world's growing thirst for energy. The price of a barrel of crude will spiral to US$200 - and keep rising.
Colin Campbell is a Britosh geologists who has a doctorate in geology from the Univeristy of Oxford and more than 40 years of experience in the oil industry, popularised the peak oil theory in his book "The Coming Oil Crisis". He says world production of conventional oil, the kind that comes from gushing wells, is reaching its apex. Mr Campbell adds that society is not prepared for the consequences. It is too late to develop alternative sources of power, such as solar cells, nuclear reactors and windmills, to fill the oil gap before energy prices soar.
Theirry Desmarest, chief executive officer of Paris based Total SA, told the World Gas Conference in Amsterdam in June that global oil production would peak in 2020.
colorado,
Yes, was aware of the Indian refinery coming onstream in Oct. In fact, I posted this news in another of SPC topic a few weeks ago. There is another Indian refinery (660 bbl/day) scheduled to come onstream in 2008. There is also at least a new refinery in China under construction.
For me, I am already vested in SPC since early 2004.....so, no sweat. Its just that, with no news impetus, the counter looks abit tired at this level. Their 'upstream' activities have been abit disappointing...vis a vis...the long delay of the Oyang field getting production going. (delayed from mid 2005 to mid 2007). Furthermore, the earnings this year will be diluted with the full conversion of the bonds to shares.....think the dilution is about 15%.....i.e. if SPC maintains 2006 earnings at the same level as 2005, its eps will be 15% lower cos it has to be distributed to more shareholders.
Shplayer,
Looks like we have to "study" more before we can take the plunge. I'll stay on the sideline in the meantime...
India's Essar Oil Ltd. will start initial activity to commission its new refinery in October and complete the project in April 2007, the company said. It will initially process 150,000 bpd, rising to 210,000 bpd in the first part of next year.
Two critical secondary units -- the FCC and diesel hydro desulphuriser -- are expected to go on stream only by March 2007, officials have said.
India aims to emerge as a global oil refining and export hub in the next six years to match its growing energy needs as the economy surges ahead with 7-8% annual growth, and plans to expand its refining capacity at a time when many Western oil majors are still reluctant to invest.
Complex Singapore margins for refiners that produce more high-value transport fuels were US$3.11 a barrel over the past week, half their average from July but still above the lows of late January, Reuters data show.
Simple plants that produce more residual fuel are losing US$3.21 a barrel and slumped last week as low as US$5 a barrel, the weakest since Reuters data began in 1997.
"Going forward, the best we can hope for is for simple refinery margins to break even," said Victor Shum, an analyst with Purvin & Gertz in Singapore.
Wortel-1 well can be tied back or quickly connected to the nearby Oyong field, which is scheduled to start production next year. Wortel-1 well found natural gas and condensate, with initial gas flow of 18.5m standard cubic feet per day - roughly a sixth of the Malaysian gas that its controlling shareholder, Keppel Corp, is bringing in for its new Jurong Island power station - and condensate of 4-5m bpd. The connection via pipeline of the 2 fields should result in greater economies of scale.
SPC is downtrending from TA charts.
Business Times 2 Sept 06
Low oil prices during the 1990s and operating rates of about 75-85% meant there was little incentive to build new refining capacity. Increased economic activity in recent years resulted in some refineries, particularly in the US, operating at 95% capacity which meant that there was limited flexibility to absorb the impact of events such as Hurricane Katrina. This high operating rate stimulated a call for the construction of new refineries.
From global capacity of 83 million barrels per day (mbd) in 2004, the Interbnational Energy Agency estimated that capacity needed to be increased to about 93 mbd by 2010 and to 118 million bpd by 2030 in order to bring the industry back to a more comfortable 85% utilisation level. A recent report by the IEA suggests that 11.7 mbd of new capacity will in fact come on stream between 2006 and 2011. As much as 1.25 mbd will come on stream in 2006, but expansion may lag demand between 2006 and 2009 before substantial amounts of new capacity come on in 2010 and 2011. Chinese capacity expansion is likely to be about 2.5 mbd, nearly 25% of global growth while India plans to add about 2 mbd of new capacity by 2012.
Reading again the gas discovery announcement on Wortel 1,......production from this well can be 'tied back' to the Oyang field. This means that production can possibility come onstream at the same time as the Oyang field scheduled for mid 2007.
Apologies for the error in earlier thread.