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Hey Oil Barons.......


936horn

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I’m slightly skeptical on whether the finance side will have learned their lesson when things come back around. I read an internal report yesterday and was just astonished by what some of my colleagues think of basins and management teams. Granted I’ve been the pessimist on the team for the past six months.

Walk this thing back four months and two of the deals we brought were just absurdly stupid, thankfully they got killed just in time. I mean one of them was a new iteration of a portCo and their plan was to immediately take the RBL, drill as quickly as possible and be at 80-90% utilization within a year. Why the fuck are you doing that? Why not drill at a moderate pace and utilize 50%? I was consistently told these guys were top management with xyz background... morons. Another client unfortunately did this exact thing a year ago... guess what dipshits, your BB is getting cut 20% and you’re in a deficiency. Just totally unnecessary.

Also - it’s quite remarkable how once these companies stop drilling their EBITDA craters within 6-12 months. Doesn’t seem to follow the type curves I was shown the past two years. Have to wonder if they were forced to not drill for the next 2-4 years if the cash flow would actually pay back the debt. I doubt it. It has all the makings of a complex ponzi.

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I’m slightly skeptical on whether the finance side will have learned their lesson when things come back around. I read an internal report yesterday and was just astonished by what some of my colleagues think of basins and management teams. Granted I’ve been the pessimist on the team for the past six months.

Walk this thing back four months and two of the deals we brought were just absurdly stupid, thankfully they got killed just in time. I mean one of them was a new iteration of a portCo and their plan was to immediately take the RBL, drill as quickly as possible and be at 80-90% utilization within a year. Why the fuck are you doing that? Why not drill at a moderate pace and utilize 50%? I was consistently told these guys were top management with xyz background... morons. Another client unfortunately did this exact thing a year ago... guess what dipshits, your BB is getting cut 20% and you’re in a deficiency. Just totally unnecessary.

Also - it’s quite remarkable how once these companies stop drilling their EBITDA craters within 6-12 months. Doesn’t seem to follow the type curves I was shown the past two years. Have to wonder if they were forced to not drill for the next 2-4 years if the cash flow would actually pay back the debt. I doubt it. It has all the makings of a complex ponzi.

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16 minutes ago, HoustonFrog said:

I’m slightly skeptical on whether the finance side will have learned their lesson when things come back around. I read an internal report yesterday and was just astonished by what some of my colleagues think of basins and management teams. Granted I’ve been the pessimist on the team for the past six months.

Walk this thing back four months and two of the deals we brought were just absurdly stupid, thankfully they got killed just in time. I mean one of them was a new iteration of a portCo and their plan was to immediately take the RBL, drill as quickly as possible and be at 80-90% utilization within a year. Why the fuck are you doing that? Why not drill at a moderate pace and utilize 50%? I was consistently told these guys were top management with xyz background... morons. Another client unfortunately did this exact thing a year ago... guess what dipshits, your BB is getting cut 20% and you’re in a deficiency. Just totally unnecessary.

Also - it’s quite remarkable how once these companies stop drilling their EBITDA craters within 6-12 months. Doesn’t seem to follow the type curves I was shown the past two years. Have to wonder if they were forced to not drill for the next 2-4 years if the cash flow would actually pay back the debt. I doubt it. It has all the makings of a complex ponzi.

Yea, I don't know if I agree with Doc Beeper that the money will be smarter the next time around - give me one more good boom, I promise I won't squander it this time.  It may not be exactly like a Ponzi, but the whole thing sure seems to fall apart if there isn't some other optimistic sap to unload everything on after a few years... 

I'm not sure if it will be as easy for those who access the foundation/pension capital directly or not, but the teams I work with that have taken that route instead of PE have actually been pretty conservative and I think are going to be able to weather this storm.

The bad news and hard conversations keep piling up for me - the London market is hardening at a terrible time, collateral demands from surety bond underwriters, the D&O market for both private and public E&P companies is doling out 100-200% rate increases, etc. etc.

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On top of this, I've seen reports estimating that US production is already down 1.5Mbbl/day since the beginning of the crisis, and large scale shut-ins are just beginning. Currently sitting around ~11.5M/day. I'd expect we'll drop to below 10M by end of June. That would wipe out nearly 3 years of supply growth.

Edited by Storm the Field
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An interesting development here in the Permian coming from all of this.  I haven't seen it discussed here, apologies if so.

Apparently crude purchasers are having trouble finding enough barrels to meet their contractual demands.  So many wells shut-in, curtailed and operators storing their own barrels on lease that this is apparently the case.  My friends in purchasing are now actually having to pay premiums to what they sold their futures contracts for last month in order to make delivery, making the losses even worse for them. 

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10 minutes ago, Fudge Nuggets said:

I guess anything is possible these days, but I have a hard time believing anyone is having difficulty finding barrels.  Sounds more like your buddies are being taken to the cleaners.

I'm in Midcon, but one of our purchasers called today asking for any barrels we could send them--even split loads. We are selling a ton today and saving the storage for next month when prices are even lower. 

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Xom numbers this morning

Exxon posted a GAAP loss of 14 cents per share, and a non-GAAP profit of 53 cents per share. The consensus estimate was for a breakeven quarter. The company announced a 30% cut in capital spending and will also reduce cash operating expenses by 15%.

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Not sure what it means, but oil is trading negative in Kansas as well.

KANSAS CRUDE OIL PRICES

COMMODITY PRICE CHANGE UNIT UPDATED
Central Kansas Sweet 5.35 3(127.66%) $US/Barrel 29 Apr 2020
Eastern Kansas 47.75 -0.25(-0.52%) $US/Barrel 02 Jan 2018
Eastern Kansas Common 2.00 0(0%) $US/Barrel 29 Apr 2020
Eastern Kansas Common Special -2.05 0(0%) $US/Barrel 29 Apr 2020
Kansas 10.50 2.75(35.48%) $US/Barrel 29 Apr 2020
Kansas Common 3.14 2.85(982.76%) $US/Barrel 29 Apr 2020
Northwestern Kansas Sweet 3.25 3(1200%) $US/Barrel 29 Apr 2020
South Central Kansas 52.25 -0.25(-0.48%) $US/Barrel 02 Jan 2018
Southwest Kansas 4.23 2.7(176.47%) $US/Barrel 29 Apr 2020
Southwestern Kansas Sweet 3.75 3(400%) $US/Barrel 29 Apr 2020

 

 

https://www.oilmonster.com/crude-oil-prices/united-states/kansas/17

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Daily tidbits:

XOM cutting 400K/day in Q2. 100K from Permian, rest from Canada and international.

CVX cutting 200-300K in May, 200-400K in June. 

Air travel numbers beginning to improve ever so slightly. 155K went through TSA checkpoints yesterday. That's the highest number since 3/30, though still ~95% less than this time last year.

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1 hour ago, Parliament said:

Not sure what it means, but oil is trading negative in Kansas as well.

KANSAS CRUDE OIL PRICES

COMMODITY PRICE CHANGE UNIT UPDATED
Central Kansas Sweet 5.35 3(127.66%) $US/Barrel 29 Apr 2020
Eastern Kansas 47.75 -0.25(-0.52%) $US/Barrel 02 Jan 2018
Eastern Kansas Common 2.00 0(0%) $US/Barrel 29 Apr 2020
Eastern Kansas Common Special -2.05 0(0%) $US/Barrel 29 Apr 2020
Kansas 10.50 2.75(35.48%) $US/Barrel 29 Apr 2020
Kansas Common 3.14 2.85(982.76%) $US/Barrel 29 Apr 2020
Northwestern Kansas Sweet 3.25 3(1200%) $US/Barrel 29 Apr 2020
South Central Kansas 52.25 -0.25(-0.48%) $US/Barrel 02 Jan 2018
Southwest Kansas 4.23 2.7(176.47%) $US/Barrel 29 Apr 2020
Southwestern Kansas Sweet 3.75 3(400%) $US/Barrel 29 Apr 2020

 

 

https://www.oilmonster.com/crude-oil-prices/united-states/kansas/17

Kansas Has No Trees

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4 hours ago, Parliament said:

Not sure what it means, but oil is trading negative in Kansas as well.

KANSAS CRUDE OIL PRICES

COMMODITY PRICE CHANGE UNIT UPDATED
Central Kansas Sweet 5.35 3(127.66%) $US/Barrel 29 Apr 2020
Eastern Kansas 47.75 -0.25(-0.52%) $US/Barrel 02 Jan 2018
Eastern Kansas Common 2.00 0(0%) $US/Barrel 29 Apr 2020
Eastern Kansas Common Special -2.05 0(0%) $US/Barrel 29 Apr 2020
Kansas 10.50 2.75(35.48%) $US/Barrel 29 Apr 2020
Kansas Common 3.14 2.85(982.76%) $US/Barrel 29 Apr 2020
Northwestern Kansas Sweet 3.25 3(1200%) $US/Barrel 29 Apr 2020
South Central Kansas 52.25 -0.25(-0.48%) $US/Barrel 02 Jan 2018
Southwest Kansas 4.23 2.7(176.47%) $US/Barrel 29 Apr 2020
Southwestern Kansas Sweet 3.75 3(400%) $US/Barrel 29 Apr 2020

 

 

https://www.oilmonster.com/crude-oil-prices/united-states/kansas/17

Doesn't match the facts on the ground in Kansas. Spot prices never went negative there, did get to about25 cents on day oil went -37.00. 

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1 hour ago, MaybeACoordinator said:

Seems legit from checking out the Reddit thread. Bosses told workers furlough was ending early and for everybody to come in Monday so... they can be unfurloughed and immediately laid off. Maybe you could pull a variant on the Costanza and just not show up Monday and hide out at home for awhile.  

you bet like hell im slipping and tripping on the way in !!!!!!!!!

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when I had an office, the only personal item I kept in there was a coffee mug. they can keep that

 

if you work for any oil field service company (and have any sense), you know this day is coming sooner or later and you'll buy back in (after swearing you'll never work for an oil field service company again !!!) and that day will come again and so and so and so on. doesn't make it right but that's how shit goes. 

Edited by tx 3 putt
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@tx 3 putt I agree with the first part. I left my office bare. Coworkers always made comments but it made things a lot easier once I was given the boot. 
 

Second part for me didn’t hold. I left and never looked back. Every year I feel better about the decision. I won’t lie; I do miss it somehow. 
 

I hate to see that at Halliburton office. Family friend was furloughed. He had been with company 25 something years. Worked in global supply chain I think so he managed to stay essential for a long time. 

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On 5/3/2020 at 1:48 AM, tx 3 putt said:

when I had an office, the only personal item I kept in there was a coffee mug. they can keep that

 

if you work for any oil field service company (and have any sense), you know this day is coming sooner or later and you'll buy back in (after swearing you'll never work for an oil field service company again !!!) and that day will come again and so and so and so on. doesn't make it right but that's how shit goes. 

Been that way for over a century.

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On 5/3/2020 at 1:48 AM, tx 3 putt said:

when I had an office, the only personal item I kept in there was a coffee mug. they can keep that

 

if you work for any oil field service company (and have any sense), you know this day is coming sooner or later and you'll buy back in (after swearing you'll never work for an oil field service company again !!!) and that day will come again and so and so and so on. doesn't make it right but that's how shit goes. 

I need my 28 year old HP-48SX calculator, but other than that they can keep the rest.

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Low oil prices are a factor, albeit a small one, in why airlines are still operating today without furloughing employees.  Per internal email at my airline, Jet-A costs about 50% of what it did earlier this year.  So....thanks oil barons?

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