Member Info for epiphany121

Chilting - it looks like you have a major wall street bank CEO, James Gorman, in your camp. He's talking of the recession lasting through 2021. ;-)

https://www.cnbc.com/2020/04/16/morgan-stanley-ceo-gorman-says-coronavirus-recession-may-last-until-2021.html?__source=twitter%7Cmain

However, I have the most important person on the planet in my camp - Donnie. He'll come up with a most beautiful and amazing plan, in fact so beautiful that we can't see it. Beautiful, so beautiful and it will open up the economy so quickly, so powerfully, much more than ever before and Dow Jones will hit powerful records. It'll be a work of art, I promise you. It's nothing like you've seen before.

Yes, R. And this is why i'm inline with you'd expressed previously about the near term pain in the oil patch wiping out the weakest in the shale patch, and as you observed last evening, they're in the hundreds, if not thousands. If the US govt lets capitalism run as it's intended to, more than 50% Shale will be wiped out. They'll come back slowly over years after the extent of this bruising, but only after a time by which Enquest would be healthy via high oil prices and with not a lot net debt, if any.

The market is currently not looking beyond what happens in the next few months with demand now having cratered, and storage running out. I'm under no illusion that this is a problem, but India will come out of its lockdown soon and so will the rest of the world, albeit slowly. And oil will go back up in Q3 and beyond, even if slowly..

Maybe this will help clarify..

https://www.politifact.com/factchecks/2020/mar/20/facebook-posts/debate-joe-biden-said-no-more-oil-drilling-and-no-/

The reality is that, as I've said before, any ban can only happen on Federal lands. It won't lead to the disappearance of the shale sector and your globalist/chinese mates not having to release Covid-21...

The extent to which the repubs and oil moguls have degraded to unmitigated socialism is astounding. That tells you all there is to know about capitalism in their eyes - as long as it lines up the owners/CEOs pockets, capitalism is great. As soon as their stupid drilling causes massive supply-demand imbalances, then they come running to numpty with their tail between their legs, asking for bailouts - this is what socialism is all about isn't it? Government bailing out inefficient companies and sectors..

Boggi - where are you coming up with this BS from? Firstly, Biden hasn't said that he would ban shale oil and the reality of US politics is that he can't. Such a bill would need to be passed in both the House and Senate, and there's zero chance of that happening anyway. At best, a democratic president can do is to ban fracking on Federal lands and that's like less than 20% of the overall shale acreage, and that's mostly in the NM side of the Permian.

What will almost certainly happen is that regulations will be put on unregulated flaring and that's great for tempering massive production rises from Texas/shale patch in general... Oil has a better future under a democratic president than under the orange man.

Hello R - I don't really buy this looking at Shale as an industry in the whole, in the past tense. There will be bankruptcies, no doubt, there will be production cuts no doubt, but as soon as WTI is in the 50s, Shale will come back. I do see consolidation though and there'll be fewer players left which is actually good in keeping control over production and tempering these massive boom and bust cycles in shale. And this in the longer term is better for the health of the global oil market.

Chilting - disagree with $40 not being hit this year. WIth the amount of liquidity injected into the world economy through fiscal and monetary stimulus, once we get to Q3 and beyond, keeping in mind that US production will fall off quickly from herein on, any green shots will see oil go above $40. Remember that GDP should rebound sharply (assuming no Covid comeback in Q3) in Q3 as a one-off, and falling back down in Q4, and this rebound will drive up oil temporarily even.

In the longer term, we don't need numpty bailing out shale companies like this.

https://www.forexlive.com/news/!/us-drafts-plan-to-pay-oil-companies-to-leave-crude-in-the-ground-report-20200415

Dems should step up and not provide money for these socialist policies proposed by the republicans - who'd have thought that the world would come to this? Republicans are oil economy socialists - hey whatever it takes to gets numpty re-elected, yes.. The above action would ensure that small Shale players survive when they shouldn't and will bounce back quickly as soon as WTI is in the 40s.

Hello P - Yes, agree. We can ignore the whole 600 kbopd drop last night. That was EIA catching up with reality and understanding that there was a zero probability of production at the 13 mmbbls/day levels in March. Jan actuals were 12.74 mmbbls/day vs EIA 4-week projection of 13 mmbbls, and dropped vs December. And if you see the drop off both in Rigs as well as Frac Spreads just in the past 3 weeks, you'll see the extent of chaos in the oilfield services market in the US. Capex cuts are in the circa 40% range now for Shale E&P companies, on average. Over this year and the next, 2 mmbbls/day fall is a given and it could be considerably worse if oil hangs at lower levels for longer - read WTI in the 30s and 40s.

In a sense, it's good that Enquest's hand was forced and they've stopped production at higher cost locations at this time. When oil eventually gets to the 50s/60s - in 2021 maybe, Enquest's FCF will be cracking. Near term, oil will be volatile and Enquest's SP may swing both ways, but looking forward to 2021, I believe it'll be a generational investing opportunity for surviving oil companies - Enquest will easily be one, IMO.

GL..

Oil Rigs are off 58 to 504 - Permian's off 35. Frac spreads as of today are down to 185 from 215, and will continue to collapse below 150 with WTI printing below $25. At this rate, even 11 mmbbls/day may be too optimistic for shale in 2020.

Enquest is doing what it has to do with cutting costs, even though Brent/WTI may drop more in the coming weeks - that looks like it it's a given at this time with large scale demand collapses lingering in the coming weeks. I still stand by a Q3 recovery thesis in Brent. Enquest is well set into next year, even if there's short term volatility.

I cant see how oil eventually stays this low once we're on the other side of Covid, with the Gynormous amount of liquidity infused into the economy...

The Fed is going bonkers with another lending bazooka of $2.3 trillion for lending to business. Markets have shot up as a result. Trump's doing all to get re-elected.. ;-)

Poor Neil Hannon and his avatar, Luck Counts, trying their best to get the SP down by deramping. Funny...

Chaps/Squif - Remember that the reserves write-down is based on a decision not to bring prodution back online at Heather/Thistle/Deveron, as production costs are higher there. When Brent goes back up, they could bring them back online and write back the reserves writedown.

Capex/Opex is cut even more ($30mill and $40mill resp.) from the March update. There's nothing not to like about the revised FCF breakeven levels. My favourite gripe is their useless hedging strategy and they're always sleeping at the hedging wheel. Operationally that's great execution and awareness of a low price environment, and have cut expenses a lot. If they'd hedged even 50% of 2020 production, as almost every shaler has done, we'd be in a much better shape, debt-wise.

AB is on CNBC TV tomorrow at 8:15 AM, ostensibly to discuss FY results.

Cheers. The whole 13 mmbbls/day projection for last week was total BS anyway. As of end of of January, actual production dropped to 12.7 mmbbls/day (from 12.8 mmbbls/day) , and the probability that it was anyway close to 13 mmbbls/day in March was fantasy.

At the rate capex is being cut and wells are even being shut down, 11 mmbbls/day by the end of 2021 isn't outrageous anymore.

P.S: if there's a trade I'd make at this time, I'd short the **** out of TLW after the move up from 11p to 27p in 3 days. This looks good for a at least 30% downside at least in the coming days. Easy come, easy go...

L7 - I broadly agree with the theme of your post. Barring 2016 when Enquest hedged with Swaps at $65 when Brent went down to the 30s and gave Enquest cash flow of $200mill +, they've been mostly behind the curve. It pains me to say that even though we're financially much better off than PMO/TLW, they're treated better by the market than us, and you could laid of the 'blame' on our insipid hedging.

Many of the Shalers are hedged 50% to 90% for 2020, albeit many of them are hedged with 3-way collars that negates a lot of the benefit they generate with these hedges. I know of Devon that's 80% hedged for 2020 (100 kBOPD) at $45 WTI and that'll help them enormously this year. We're left at the mercy of OPEC++ at this time and that isn't a good place to be.

P - you and I have been long arguing that Enq has been a slacker at hedging and that is only too obvious to the market as well. I hope they're learnt their lesson and get intelligent hedgers on board. For the sake of holders here, we can only hope that this becomes a reality when oil rallies next year. Remember that Shale will NOT disappear and they'll bounce back just as soon as WTI gets above the mid-40s and push production up. No matter what others think, oil WON'T go up meaningfully gets above the 50s/60s WTI as that'll unleash additional production from the Permian.

In the medium/long term, Enquest has to cut out assets with higher OPEX costs that aren't viable in a low oil price environment, and that'll set Enquest up for success with Brent in the 50s. If that means Production is the mid 50kbopd rane, that's still OK. But that's the best way to give us the upside in the long term.

GLA..

Yes, likely Russian bot fake news - this rumour started on a Russian twitter account. I suppose it isn't surprising given the chaos and disruption they want to put out.

news about our PM's condition, if true.

https://twitter.com/Fxflow/status/1246925269383987202

P - What the US would try to do with Tariffs is to 'stop' imports of Saudi Arabian oil into the US, with a view to causing them pain via stopping access to a 'key market'.

However, here are a few additional facts to consider

1. I'm not sure why the numpties there think that this action would boost their domestic oil companies as most US refineries can't process the ultra-light sweet crude coming out of the shale patches
2. SA doesn't export as much to the US as it used to in the past
3. The oil that SA produces needs to find a home somewhere in the globe and without that production being cut back, overproduction will bring Brent prices down

Net-net, there are unintended consequences in enacting such stupid steps and for a global commodity like oil, it'll only push prices lower. It'll hasten job losses and bankruptcies in the US, and will bring down their production even more. Of course, all of this will be lost on the super-genius that currently resides in the White House.

These idiots can't organise a ****-up in a brewery, and the king idiot talked about a 10-15 mmbbls/day cut without the US committing to a cut. Weird enough...

https://www.cnbc.com/2020/04/04/oil-set-to-crater-monday-as-opec-meeting-delayed-tensions-flare-between-saudi-arabia-and-russia.html