Newsletter, Links, & Opinion

             At the  beginning of the year I like to write an opinion regarding where we think the industry will be domestically for a calendar year and where the advantage may be from an investment standpoint. We've been MOSTLY accurate (taking out 2014) in the past, have felt confident we can make a decent prediction with some caveats.

To recap 2020, our prediction was fairly close...if you don’t count the pandemic!

                            So let’s talk about what we saw in 2020 on the world  market

• Rig  count was down by at least 40% throughout the world. Lots of layoffs from top producers up and down the chain.

• The United States was STILL the strongest player on the world oil and gas market. The US controls both imports and exports in their hemisphere and  what they will and can take from the Middle East.

• Large US producers evened out supply and demand for the most part by end of Q3

• Continuing sanctions on Iranian oil and pressure on their typical buyers to refuse delivery has certainly helped. It has helped stabilize the entire oil economy in the Middle East.

•       Anyone who shorted oil in Q1 got killed in early Q2 (but a good time to pick up some commodities).

• A “little” blip where you had to pay someone to pick up oil from West TX in April!

               What do we see on the domestic and international realm on a whole today?

• Rig count and stockpiles should be fairly stable throughout the year as world  and domestic demand is only seen to rise no more than 5%. Rig count should have a higher percentage of re-entry vs exploration.

• OPEC+ members will be coming back to play “ball” with the US markets...keeping all commodities stable...for about 6 months. (Russia went after Trump and US...didn’t really pan out for them)

•  Although their demand will grow, neither China nor India should develop enough new demand to outpace supply based on their current overall economic conditions.

• LNG and crude/refined product export market will slightly increase with a new China trade deal.

                                             What role does politics plays into this year?

This year, we anticipate that we will see similar policies implemented by the Federal Government side as we did in the Obama Years. This will create the following:

      • Little to no support for new domestic infrastructure (think Keystone       Pipeline)
     • Little to no new development support on any Federal lands or existing       leases
     • Open LNG business to China
     • Iran may come back into play as supplier
     • Federal Tax incentives being left alone

Leading to: Federal lease interest with ANY type of polarity (environmental action groups) will NOT be pursued by major oil companies (ex: ANWR bids were abysmal) AND mineral rights on private land may be valued higher.

                                  What can be expect for the domestic prices as a whole?

We’re predicting no lower than $45 WTI/ $2.70 natural gas and no higher than $73 WTI/$3.30 natural gas for 2021 for extended periods. WTI is $52 today and gas is $2.70.

Of course, there are possible factors that could fluctuate prices rapidly.   Some oil economists are predicting market price increases with volatility especially in Q1. It may create an artificial price spike with WTI and natural gas pricing in Q2. There is also the possibility that OPEC+ countries may go rogue and dump product on the market.

                  What does this mean for the direct domestic oil and gas investor today?

We are anticipating no fire sales of leases, production, equipment, nor any soaring prices of operating expenses. With little demand for exploration, it will keep lease and oilfield services and availability in check.

Lack of large exploration today makes for a scenario for increased demand and relatively diminishing storage in late Q4.

We are predicting a statistically significant price jump in both Brent and WTI by Q3.

We see some significant short and medium gains to be made for those who get in early into programs that have good potential for production and solid site management practices. especially in Q1.

Don't be in "I should have invested" boat...check out the programs we have today or call us to customize your investment criteria in this  space, including leases for sale.
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This  is not an offer to buy or sell securities. We are not a United States Securities Dealer or Broker or United States Investment Adviser. This is an opinion article and should be treated as such. Do your own due diligence and consult with a licensed professional before making any investment decisions.

©2021       Knik Energy | Ft. Worth, TX 

Knik Energy Inc. is officially announcing the halt of promotion of investment programs for well development or improvement offered by  Kelly Buster and/or assigns (Union Asset Management, LLC.  Strawn Partners Operating, LLC Holland Asset Partners, LLC, etc) .

So...we observed the price of oil for the past 2 weeks get hit by hyperbolic news and natural market flows. Then yesterday happened...

Saudi Arabia, in a bid to squeeze Russia and its oil partners, has decided to open the spigots and flood the world market with cheap oil.  Although it appears the US is not the specific target, we are taking shrapnel. I saw WTI go down to $27 yesterday...was getting flashbacks from a few years ago. 

Let’s get to the facts:

• This may be the strongest US economy in history both on market and in the streets (industry, technology, employment, etc.). 
• Covn-19 is somewhat predictive on who is most susceptible and individuals and governments are taking some counter-measures 
• China is going back to work
• US is ENERGY INDEPENDENT and diverse...we don’t need foreign crude nor refined product.

I predict short term that oil purchasers and downline entities will feel the pinch as large oil producing leases with slim profit margins will be at the least holding onto product.  Some ops may shut down temporarily by end of the week (shale). Good time to get equipment and shop maintenance done.

Medium term is a little harder to predict, but I suspect that since SA and Russia are so dependent on crude for their livelihood (as China ramps up again), this will be resolved in weeks and markets should bounce back at least to $48 WTI.

I do not see at this point where investors can take advantage of lower development costs unless we see oil in the $30’s for a month. If it comes, we will take advantage just like we did a few years ago.

As long as people love shopping online worldwide and no one's talking about putting sails on cargo ships, I think we're good!

Happy Monday

At the beginning of the year I like to write an opinion regarding where we think the industry will be domestically for a calendar year and where the advantage may be from an investment standpoint. We've been MOSTLY accurate (taking out 2014) and in the past, have felt confident we can make a decent prediction with some caveats.

To recap 2019, our prediction was very close to actual. In a simple phrase...a pretty boring year...Which I LOVE!

So let’s talk about what we saw in 2019 on the world market:

• The United States IS the strongest player on the world oil and gas market.  The US controls both imports and exports in their hemisphere and what they will and can take from the Middle East. 
• Large US producers evened out supply and demand for the most part
• Sanctions on Iranian oil and pressure on their typical buyers to refuse delivery has certainly helped. It has helped stabilize the entire oil economy in the Middle East.
• China's economy did not make any significant gains due to internal and US pressure to “play fair”, therefore not attributing to any significant demand for hydrocarbons on the world market. 

This year, we anticipate the following:

• Rig count should be fairly stable throughout the year
• More small oil producing companies will be merging or being purchased. It’s “big fish eats little fish” season.
• OPEC+ members will keep playing “ball” with the US...keeping all commodities stable.
• Neither China nor India will develop enough new demand to outpace supply based on their current overall economic conditions. 
• LNG and crude/refined product export market will slightly increase with new China trade deal, but not at a pace to significantly affect price.  

Of course, there are possible factors that could fluctuate prices rapidly:

• Some oil economists are predicting market price increases with volatility especially in Q1. It may create a little chaos with WTI and natural gas pricing. We disagree as we know reserves with small and large producers are ready to pounce on any increase. Hedge funders may get killed trading (we don’t play that game here).
• Possible Middle East tensions disrupting oil flow (like almost any year)
• Trump Factor. If he’s not re-elected (seems highly unlikely), you can expect market and commodity chaos at the end of the year.

So, what does this mean for the direct oil and gas investor today? We are anticipating no fire sales of leases, production, or equipment nor any soaring prices of operating expenses or leases either. In reality, a fluid and fair-trading market. 

It's the long game, which I feel will pay significant dividends for the direct investor in the next 2-5 years.  Fossil fuels are NOT going away as no technology can ramp up in any near time frame to replace the FF’s output and distribution.

We’re predicting no lower than $45 WTI/ $2.00 natural gas and no higher than $60 WTI/$3.10 natural gas for 2020 for extended periods.

Happy New Year!  

At the beginning of the year I like to write an opinion regarding where we think the industry will be domestically for a calendar year and where the advantage may be from an investment standpoint. We've been MOSTLY accurate (taking out 2014) and in the past, have felt confident we can make a decent prediction with some caveats.

To recap 2018, our prediction in the beginning of the year was very close to actual. What we didn’t expect was the significant downturn in Q4 in the markets, which in turn with a bit of oversupply, to drive the markets down everywhere. We did, however, predict the low on West Texas Intermediate (WTI) correctly. Also, we didn’t expect natural gas go to $4.50...even though it was very short lived and completely predictable it would come back down to earth.

So let’s talk about what we saw in 2018 on the world market:

• The US has become the strongest player on the world oil market.  The US controls both imports and exports in their hemisphere and what they will and can take from the Middle East.
• Large US producers created several periods of oversupply due to technology enhancement on new and re-entered wells...the same technology that helped the US become #1.
• China's economy did not make any significant gains due to internal and external factors, therefore not attributing to any significant demand for hydrocarbons on the world market. 
• The spot price of Midland WTI dropped significantly compared to WTI from other areas, some differences I heard as much as $17 less! 

This year, we anticipate the following:

•  Although optimistic budgets were set by most large exploration companies in Q3 2018, we expect rig count to be declining throughout Q1 2019 and pick up in late Q2. 
• OPEC+ members will keep playing “ball”. They really have no choice.
• Neither China nor India will develop enough new demand to outpace supply based on their current overall economic conditions. This was the case last year and we even expect some contraction.
• Midland WTI pricing will stay suppressed until Q3 when pipelines are in place to move product.
• LNG export market will increase, but not at a pace to significantly affect price.
   

Of course, there are possible factors that could fluctuate prices rapidly:

•  Wall St. types are predicting growth but with volatility especially Q1. This will create a little chaos with WTI and natural gas pricing. Hedge funders may get killed trading (we don’t play that game here).
•  Possible Middle East tensions disrupting oil flow (like almost any year)
• Iran Sanctions (and how they are applied)
• Trump Factor (again, the wild card)

So, what does this mean for the direct oil and gas investor today? It's a year of volatility up close but with slight uphill trend, which means that both buy and sell side will stay in balance as it did much in 2018.  We are anticipating no fire sales of leases, production, or equipment nor any soaring prices of operating expenses or leases either. 

It's the long game, which I feel will pay significant dividends for the direct investor in the next 2-5 years. 

We’re predicting no lower than $42 WTI/ $2.10 natural gas and no higher than $65 WTI/$3.10 natural gas for 2019 (for extended periods).

Happy New Year!

John Mink, CEO

And the Winner is: USA! 

The US has become the strongest player on the world oil market. 

The biggest reasons for this declaration are due to improvements in completion technology (fracking shale) helping to release more reserves, lifting of the crude oil export ban in 2015, the SURPRISING fiscal responsibility of large producers after the 2014 crash, and the fall or distaste of oil-producing countries’ product due to their corruption. 

The US has been the largest producer of oil for the past 2 months and its companies deliver on product promised. This has helped maintain a stable hydrocarbon global economic environment for those who “play nice”.

So, what’s does this mean to upstream investors like yourself?

It means that we can anticipate oil prices to stay relatively stable as well as expenses for drilling, testing, and completion for the foreseeable future. In this market, you will see very few “fire sales” and price gouging will be kept at minimum unless you’re selling over 1000 bopd leases. Some predictable circumstances for seasonal oil price fluctuation or increased field costs are delayed pipeline development in West Texas, weather (Texas had it’s rainiest October ever, halting almost all field activities in areas), and labor shortages. 

Being stable is being happy...and allows everyone to sleep peacefully. If you want this feeling from your investments, check out our opportunities page.

John Mink

Alert...Crude is Staying Up!

Over the past month, we’ve been watching the West Texas Intermediate Crude Oil (WTI) prices, just like you, go up 10%.  It’s up +20% for the year. we’ve been trying to determine if this is a simple rise due to the season, physical oil stock manipulation, geopolitical events, or if there’s more to this. We predicted in January that the low would be $50 and the high would be $70 for WTI for the year.

We checked my “go to” numbers that tell me right away if there will be a “correction” coming; weekly physical WTI stock and rig count. For the past 2 years, a lowering of WTI stock (usually in Cushing, OK) correlates to the prices goes up, in which follows an increase in rig count. This, in turn, drives the price down. It’s been a predictable cycle. But right now, there are no big increases in rig count and WTI stocks are relatively stable (although the Permian is in oversupply and taking an average of a $13 hit to WTI due to transportation).

We also looked at futures and general trading activity compared for the past year. Both categories are up from last year and futures price is not going crazy as one would expect from previous years. Looks like there are actually grown-ups in the room!

Finally, we’ve been reviewing what we see on the ground. Oilfield services availability is getting tight (no price increase yet...but coming). Lease pricing and activity is up.  Price for ideal production purchases (30/60 produced vs remaining, shallow decline curve) is up at least $10k per barrel of oil a day (BOPD) from January. And not least, investor interest in working interest programs is up. 

Now the question is “why” and the answer is simple...demand is up! 

Both worldwide and domestic demand from consumer and industrial markets has been steadily rising for 6 months. Not only is the US economy on the upswing, so are the other open economies throughout the world. Contributing factors such as improved economic relations with China and Saudi Arabia key drivers, but not as much as good ol’ American Optimism.

On a lesser note, the US and other free market oil producing countries are supplying the world with reliable product, which keeps rogue or government-controlled oil countries (I call them Klep-tocracies) in the dark. 

We predict that going forward for the remaining year, we are estimating the bottom price from $58 and the top price to $82 for WTI (would not be surprised if it goes to $90 in December). 

Saying that...there should be a 4-week bubble for oilfield service prices to catch up to the price increase for the past 3 months. All our programs work at $50 oil.  

So in short, invest now while there still an in-balance for better returns.

John Mink, CEO

Prediction Time for 2018

At the beginning of the year I like to write an opinion regarding where we think the industry will be domestically for a calendar year and where the advantage may be from an investment standpoint.We've been MOSTLY accurate (taking out 2014) and in the past, have felt confident we can make a decent prediction with some caveats.

To recap 2017, there were some significant moves and non-moves made in the oil and gas market. It mostly has to do with the realization on a world-wide basis that oil is not scarce and exploration and production costs do matter to the bottom line.

   · OPEC and non-OPEC allies played very well with each other this year.  We thought, based on history, one of the allies would go over-quota and start a price war again.  Really didn't happen.

   · Large US producers did not get overzealous and over-produce with small spikes in market price.

   · US is now exporting more product than ever, due to the US's ability to deliver product on an honest basis and build-up of infrastructure (even though it may be more $ per barrel than dealing with other factions)

   · China's economy did not make any significant gains, therefore not attributing to any significant demand for hydrocarbons on the world market.

This year, we anticipate the following:

   · OPEC and non-OPEC members have agreed to continue production cuts through 2018.  Since they kept to the game plan in 2017, we give them the benefit of the doubt for 2018

   · Although US corporate tax cuts are significant, industrial growth will follow a little slower than most expect due to the strength of the dollar.

   · Neither China nor India will develop enough new demand to outpace supply based on their current overall economic conditions.

   · Large US producers will stay the course and mostly develop what's in reserves (PDP) and stay onshore.  ANWR will not affect price for years to come (as an Alaskan I'm thrilled it's now open to possible exploration and production).

   · "Cheaper" oil on the market from questionable sources will keep US oil export demand steady

Of course, there are possible factors that could increase prices rapidly:

   · How many US dollars will be "re-patriated" back into the economy from overseas accounts and IF it correlates to rapid industrial growth.

   · Foreign investments have dramatically increased in 2017 into US oil and gas assets (and other industries) and may increase in 2018. Knik Energy has seen an increase of 55% more in funding from 2016 from clients living abroad with accounts in the US. This may start bringing up domestic prices on programs, including the ones we offer.

   · Possible Middle East tensions disrupting oil flow (like almost any year)

So, what does this mean for the direct oil and gas investor today? It's a year of stability with slight uphill trend, which means that both buy and sell side will stay in balance as it did much in 2017. 

It's the long game, which I feel will pay significant dividends for the direct investor in the next 2-5 years.

I'm predicting no lower than $50 WTI/ $2.80 natural gas and no higher than $70 WTI/$3.30 natural gas for 2018.

Happy New Year!

John Mink, CEO

Alert...Crude is Going Up!

Over the past month, we've seen oil prices rise 15%.  This has to do with many factors.  The biggest one so far this month is the escalation of regional posturing in the Middle East, having both political and real consequences on the flow of oil.  Another factor is the supply/demand is fairly balanced in the US with rig count slightly under.  I won't be surprised if we see $65 oil in a month and holding for the first quarter.

Coincide this with end of year potential tax savings, it could be a good time to get some working interest.  Check out our opportunities page.

For those looking to directly participate in direct oil and gas ventures for the first time, I suggest reading this article to start. We will be creating a presentation that will be topical but comprehensive (Investing 101) available within the month.