Welcome at Kris Kon

 

Thursday, 13th of September 2018

America is now the world's largest oil producer


Monday, 27th of August 2018

IMPORTANT INFORMATION REGARDING DIVIDEND PAYMENT. SEE FURTHER DETAILS ON "MY PAGE".


Thursday, 21st of June 2018

Goldman Sachs still sees oil rallying over $80 despite concerns over OPEC meeting

 

Wednesday, 20th of June 2018

The dividend reports for 3th & 24th Quarter 2017 will be available on "My page" end August / beginning September 2018.

 

Friday, 23th of March 2018

IEA - The global oil demand is expected to increase further


Monday, 12th of February 2018

The dividend reports for 1st & 2nd Quarter 2017 are now available on "My page"

 

Wednesday, 27th of November 2017

World Energy Outlook - November 2017

 

Thursday, 10th of August 2017

The dividend reports for 1st & 2nd Quarter 2017 will be available on "My page" end November / beginning December 2017.

 

C U R R E N T  P R O J E C T S  F O R  S A L E

 

N E W  P R O J E C T - Wells in Texas and North Dakota


 


N E W  P R O D U C T I O N  D E A L  I N  T E X A S !


FOR HIGH NET WORTH INVESTORS / PROFESSIONAL INVESTORS / INSTITUTIONAL INVESTORS !


 

For further information, please contact CEO Kristian Kondrup

 

N E W  P R O J E C T  I N  N O R T H  D A K O T A !


KRIS KON SWEET SPOT NO. 1

 

N E W  P R O J E C T - B A S A  R E S O U R C E S,  I N C.

Project with more than 400 producing wells!


 

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Is investment in oil wells still attractive?

 

Oil prices have fallen by 25% during the first 20 days of 2016. Movements that strong are unusual but not unprecedented. In six months in 2008, oil prices fell from $ 147 to $ 34 and during just two months in 2001 from $ 29 to USD $ 17. In both cases, the price rose sharply after, respectively $ 73 and $ 29 in less than 6 months.

The decline from the peak in July 2008 to date is over 80%. Historically, a large "market crash" often bottoms-out 70-90% from the peak. For example, the US Dow Jones Stock Index dropped 89% from 1929 to 1932.

The above suggests that it may be attractive for long-term investors to place a portion of funds in oil.

The reason behind the sharp decline in the oil price is mainly, that the daily global production of oil the last year has exceeded demand by over 1 million barrels per day. This, due to the fact that Saudi Arabia has increased its production strongly to defend its market share. Concern for the development of the Chinese economy and fear of a greater supply from Iran, due to the lifting of trade barriers, which is expected to increase Iran's output of oil with 500,000 barrels a day, has also had a profound negative effect on the oil price.

In light of the sharp price declines, production of oil from a number of countries (mainly in the OECD) is expected to decline as existing wells will deplete and new projects will not be launched, as these are not commercially attractive at the current price of oil. For example, the number of active drilling rigs in the United States has over the past year decreased from 1600 to 515.

Especially the very small oil wells in the US - known as "Stripper Wells" which produce less than 15 barrels of oil per day, is in danger of ceasing production at current oil prices. "Stripper Wells" accounts for roughly 10% of total US oil production amounting to about 1 million barrels a day. Historically, the production of these small wells decreases by approximately 50% during periods of prolonged drop in oil prices.

Global demand for oil continues to rise. In 2016, demand is, according to the International Energy Agency (IEA), expected to grow by 1 million barrel per day, equivalent to a total of 96.5 million barrels per day (see link below).

https://www.iea.org/oilmarketreport/omrpublic/

In light of the above, the IEA expects that supply and demand will be in balance in the 4th quarter of 2016 and it may be possible that demand will even exceed supply. Given such a scenario, oil will trade at much higher prices later this year.

Kris Kon and Investeringsselskabet KrisKon A/S always seeks to find oil- & gas wells to investors at prices that fulfills a budgeted annual dividend of 15-20% at the at all times current oil price (presently 25$-30$). Should oil prices rise from the current level, the expected yield will thus become significantly higher.

We regard the current environment as being exceptionally attractive for investment in the operation of oil wells in the United States and the risk to be relatively limited if the principle of diversification of investments in several wells are fulfilled (which happens automatically when buying shares in Investeringsselskabet Kriskon A/S).

Søren Glente, Kris Kon Fund Management

January 21, 2016.

 

 

Where will oil prices go?

Factors that speaks for falling oil prices:

  • Falling demand from China, Brazil and Russia because of lower growth.
  • Falling demand from OECD countries because of lower growth and a higher share of alternative energies.
  • Rising daily supply from Iran and rumors, that they have 30 million tonnes of oil loaded on large supertankers, ready for export.
  • Continued high supply from US oil companies because of pressure from banks to provide cash flow to reduce debt.
  • Saudi Arabia continue full production to protect market share. They have lately increased the domestic tax on fuel - maybe ​​a sign for preparation of a longer period of low oil prices.
  • Russia continue full production to reduce the domestic deficit.

 

Factors that speak for rising oil prices:

  • Oil prices have fallen more than 80% from the peak in 2008, more than any other asset class.
  • Declining production from OECD Countries, as new and smaller producing wells are not commercial viable at current oil prices. The number of new drilling rigs in USA has also dropped sharply.
  • Declining production from existing wells due to depletion. For example, production data from the North Sea and from Mexico has shown heavy decline in recent years - even at higher oil prices.
  • Initial signs from Russia to initiate in dialogue with OPEC in order to reduce production.
  • Rumors that several Western oil companies will repurchase own debt rather than drilling new wells. It is estimated that up to 26 billion US dollars of issued bonds are more attractive for repurchase than using capital for new drilling.
  • Global demand continues to rise even at a low global economically growth. Especially demand from India is expected to pick-up sharply.

 

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