August 5, 2021

13 thoughts on “Negative Oil Price – what it means? And how come Exxon or Shell share price did not fall as much? How about Keppel and Sembcorp?

  1. Hi Rolf,

    Another unusual thing that happened besides the negative price is the leverage ratio going below 1 for some brokers. Leverage for futures contracts can vary between 10 to 20. On Interactive Brokers for WTI May contract when oil price was still positive, leverage ratio went below 1. Now, broker also very scared about clients being blown up. Indeed, when unusual, unprecedented events happen in financial markets, it's not surprising to see even experienced traders getting blown up. Like Hin Leong.

    As an insider in the oil industry, what is your opinion about what happened to Hin Leong?

    This company is unusual. Hin Leong should be a commercial hedger for oil futures contracts, yet it does not do hedging. Not only not do hedging. Hin Leong actually speculates in oil futures and its downfall can be traced to losses in futures speculation. OK (or should I say KO) Lim and family should be making lots of money from the oil tankers they own today. Yet, they're financially distressed instead of prospering today.

    1. Hi hyom, thanks for commenting. Over the years, you always made very good comments on all the blogs. First and foremost, may you be blessed with good health and wealth during this period.

      As for your question, I think I will disappoint you. While I am familiar with Oil and Gas industry this is not my segment, so I can't really answer. Sorry mate.I am more in the upstream side of the business.

      Examples of segments to show who wide the industry is.

      E.g. Upstream: Exploration, Geo-survey, feasibility studies, Offshore construction, pipelay, subsea wells, Well intervention, Drilling rigs, Platforms FPSOs, FSOs, Offshore Support Vessels, Iiftboats, Decommissioning, equipment suppliers etc)

      E.g. Midstream: Storage and Transportation such as tankers, bunkers etc

      Eg. Downstream : Refinery, petrol, lubricants, pharm, cosmetics.

      For Hin Leong, I think should be Mid-Down stream, including tankers, bunkerings, Oil trading.

      Just FYI – I written article on diff segments of Upstream before.

    2. Hi Rolf,

      Thank you for your compliments:) No problem. I like your honesty to admit you don't know instead of pretending to know.

      I think low oil price will affect upstream the most. Downstream will be in distress too since demand for their products have crashed due to the virus lockdowns. Midstream should be making the most money in this oil glut. It's ironic that the biggest blow-up so far in this oil crisis is a mid-stream company.

      Although you're in upstream, I'm confident you have no problems coping well in this crisis based on your past blog posts.

      You take care too. Good health and wealth to you and your family. Since we are trapped at home with wife and kids, enjoy your family time with them. Make more love to your wife. Haha. But be careful as I think you have contributed enough kids to Singapore liao. 4 kids already?

    3. Hi hyom,

      I prefer to be truthful if I do not know. But if I do little research then I will say I do little research.

      My company core profitable biz is not in O&G historically, and fortunately for me, I also switch role to take care of all the segments of biz over the last few years within the Asia Pacific region, so I must admit that I am very very heng in a sense…

      Yeah.. stop contributing to Sg no more.. too siong physically, mentally and financially….

      Hahaha.. y u say make more love… This blog is for my children to read one leh… hahahahaha

  2. Hi hyom,

    Did some research and read that OK Lim is a avid poker lover. He loves to gamble. And when you have been winning in most of your entire life to become so rich and powerful, your pride and greed will grow. It will then reach a point when you start making irrational decisions, because your big EGO will always remind you that you are the "greatest and most lucky". Unfortunately reality bites.

    For Swiber, it is quite similar. The growth of the company within 10-15 yrs is tremendous, and the owners yearn for more growth, hence big borrowings.

    Even Donald Trump was very prudent and successful in the 70s to 80s, and his business grew so big, so was his ego in late 80s. In early 90s, he almost go bankrupt with banks liquidating many of his real estates. Somehow, he managed to escape and survive using his "Trump" brand for listing. You can say he is capable or he is lucky.

    But I believe one thing. If your EGO becomes too big, one day, you will ultimately collapse be it in business or your health or family problems that haunt you down.

    So do not ever let our EGO grow bigger than we can handle for a sustain period of time. Doom is awaiting eventually.

    1. Thanks for your reply. I did not see it until after I published my last reply.

      Yes, EGO has been a problem affecting successful, ambitious people throughout history across all cultures and civilisations.

    2. Ur last reply is correct. After i send the earlier comments, I went to read up Hin Leong website and do some research.

      Also, HL is involved in investments of many big oil facilities in China, Myanmar etc. These heavy capital investments can drain out cashflow if “few project cock ups”.

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