Member Info for epiphany121

I;m not sugar-coating this - It's scary out there, Jan. US is going through massive layoffs/shutdowns at this time. The big 3 Auto manufacturers in the US have just now shut down - the news flow is relentlessly negative. Until we get to the other side of this pandemic, it's anyone's guess as to where oil and the stock markets will end.

When you have Boeing fall from $340 to $90 inside the last month, that tells us all we need to know about the state of the global economy in general.

GL

Yes, Mod. I was watching CNBC during Donnie's address and was tracking the oil shares on my Schwab account in the last 30 minutes or so. It was evidently a massive short-covering shale push in the last couple of minutes . Even the large cap ones jumped 10-15% just in the last minute - it was probably easy for the likes of GPOR/OAS/WLL to jump between 60 to 150% in that tiny time. Quite insane.

Hi R - Overshooting is precisely my point. It's fear right now that's driving market action and I'll look to buy now too. The panic will blow over soon and there'll be the customary near-term bounce. Longer term, the CV panic should fade in 3 months or so, and setup a recovery from Q3 onwards. THat's still my base case. Equity + Bonds are being killed because of panic and that's not really surprising. This will eventually blow over too.

One more to the list - Murphy, which is both a shale and Gulf of Mexico offshore play. THey've also chopped $500 mill capex, for a 35% cut.

https://www.marketwatch.com/story/murphy-oil-to-cut-2020-capex-by-35-to-950-million-in-effort-to-preserve-dividend-2020-03-12?siteid=yhoof2&yptr=yahoo

I get that about the Virus and that the spread is already much wider than the reported cases - the US is completely clueless and so far behind the curve that it's a joke. The US economic activity will collapse for a short duration (unknown for how long) and it's probably already started and this is what the market is trying to price in at this time. China was better prepared and they could shut down cities at a time, unlikely that the US can. Maybe Numpty will surprise us, after denying that CV was an issue all this time (till yesterday anyway)

From an oil viewpoint, in a really bad scenario, Brent could be a few bucks lower, but then OPEC+ will come together and cut. They've seen shale falling down like 9 pins with their capex cuts, and the only possible scenario from here is that production will start dropping from this year, and not grow as EIA suggested yesterday - they're still sitting in their caves. I still see oil reacting positively from a couple of quarters - recession or no recession.

And Apache follows, and this is a really meaningful cut. Their capex was $2.4 billion in 2019, and they cut it to $1.6 to $1.9 bill just about 3 weeks ago, for 2020. And today, they've chopped it to $1 to $1.2 bill range. That's nearly a 40% cut. And here's the kicker, rigs in Permian will be cut to Zero. I'd highlight that - writing was on the wall, and they're finally following through. Stock's off 20% pre-market - nothing seems to be helping them though. ;-)

http://investor.apachecorp.com/news-releases/news-release-details/apache-corporation-announces-revised-capital-guidance-and

NH - I normally wouldn't engage with you, but please give it a rest winding up the suffering longs on here. Your trade was correct and getting out 3 weeks ago would've saved longs their capital, but many don't market time, and rubbing it in isn't helping them. The market is due a bounce in the near term, but with all the CV uncertainty around, it'd be foolish to call it a real bottom at this time.

I'd say the likes of PMO/TLW/RKH are more at risk of going under, than ENQ. This Brent price for longer, say into 2021, will mean half or more of NS will be bankrupt, but IMO, it isn't likely to hang around these levels for too long. A Q3 recovery is what I'd call, as the oil market looks forward to an economic recovery in Q4 and onwards.

This time it's Devon Energy with a circa 30% capex cut from $1.8 bill to $1.3 bill. It's interesting that the stronger players are the first to cut so far, and the weaker ones just go down with the ship, I suppose. There's no chapter 11 to save them this time around.

https://www.devonenergy.com/news/2020/Devon-Energy-Reduces-2020-Capital-Spending-and-Provides-Financial-Update

I'm not one for timing the bottom, but the market overshoots both on the up and downside, and it's currently pricing in the worst possible outcome. Even with a worst case short, sharp recession in the next 2 quarters, Enq can hunker down and survive the next few months and come out fine on the other side. Can it go down more from here - sure it can, who knows.

GL...

The Dems control the house of reps. There's a ZERO probability of getting any aid to the shale sector this election year. The stronger will just about hang on and many of the weak will be bankrupt. That's OK for the long term future of oil. Numpty doesn't think about unintended consequences and shale bankruptcies in an election year with job losses, because of low oil prices due to over investment, is a key one.

Yes, Mod. It's right up there on my carnage watchlist. ;-) Retail and Travel shares have been pummelled as well, pushing Boeing down to multi-year lows.

TBH, the stock market has gone down way too much too quickly, and we may get a little bit bounce soon. Now, if the market fall and the CV scare doesn't feed into the real economy, then we'll get a hard bounce.

Dow's now officially closed down at a Bear Market level - here's a stat that Donnie can't shake off his illustrious CV, no pun intended - 2 bear markets in his first term.

Chilting - even though shale my not directly bring Trump down, at the very least what they've done is caused the credit market meltdown on Monday (triggered by OPEC+) with low investment grade and Junk bonds selling off and yields shooting up. That's what convinced the market that the credit market may now be seizing up with banks holding that category of debt running into liquidity issues. It wasn't a wonder that Dow was off 2000 points on Monday. And another 1600 points off today and high yield debt selling off more today and oil's a large portion of this distressed debt.

Companies like Apache are at multi-year lows - It's at $8 from $30+ in January. And travel getting hit is hammering Boeing today - down $40 to $190 right and pushing Down lower. It isn't just oil anymore - Travel related, retail, banks - all sharply lower. For one, I'm with Hitman, and we need the orange man out of the WH and oil will then meaningfully rally as the Democrats put on meaningful restrictions on Shale - no excess flaring/ environmental considerations. A US recession now will almost certainly do the job...

Cheers, Hitma. Dow's now in bear market territory and is off 20% from the all-time peak just last month and is officially the fastest bear market from a peak ever. And that's the first US bear market since the end of the great recession in 2009. Would this lead to a technical recession - possibly. But, oil has certainly been hammered so much that this scenario should now be discounted. Shalers' SPs are still getting hammered and larger mid-caps are off 80% from the highs just last year. We're doing well vis-a-vis their prices.

It's the uber idiots like Harold Hamm who've caused this major oil over investment and the resultant crash and the situation we're in. Harold - ask yourself why you idiots can't generate FCF at under $50 and why the f**k OPEC+ should feed your never-ending idiocy? CLR has hit all-time lows at $7 on Monday. Idiot Hammy owns 80% of the company and his net worth is now $2.4 billion down from $30 billion a couple of years ago. It's no wonder he looked exhausted and goes running to the Numpty.

I can't see how import restrictions can help. OIl is a global commodity and if it doesn't find home in the US, it'll go somewhere or into storage, and keep oil prices lower anyway, Numbskull Hammy. Go cut your capex first before you continue moaning.

Lol..;-) No, there's nothing announced for 2021. Reading up some of the ARs for shalers, I did see some hedging in 2021, but miniscule. To give you another example, Ovintiv was a Canada HQ's shale focused company, and recently moved to Denver. They were forecasting 235 Mbbls/day production for 2020 and as you can see below, they'd hedged 165 Mbbls/day for 2020. However, 80 Mbbls/day were 3 way collars at $61.68 ceiling (Sold call) and $53.44 floor (Bought put). However, foolishly in hindsight, they sold a put at $43.44 to make it a 3-way collar. If it was just a 2-way collar (like Enq does), then they'd always be getting $53.44 a barrel. The problem with the sold put at $43 is that it removes unlimited downside protection from the $53 level. If WTI is say $35 on settlement, they'd end up getting $45 for an additional $10, which is the difference between the Bought put and sold put strike prices. If WTI averages $30 for the rest of the year, they'd only get $40 (the same additional $10). I hope this makes it a bit clear.

3-way collars are taken out when a company forecasts that OP volatility will be low and hence, chances of breaching the sold put strike to the downside is very low. They get a premium (income) for this 'sold put' and that's a consideration. However, none contended with CV and OPEC+ to shaft their grand plans.

https://finance.yahoo.com/news/ovintiv-reiterates-strong-capital-structure-011600037.html

Hello R - with regards to the options, the shalers had taken them out last year, and as you'd have noted from the Parsley Energy news release on Monday - pasting below for reference, they're hedged pretty uniformly over the rest of the year. However, the catch is that about half of their option hedging is a 3-way collar and that doesn't give them too much protection - only about a $10 benefit, instead of a $22 benefit per barrel (at $33 WTI). I haven't analysed other shalers in too much detail as they haven't put them out yet, but it could be a similar story.

https://finance.yahoo.com/news/parsley-energy-provides-2020-development-134300727.html

I'm with you on the rest of the points about shalers. However, should oil start moving up, we're likely to see them come back quickly, to an extent, but how much will they aim for is an unknown.

Another shaler, Matador, announced Rig cuts from 6 to 3 by the end of Q2 - a bit slow, but maybe that was committed spend. And the CEO/Exec management is taking a pay cut, instead of large scale layoffs maybe? Protecting Numpty from an election backlash, I'd imagine.

https://www.marketwatch.com/story/matador-resources-to-cut-oil-rigs-operated-in-half-cut-ceo-salary-by-25-2020-03-11?siteid=yhoof2&yptr=yahoo

Jan - many are well hedged - many are 50% for all of 2020, some are even 75% hedged. If you look deeper into their hedging strategy, many are hedged through 3-way collars. This is a combination of a sold call at say $65 (Ceiling) bought put at say $52 WTI (Floor - usually) to give downside below that level and then they went a sold a put at $42, which limits their downside protection when WTI falls to say $30. Instead of getting $52, they only receive $40, because the sold put at $42 takes away $12 from what they would received if they didn't take out this 3rd element of the 3-way collar. I'm not sure if this is clear, but many with 3-way collars didn't expect this kind of a sharp fall and are not as protected.

This is why we have seen circa 30% cuts from 3 of the 4 shalers that announced in the past few days. We'll see where the others land.

Squif - Chevron is the first major to say they will cut costs - not sure how much and we'll know soon. EOG, another large producer, has also said they'll look to cut. In the coming days, we'll get more definitive spending cuts and that'll inform us better. We may be finally looking at a substantial falling away from shale in 2020/2021. Would Russia forcing their hand, this would've continued for a few more years. Continental hasn't spoken yet, although their wells are in the Bakken (ND)and Stack/Scoop (Oklahoma).

Along with Marathon which cut $500 mill capex, Occidental has cut capex by $1.7 billion from $5.2 to $5.4 bill range to a revised $3.5 bill to $3.7 bill range. Marathon was just a 21% cut, whilst OXY was a meaty 30% cut. That's 4 formal hard number announcements so far.

Mavrick - Thanks for this. I'd seen a couple of interviews by Scott on CNBC and in Q4 last year, he was calling for a reduction in production rate in 2020 saying that growth wasn't sustainable, blah blah blah...

And what does he actually do - as recently as 2-3 weeks ago when they announced results, they guided to an increased capex at over $3 billion for 2020, which was about 5% above 2019 levels. THat's hypocrisy at its best for you. If PXD is now actually cutting Capex by 30 to 50%, that's fantastic. We want these idiots to actually realise that they're friggin high cost producers and the only reason they're surviving and thriving, in some cases, is because of the generosity of OPEC+.