Oil prices

[jn1780]

I don't see any sign that the virus will be over by Spring for China. They may get to the point where they realize the quarantine measures are now pointless and get use to living with the virus for awhile and go back to work. The good thing is that so far its not spreading like wildfire in countries outside of China so this may largely be based on poor sanitation, but some of this can be contributed to the quarantine and travel restrictions put in place.

[gopokes88]

CHK down 28% after earnings.

But hedges

[gopokes88]

Also corona is very very very very very bad

[OKCRT]

CHK down 28% after earnings.

But hedges

So is it time to buy?

[gopokes88]

So is it time to buy?

Puts

[gopokes88]

CLR is also in some major trouble. That guidance is terrifying

[Pete]

CLR is also in some major trouble. That guidance is terrifying

What does this mean?

[Anonymous.]

CLR: "In 2020, the Company plans to deliver approximately 8% ROCE at $55 WTI."

Current WTI: $48.65 and falling.

[OKCRT]

CLR is also in some major trouble. That guidance is terrifying

You could prob say that about most all O&G stocks right now. Correct? They are all taking a beating.

[gopokes88]

What does this mean?

1. They’re out of good acreage. Their production is shifting from oil to gas
2. Capex is increasing next year for some reason.
3. We are way below their FCF #’s with no hope of recovering back to those levels till 2021.

They aren’t going bankrupt yet, but stock will fall 50% this year. Already down 20% in after hours. Layoffs. Pain. Etc

[PhiAlpha]

1. They’re out of good acreage. Their production is shifting from oil to gas
2. Capex is increasing next year for some reason.
3. We are way below their FCF #’s with no hope of recovering back to those levels till 2021.

They aren’t going bankrupt yet, but stock will fall 50% this year. Already down 20% in after hours. Layoffs. Pain. Etc

Yeah at sub $50 oil and basically negative natural gas prices in most cases, there isn’t much, if any, good acreage in the state for horizontal development. I know a few conventional operators that are having a good year so far but vertical dev is much less scalable and creating new secondary and enhanced recovery units is often costly on the front end so the effect of those companies’ success on the overall picture will be minimal.

[gopokes88]

Yeah at sub $50 oil and basically negative natural gas prices in most cases, there isn’t much, if any, good acreage in the state for horizontal development. I know a few conventional operators that are having a good year so far but vertical dev is much less scalable and creating new secondary and enhanced recovery units is often costly on the front end so the effect of those companies’ success on the overall picture will be minimal.

We’re looking at the entire shale industry potentially going belly up. Lots of mergers (not acquisitions) coming.

[chuck5815]

I’ve always been under the impression that CLR runs lean as hell, such that there’s not ever much in the way of fat to be cut via layoffs.

[gopokes88]

They’ll do it anyway.

Oh look oil down another dollar.

[DowntownMan]

I’ve always been under the impression that CLR runs lean as hell, such that there’s not ever much in the way of fat to be cut via layoffs.

Probably not layoffs but what they probably will do is not rehire any position where someone leaves and then any low performers might be let go but they probably won’t call it a lay-off.
Pretty sure this is what they did back in 2014-2015 and they reduced head count by a fraction doing it this way

[BG918]

I’ve always been under the impression that CLR runs lean as hell, such that there’s not ever much in the way of fat to be cut via layoffs.

They have always been the opposite of bloated CHK and Devon. I remember hearing the stories from people who worked at CHK in the “heyday” back in 2010-14. Lots of people on the payroll because their dad knew Aubrey or they went to Casady/Heritage Hall. 3 hour lunch and gym sessions at the company cafeteria/fitness center. Remember this was back when CHK had not one, but TWO, beekeepers on staff at HQ..

[gopokes88]

Probably not layoffs but what they probably will do is not rehire any position where someone leaves and then any low performers might be let go but they probably won’t call it a lay-off.
Pretty sure this is what they did back in 2014-2015 and they reduced head count by a fraction doing it this way

When your stock goes down 30% in a day. Oil hits $46 and is still in an absolute free fall,

Your going to lay off people. That’s just the nature of this beast.

Oh CHK down another 16% but hedges.

This is it. This is shales week of the bill finally coming due. The party is over. We’re past the event horizon nothing can fix this mess.

[gopokes88]

Devon is now worth $6 billion.

They’ve spent $5 billion on buybacks.

Just in case anyone ever wants to argue buybacks are a good idea in a cash intensive business.

[Greggo71]

When your stock goes down 30% in a day. Oil hits $46 and is still in an absolute free fall,

Your going to lay off people. That’s just the nature of this beast.

Oh CHK down another 16% but hedges.

This is it. This is shales week of the bill finally coming due. The party is over. We’re past the event horizon nothing can fix this mess.

You must realize the hemorrhaging of the last 2 weeks is completely due to the corona virus and the anticipated reduction in O&G demand it will cause. If you haven't noticed, the market as a whole is getting hammered - to treat this as a result of the sins of the energy industry is disingenuous.

[jn1780]

You must realize the hemorrhaging of the last 2 weeks is completely due to the corona virus and the anticipated reduction in O&G demand it will cause. If you haven't noticed, the market as a whole is getting hammered - to treat this as a result of the sins of the energy industry is disingenuous.

I don't think he said anything about "sins". Just talking about an already deflating bubble that just got hit with a corona sledge hammer.

[gopokes88]

You must realize the hemorrhaging of the last 2 weeks is completely due to the corona virus and the anticipated reduction in O&G demand it will cause. If you haven't noticed, the market as a whole is getting hammered - to treat this as a result of the sins of the energy industry is disingenuous.

It's going to hammer energy harder than anyone else because

1. Demand destruction that isn't easily fixed. Less people driving, flying, spending, factories shut down. We're building massive gluts that won't be quickly or easily drained.
2. The value of the product they sell crashed 20% in a WEEK. Apple may slow down but they can still sell phones for $800.
3. Banks are done with energy. Very few companies can live within their cash flow and there will be no bailout by Wall St.
4. The shale model doesn't work. The core of the business model is broken, and unworkable.

What September of 2008 was to the finance and mortgage industry, that's what this week will be seen as to O&G.

[OkiePoke]

Good contago?

[Canoe]

It's going to hammer energy harder than anyone else because

1. Demand destruction that isn't easily fixed. Less people driving, flying, spending, factories shut down. We're building massive gluts that won't be quickly or easily drained.
2. The value of the product they sell crashed 20% in a WEEK. Apple may slow down but they can still sell phones for $800.
3. Banks are done with energy. Very few companies can live within their cash flow and there will be no bailout by Wall St.
4. The shale model doesn't work. The core of the business model is broken, and unworkable.

What September of 2008 was to the finance and mortgage industry, that's what this week will be seen as to O&G.

What companies can live within their cash flow in your opinion?

[gopokes88]

What companies can live within their cash flow in your opinion?

At $47? None. The only that can survive are the ones that have low debt level or super majors.

At $55? Exxon, Chevron, Conoco, Shell, BP, EOG, Pioneer, Hess, Concho, Diamondback, Noble, CLR, DVN, Parsley, WPX. Maybe a few others.

Everyone else is too highly levered or running out of acreage.

[Jersey Boss]

At $47? None. The only that can survive are the ones that have low debt level or super majors.

At $55? Exxon, Chevron, Conoco, Shell, BP, EOG, Pioneer, Hess, Concho, Diamondback, Noble, CLR, DVN, Parsley, WPX. Maybe a few others.

Everyone else is too highly levered or running out of acreage.

https://www.barrons.com/articles/ene...ds-51582755434
Chevron (CVX) and ConocoPhillips (COP) are close to covering their dividends from projected 2020 earnings at current oil prices, based on a report published a month ago by J.P. Morgan analyst Phil Gresh. Chevron needs a Brent price of $57 a barrel and ConocoPhillips, $55 a barrel. Exxon Mobil (XOM) needs a much higher oil price of $87 a barrel to cover its 2020 dividend from earnings, Gresh estimates.

The two largest European energy companies, BP (BP) and Royal Dutch Shell (RDS.B), cover their dividend at lower oil prices than their U.S. peers. Oswald Clint, who covers the European oil stocks at Bernstein, calculates that BP covers its dividend at about $40-a-barrel Brent and Royal Dutch at $51 a barrel.


From this it appears the Euros are in better shape. i guess there could be production cuts to shore up the price but will Putin agree to production cuts?