Member Info for epiphany121

Romaron - yes indeed, they're being pushed so hard that they won't back down now. One angle they can look at is - OK, we'll let this slide and let the world economy fall into a recession and that takes the US with it. That recession scenario will almost certainly ensure that Numpty loses next year. This isn't too far-fetched a scenario. This also would have the effect of washing down Shale and US production with it and should result in a more balanced oil market in 2020/21.

There was an interesting article about why the next recession would mean the death knell of new age nationalism that reared its head in the past 3 to 5 years, and I wouldn't be complaining if this were to happen. This phenomenon often springs up in the aftermath of a deep recession (let's roll back to the 1930s, eh?) and Tariffs are imposed leading to lower prosperity and an eventual realisation that nationalism isn't all it's made out to be. No doubt oil and oil shares will suffer should this play out, and a scenario where the likes of ENQ may even go bankrupt shouldn't be discounted. That's a scenario I hope wouldn't happen for our own sake... ;-)

GL

Hi Hitman,

Yes, that's spot on. WLL is the company that I mentioned this morning in the Bakken - they laid off 33% of their workforce to save $50 million a year, and yet they're spending $800 million just to sustain shiite production that has to be sold at a massive discount to WTI. Their stock is off 38% so far today.

The other Shale company CXO (COncho) is currently the biggest in the Permian and their experimental drilling method of drilling a bunch of tightly spaced wells has flopped. And they are spending $3 billion just to sustain production at the 300kboepd range this year. Because it's such a high production volume base, they need huge capex just to sustain production and therein is the problem with that business model. If these tariffs do end up causing a recession (as I suspect it would if they're not reversed quickly), then these shale companies are fu**ed.

Yes, China will take the medicine and will hunker down and wait out till end of 2020. I doubt they'll be bullied into submission.

You couldn't make this up if you tried any harder. There goes Brent and the economy..

Hello DK - now the stock market is speculating that Powell will indeed make another cut in September. Economic data out of the US has been terrible and Manufacturing ISM indexes are flashing red at the regional level certainly (Chicago PMI, for example). That's having a bearing on oil. All of these have Numpty's finger prints all over them.

Wall Street is pushing shale towards capital discipline vs growth, and that'll eventually show up in US production data. Just as the Market was sanguine this year at this time about WTI's prospects as the shale growth wasn't fully factored in, it's now thinking that shale will grow a lot more than these levels during this half. Oil bulls' big hope is that the Street can reign them in, along with the numpty waking up to reality and cutting a China deal of course.

GL

Well, what can I say. ENQ is in a relative state of tranquility compared to what's happening to CXO and WLL today on Wall Street. CXO is off 22% and WLL is off 33%. CXO was a $20 bill mkt company yesterday. ;-)

Most shalers on my screen are being pummelled to (near) oblivion. ;-) I still don't know when they'll learn the lesson - cur drilling and over producing, you idiots. It's not a good place to be in when the bond market is screaming 'big slowdown'. Self-inflicted by numpty, of course.

Also, if we note the Q2 to Q3 2018 production growth to the projected Q2 to Q3 2019 production growth, we do see a circa 60kboepd growth in 2018, but even with $3 billion + Capex spending over the past year, projected production in Q3 2019 is dropping from Q2 19. That stat gives a good picture as to why their capex spend isn't sustainable and neither is their growth rate..

WLL (Whiting) from the Bakken also came out with numbers yesterday, and they're dealing with pipeline issues and a major pricing differential, and Capex just isn't economical anymore from an FCF viewpoint and they're now focusing on DUCs in Q4 and pull all rigs after Q3. They'd have still spent $800 million plus in 2019 on Capex, but production isn't going anywhere really and debt is still climbing.

If WTI stays around these levels, 2020 may just be the year of decline for US crude production, with capex cuts all around.

Concho is the largest non-Major Permian driller and they're slowly seeing the light to cut excess drilling and focus on FCF, which won't be in place till 2020 at the earliest. Rigs cut from 33 in Q1 to 18 today. See link below. All of this will take time to weaken production growth, but we won't see runaway growth rates that we did from Shale in 2018.

https://www.investors.com/news/permian-basin-shale-concho-occidental-earnings-q2-2019/?src=A00220&yptr=yahoo

https://s2.q4cdn.com/413021264/files/doc_financials/quarterly/2019/Q2/2019.07.30-v2-(FINAL)-2Q19-Earnings-Presentation.pdf

It's as waffled a fed chairman presser as I've ever seen. And Dow's fallen nearly 450 points since it started about 20 minutes ago. Lol..

Read between the lines - He's basically stating that further cuts depend on numpty's stupid trade wars. The market in between was confused that he was saying that a further cut may not be needed and sold off big, but now he's clarified that's not the case. Numpty has him shaking in the boots is what it is..

What!!! Given the market expectations that had built up since the Fed started positioning a rate cut a month ago, a no cut today would've probably taken oil down a couple of bucks - and that's not even talking about what would've happened to DJIA/S&P today.

What Jerome Powell has just now admitted in his press conference is that this has nothing to do with the economic indicators, but more of an insurance against numpty's trade wars...And that buffoon still talks about how great America is when he's the one who's been shafting it.

They're proper capitalist greedy and won't listen to reason. Although, Wall Street is now pushing them towards an outcome where they need to live within their means - i.e. within cash flow from ops. The best outcome (for Brent and us) is one where rapid production growth won't happen - that isn't too unrealistic. Getting down to 10 mmbbls is utopia - certainly won't happen unless there is a recession that drives WTI to the 30s.

Showed a slight decrease over April, which isn't that surprising in itself. It was at 12.1 mmbbls for May. What happens in the next 3 or 4 months is crucial, as historically the summer months is when there's a spurt in production. We can only hope that this pattern doesn't repeat. Monthly figures in kbbls/day are below for 2019 and 2018..

2019 - 11,856 11,669 11,892 12,134 12,108

2018 - 10,018 10,281 10,504 10,510 10,460 10,649 10,891 11,361 11,498 11,631 11,999 12,037

That didn't take too long. Production is back up to 12.2 mmbbls in this week's report. That's normal service resumed, but they're not running away with it thus far this year. That's a 'positive', IMO

People do generally have a life outside these MBs, I'd tend to think. Let's just say they're going about their jobs...

Dark_Knight - Last week's was definitely 'Hurricane Barry' effect causing GOM platforms shutdown. There is no way that Shale will suddenly fall off the face of earth (1.1 mmbbls in 2 or 3 weeks). You'll see the production numbers climb back a (fair) bit tomorrow and back up some more to over 12 mmbbls in the next couple of weeks, at worst.

Hi Romaron,

Yes, fully agree with you. He wouldn't be drawn into spilling out numbers that weren't out in the public domain. Case in point, he only acknowledged that AK was producing over 40kbopd in the days around the AGM, after someone directed that pointed question at him, quoting what CNE's CEO had stated a few days earlier in their AGM.

I'm fully keeping my eyes and ears open around the macro economic situation - the global economy and China US trade wars - and how the Shale idiots are looking at their capex for the rest of 2019 and beyond. These will certainly have an impact on Brent and consequently our cash flow in 2019 and beyond.

Good luck

in a while yet. It's like a big snap back rally on today, and Brent/WTI are up in unison too. They're up anywhere between 8 to 25% today - the biggest riser CNX is after they reported decent quarterly results. But then, many of them were down 75% or so in the last 10 months.

Hello L3 - yes, I don't think shale will experience negative growth like you want them to. The best I'm counting on is a slow down from their torrid pace of growth. They're still investing just about the same as last year and that'll just about deliver maybe a small YOY growth. I still think it's likely they'll get to circa 13 mmbbls/day by the end of the year, or be close enough. It's how much they get up to with the reduced capex (on balance over last year) - that is the big question.

It'll be good to follow the earnings commentary in the coming days and assess what their general capex spending plans are. We'll get a better sense then.

At the AGM, they didn't explicitly state $250 million reduction in debt. They only stated that the Analysts are forecasting net debt to drop to $1550 million and they only acknowledged that it should end up around that number. That's as far as they would go and I extrapolated the $250 mill reduction.

Early September

HMHn - I think your numbers are pretty simplistic and doesn't take into account the complexities of ENQ's business model and how their revenues and expenses are structured.
1. Malaysian PSA that nets ENQ only circa 65% Brent price for the 9 to 10 kbopd production from Malaysia
2. Gas volumes, which nets ENQ much less than equivalent oil. The effect of 1 and 2 would mean that ENQ receives circa 90% of Brent price in realised revenues.
3. The $100 mill Magnus purchase price payback is only applicable for this year and it's a straight 50-50 profit share from 2020 onwards, after the vendor loan payments are made on a quarterly basis.
4. The circa $35 mill vendor loan payments this year for the 25% Magnus share
5. Malaysian taxes

All things being equal, my model shows real FCF (for debt reduction) at a total of $300 to $320 mill for 2019, with Brent at a average of $65. ENQ in the AGM indicated that debt reduction would be $250 mill for 2019 - not too dissimilar to what I'm getting.