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Hey Oil Barons.......


936horn

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18 hours ago, Trey3216 said:

Dangerous game to play.   Market folks know there is going to be a structural supply deficit in pretty short order.  They’re trading on the fear of the day and doing their damndest to not get caught deep on the wrong side when the reckoning happens.  

As long as his swap contracts are very much in the money, he can shut in his wells and unwind the hedges.  That's what we're going to do if oil falls to $15. 

That leaves him with a bunch of cash, so he can shut in his wells and save reserves for higher prices.  He keeps the puts (or sells them, depending on strike price), so if price spikes upward, he realizes all that upside.

I get what you're saying though.  It's dangerous to be substantially more than 100% hedged when the hedges are barely in the money and there's a ton of volatility.

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19 minutes ago, Dr. Beeper said:

OXY is fucked. I wonder if it is conceivable for them to go private. Reason I’m asked is because I’d actually heard exactly that yesterday from a banker friend of mine - that they’re looking to do just that. 

I imagine they’ll do whatever Icahn and Buffett. wants to do. Getting those two to agree might be difficult. 

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2 hours ago, Dr. Beeper said:

OXY is fucked. I wonder if it is conceivable for them to go private. Reason I’m asked is because I’d actually heard exactly that yesterday from a banker friend of mine - that they’re looking to do just that. 

What would happen to public equity in this case? Purchased by debt holders at fire sale value?

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41 minutes ago, Dr. Beeper said:

I don’t know OXY’s balance sheet to opine on what current shareholders would get, but know their assets have a lot of value, and whatever deal is struck would have to result in a premium to the current price.

Still, I’ve thought about it for 24 hours and decided it’d be damn near impossible for them to go private. I think this guy was mistaken, and assumed incorrectly that this was in fact OXY. Their market cap is still too big, and PE is dead. Hedge funds are more interested, today (and this changes on an hourly basis) on buying select distressed high yield paper. I don’t see how the capital would be available to them. 

Easy to take private at $15B

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4 hours ago, Dr. Beeper said:

OXY is fucked. I wonder if it is conceivable for them to go private. Reason I’m asked is because I’d actually heard exactly that yesterday from a banker friend of mine - that they’re looking to do just that. 

It is if Warren Buffett buys them for nothing 

Edited by Trey3216
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3 hours ago, Okie State said:

I have family who worked for Anadarko and now Oxy. Haven't talked to them in a while, but can't imagine they're feeling great about things right now.

anadarko employees got a 4.9% pay reduction. Oxy employees got 30%, so the story goes 

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11 minutes ago, Fudge Nuggets said:

I keep wondering how Anadarko employees landed such a sweetheart CoC deal to begin with?  No other company I know of has anything close at all, company changes hands... tough shit.

Agree, but that's what happens when you are begging the other company to accept your deal and throwing more money at them. 

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A question for upstream oil and gas commercial bankers - How long will the banks let a small private company with a now way underwater loan go before dropping the hammer and cleaning the mess up?  I'm thinking of small borrowers, specifically one I'm familar with who had something like an all-PDP PV(10%)  (no PDNP or PUD's) of $15MM at ~$50/bo , now much less at $25/bo, and always is fully drawn with only $50,000/month of principal reductions in place.

Edited by Heisenberg
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40 minutes ago, Lagunamadre said:

US no longer filling up the SPR. Did our industry stop paying lobbyist, what the fuck? 

 

https://www.houstonchronicle.com/business/energy/article/crude-purchase-funding-stimulus-3-trillion-us-15156275.php

I would bet through all the emergency declarations that Trump can still do it by executive order through the DOE.  The announcement last week didn't have any legislative component.

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On 3/25/2020 at 12:12 PM, TonyTexas said:

No funding in the stimulus package for the purchase of oil for the SOR. 

 

2 hours ago, Lagunamadre said:

US no longer filling up the SPR. Did our industry stop paying lobbyist, what the fuck? 

 

https://www.houstonchronicle.com/business/energy/article/crude-purchase-funding-stimulus-3-trillion-us-15156275.php

US ENERGY DEPARTMENT HAS FUNDS FOR POTENTIAL PURCHASE OF OIL FOR STRATEGIC PETROLEUM RESERVE, WORKING WITH CONGRESS ON DETAILS

 

that just came across my news tape.  also we're pressuring the saudis to leave OPEC lol.

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2 minutes ago, T’Boo Ted Marshall said:

‘21

Depends on the area. We would model 100% of our DUCs in the Permian, Bakken and EF getting completed by end of 21', we've pushed back timing quite a bit though. I could see Scoop/Stack and fringier parts of the EF being chalked up as dry holes. 

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11 hours ago, Dr. Beeper said:

Is this a Dallas company with CBP assets?

No, Houston private with lots of little interests, including ORRI's, maybe 500 properties in that PDP PV(10%) of $15MM at $50/BO.  Properties are mostly West Texas and Delaware New Mexico with other interests in E. Texas, NW Louisiana, OK, CO, WY, ND.

I'm just wondering how long before the bank moves on the collateral at $20-25/BO.

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5 hours ago, Dr. Beeper said:

Yep. I’m about to hedge the entirety of ‘20 in swaps. The back part of the curve is up. Everyone I talk to is talking single digits for April/May. I suspect we rebound fast from there, but, I’m nervous. 

Ive also heard conflicting things: 1) Saudis are employing American bankers and engineering consultants. They know they didn’t effectively do the job in ‘15-‘16. They have hired these people with express intent of crushing our world. 2) Saudis likely cannot increase production 2-3 mmbbl/d, given a) Aramco announced a huge capex cut and b) their storage outside of bbls promised to China is only 100 mmbbls. 

Fuck those goatherds and that Russian KGB thug.

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9 minutes ago, Dr. Beeper said:

Somebody’s pissed about the amount of his Continental royalty checks. 

Yep, that too. But that isn’t an important reason - the thought that those turds are screwing the hardworking people in our oil patch really pisses me off. Not to mention causing problems for state revenues.

edited to add: we  do not depend on our royalty checks at all - we are comfortable enough without them. Some relatives however do need the extra cash.

Edited by Armybrat
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