MARIA: WELCOME BACK, NOW THIS,
SAUDI GOES ON HIGHLY-AWAITED IPO
TILL NEXT YEAR.
STEPHEN SHORT.
STEPHEN, GOOD TO SEE YOU.
THIS DEAL WAS CENTER PIECE OF
AMBITIOUS ECONOMIC OVERHAUL OF
SAUDI ARABIA.
WHAT'S YOUR TAKE THAT THIS DEAL
KEEPS GETTING DELAYED.
NOW IT'S GOING TO BE GETTING
DELAYED ACCORDING TO REPORTS
TILL NEXT YEAR.
>> SAUDI ARABIA, MARIA, IS
PLAYING EXTREME DANGEROUS GAME
OF CHICKEN AT THIS POINT, AT
THIS POINT THEY MAY NEVER SEE,
WHEN I SAY GAME OF CHICKEN, THE
LONGER WAY WAIT, NOW MAYBE
PUSHING BACK A YEAR FROM NOW,
ONE MORE YEAR FOR THE U.S. CRUDE
OIL EXPORT MARKETS TO MATURE,
ONE MORE YEAR FOR CRUDE OIL TO
HIT THE MARKET, YOU'RE GIVING
ONE MORE YEAR FOR ELECTRIC
VEHICLES TO FURTHER ERODE DEMAND
ELASTICITY, THE LONGER THEY
WAIT, ODDS THAT VALUATION
CONTINUE TO FALL AND IPO
CONTINUE TO FALL.
MARIA: A COUPLE OF YEARS AGO
CONGRESS CHANGED THE LAW
ALLOWING THE VICTIMS, PEOPLE WHO
DIED AND THEIR FAMILIES TO SUE
THE SAUDI GOVERNMENT OVER 9/11.
GOING PUBLIC AT THE NEW YORK
STOCK EXCHANGE IS PROBABLY GOING
TO BE A BIG PROBLEM FOR THE
SAUDIS, MITCH, BECAUSE THEY WILL
BE FACED WITH ENORMOUS AMOUNTS
OF LAWSUITS.
THAT'S ONE OF THE ISSUES THAT
KEEPS THE DEAL GO BACK.
>> THEY COULD HAVE GONE PUBLIC
IN LONDON OR OTHER
JURISDICTIONS.
THAT WAS THEIR CHOICE.
MARIA: EXACTLY.
WE WILL SEE.
MEANWHILE THERE'S OPEC, STEPHEN
TAKING SIDES ON OIL PRICES, THE
JOURNAL THIS MORNING REPORTING
THE SPLIT ON WHETHER WILL SEND
TO OVERDRIVE AND COULD TRIGGER
SHARP DECLINE, WHAT'S YOUR TAKE?
>> ABSOLUTELY, MARIA.
U.S. SHELL COMPANIES ARE ALREADY
IN OVERDRIVE AT THIS POINT.
OPEC A FEW YEARS AGO DID THE
U.S. INDUSTRY A TREMENDOUS FAVOR
BY FORCING THE DECLINE IN PRICES
BECAUSE ALL THIS DID WAS MAKE
U.S. SHELL MORE EFFICIENT, MORE
PRODUCTIVE AND MORE PRODUCTIVE
AT LOWER PRICES, SO WHEN WE LOOK
AT THINGS, RIGHT NOW WE HAVE
SEEN SIGNIFICANT AMENDMENT,
RECORD AMOUNT OF HEDGING, THEY
ONLY THOAJ BRING MORE PRODUCT TO
THE MARKET, WHEN WE LOOK AT,
MARIA, RIG COUNT, PRODUCTION
CORRELATED TO OIL PRICES WITH
FOUR-MONTH LAG GIVEN THAT WE'VE
HAD SUCH A SIGNIFICANT RISE AND
WE ARE STAYING ABOVE $60 A
BARREL, WE ARE BRINGING AND MORE
AND MORE RIGS TO THE POINT WHERE
THE RIG COUNT OIL SPECIFIC HAS
MORE THAN DOUBLED, ACTUALLY UP
230%, SO PRODUCTION IS RISING
AND IT'S GOING TO CONTINUE TO
RISE AND SHOULD HELP TO DAMP ANY
FURTHER INCREASE IN PRICE FOR
OIL WHICH, AGAIN, GOING BACK TO
EARAMCO, BIGGER THE RISK THEY
TAKE WITH PROLONGING IPO.
MARIA: MIKE, IRAN IS PUSHING FOR
$60.
>> GIVEN THAT SAUDI AND IRAN ARE
ON OPPOSITE SIDES OF THE COIN
HERE FOR JUST ABOUT EVERYTHING
IN THE REGION, WHAT ARE THE
CHANCES THAT THEY CAN FIND SOME
SORT OF COMMON PRICING GROUND?
>> AT THIS POINT, MIKE, I'M
EXTREMELY SKEPTICAL, WHEN I USED
TO CONSULT WITH OPEC ABOUT TEN
YEARS AGO WITH REGARD TO --
SPLIT BETWEEN SUNNI SHIITE SIDE,
I WAS TOLD THEY WOULD COME DOWN
TO BUSINESS.
IT WAS FANTASTIC DURING 1980's
WHEN SUNNIES AND SHIITES
SLAUGHTERED ONE ANOTHER.
RIGHT NOW, MIKE, WE ARE LOOKING
AT THE LARGEST OUTSIDE OF THAT
AND THIS IS BECAUSE OF IRAN'S
AMBITIONS AND CAUSING TREMENDOUS
RECK BETWEEN THE TWO SIDES AND I
DON'T SEE ANY POSSIBILITY COMMON
GROUND BETWEEN THE TWO.
>> IT'S MITCH ROSCHELLE, QUICK
QUESTION FOR YOU, ON THE SUPPLY
SIDE WE HAVE RIG COUNT, WE HAVE
SHELL PRODUCTION, ONE OF THE
THINGS I WANTED TO FOCUS ON AS
IT RELATES TO PRICE THE DEMAND
SIDE WHICH IS WHAT'S GOING ON
WITH THE ECONOMY HEATING UP AND
JOB CREATION, IS THAT GOING TO
BE THE IMPETUS TO KEEP PUSHING
PRICES HIGHER?
>> YEAH, MITCH, I'M STILL VERY
SKEPTICAL ON THAT SIMPLY
BECAUSE, YES, DEMAND WILL RISE
BUT NOT GOING RISE TREMENDOUS TO
WHAT WE HAVE SEEN IN THE PAST.
THIS IS BECAUSE OF THE CHANGE IN
ELASTICITIES, YOU NEED TWO
FACTORS TO IMPACT CONSUMER
BEHAVIOR, WE HAD THE FIRST
STOCK, PRICE SHOCK GOING BACK TO
TWO GENERATIONS NOW BUT UP UNTIL
RECENTLY WE NEVER HAD THE SECOND
AND THAT'S THE SUBSTITUTE.
TO THIS POINT, WE ARE ONLY
MARKET AND THAT'S GOING TO BE
DAMPING ANY SIGNIFICANT ARISE IN
DEMAND TO PUSH OIL PRICES MUCH
FURTHER IN THE NEAR FUTURE.
MARIA: ALL RIGHT, WE WILL LEAVE