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Hey Oil Barons.......


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9 minutes ago, LABEVO said:

 

Can somebody explain to me like I'm a 6th grader on what this imply?  Did Warren just say, just give me whatever you can bc I made a big mistake investing in shale and Im going to just gonna sell this off?    

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Can somebody explain to me like I'm a 6th grader on what this imply?  Did Warren just say, just give me whatever you can bc I made a big mistake investing in shale and Im going to just gonna sell this off?    


Yes. Part of the original deal with Buffett. His Div is $200MM/qtr cash or common stock @10% discount.

If he wants his dividends to keep coming and Oxy to keep the lights on it’s better for him to accept stock and allow Oxy to maintain the cash for whatever purposes. If/when he only excepts cash payment of dividend that’s basically Oracle saying he has lost all confidence in their ability to stay out of bankruptcy.
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3 minutes ago, Llano Estacado said:

 


Yes. Part of the original deal with Buffett. His Div is $200MM/qtr cash or common stock @10% discount.

If he wants his dividends to keep coming and Oxy to keep the lights on it’s better for him to accept stock and allow Oxy to maintain the cash for whatever purposes. If/when he only excepts cash payment of dividend that’s basically Oracle saying he has lost all confidence in their ability to stay out of bankruptcy.

 

Thanks, OXY 2021 $5 put it is then

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5 minutes ago, Neonmoon said:

Chapo, 

Billy (Warren Buffet) really likes this super hot girl Mary (Oxy). Mary got in trouble and needed money for an abortion. Billy gave Mary the money for the abortion. In exchange, and to make Billy feel cool, She totally said she would go to every spring, summer, fall, winter dance with him because of it. But when the spring dance came closer, she couldn't afford to buy a dress for the dance because her mom is having a hard time selling her new jewelry line. So Billy was like, it's cool, don't waste your money on a new dress for the dance. Just give me your autographed panties and I will show it to my friends who will think I'm totally badass. Billy doesn't want to give up on going to the dance with Mary, but still wants to look cool. I mean he did loan her that money for the abortion. If she bails on the dance a couple more times or doesn't put out for Billy, then Billy might have to ask for the abortion money back. 

OK great, now incorporate Putin and MBS in this analogy

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6 minutes ago, Neonmoon said:

Chapo, 

Billy (Warren Buffet) really likes this super hot girl Mary (Oxy). Mary got in trouble and needed money for an abortion. Billy gave Mary the money for the abortion. In exchange, and to make Billy feel cool, She totally said she would go to every spring, summer, fall, winter dance with him because of it. But when the spring dance came closer, she couldn't afford to buy a dress for the dance because her mom is having a hard time selling her new jewelry line. So Billy was like, it's cool, don't waste your money on a new dress for the dance. Just give me your autographed panties and I will show it to my friends who will think I'm totally badass. Billy doesn't want to give up on going to the dance with Mary, but still wants to look cool. I mean he did loan her that money for the abortion. If she bails on the dance a couple more times or doesn't put out for Billy, then Billy might have to ask for the abortion money back. 

Mary used to hang out with a couple older boys named Boris and Abdul. They would take her too the movies and buy her stuff too when she was young. But then Mary blossomed into this super hot girl and stopped hanging out with those guys because they were controlling and lame. But those guys were tired of Mary getting all the attention, so they wanted to cause her problems. They released a video of Mary blowing Boris and Abdul. Yeah, it was embarrasing to them too because it showed their small dicks, but it really made Mary look bad.

 

 

Well done

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3 hours ago, Horns99 said:

Anyone have any intel on the energy department plan to pay producers to leave the oil in the ground ?


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The geologists and PEs will most likely correct me, but isn't there a risk of damaging the reserves if too many wells in the region shut in? I know stopping the flow of a well too much or producing too much can both damage the reserves. Any new production coming online this year probably needs to pump.

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Anyone have any intel on the energy department plan to pay producers to leave the oil in the ground ?


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https://www.bloomberg.com/amp/news/articles/2020-04-15/u-s-weighs-paying-drillers-to-leave-oil-in-the-ground-amid-glut?sref=61mHmpU4&__twitter_impression=true


The Trump administration is considering paying U.S. oil producers to leave crude in the ground to help alleviate a glut that has caused prices to plummet and pushed some drillers into bankruptcy.

The Energy Department has drafted a plan to compensate companies for sitting on as much as 365 million barrels worth of oil reserves by effectively making that untapped crude part of the U.S. government’s emergency stockpile, said senior administration officials, who asked not to be identified describing deliberations prior to a decision and announcement.

West Texas Intermediate crude oil futures for May rose about 20 cents to $20.42 a barrel on the news. Earlier Wednesday, crude futures settled below $20 a barrel for the first time in 18 years.

Federal law already gives the Energy Department authority to set aside as much as 1 billion barrels of oil for emergencies -- without dictating where they should go. That creates a legal opening for storing crude outside the government’s existing reserve and even blocking its extraction in the first place. In this case, the government would essentially buy the oil locked underground but ask producers to hold off on extracting or delivering it.

The keep-it-in-the-ground plan would require billions of dollars in appropriations from Congress -- and the administration just recently lost a bid in Congress to spend $3 billion buying oil for the government’s strategic reserve. A deal like this could be unprecedented and reflects a Trump administration push to help domestic drillers battered by a surge of oil production and a collapse of demand tied to the coronavirus.

Analysts, including experts at Wood Mackenzie and IHS Markit, expect storage tanks to fill by summer, if not sooner. Whenever that happens, oil producers with no place to put their crude would be forced to halt production and lay off workers.

Some are already idling drilling rigs and stowing excess supplies in rail cars, while pipeline operators are reversing flows to transport crude to underused storage sites.

President Donald Trump on April 3 asked his energy secretary to “check out other areas where you can store oil,” and look for places “bigger than what we have now.”

The Energy Department is discussing other ideas, including stashing oil in floating tankers, unused refinery storage tanks and underground salt caverns, the officials said. But those approaches might take too long to help as U.S. crude inventories build toward a crisis point.

The quicker solution would be to effectively reward drillers for taking a timeout. Under the approach being developed by the Energy Department, the agency would contract with companies to buy proven oil reserves but delay production of them for several years, if not indefinitely. When that crude is finally extracted and sold, the proceeds would go to the Treasury. Companies would be selected through an auction, with the government picking the lowest-price bidders.

Energy Department officials developed the plan after affirming they had legal authority for the move and studying alternatives.

Senior administration officials said the effort would benefit independent oil companies across the U.S., and it would be focused on sites that are either producing today or those with infrastructure in place so they could quickly yield oil.

The Energy Department already moved to sop up some excess crude by renting out space in the U.S. Strategic Petroleum Reserve for private storage. The agency said Tuesday it is in negotiations with nine companies to store some 23 million barrels of crude in the underground salt caverns that make up the emergency stockpile. And it expects to offer more space in the reserve in coming weeks.

An earlier administration bid to spend $3 billion buying U.S. oil for the strategic reserve was blocked in Congress, as Democrats sought to offset the purchase with investments on clean energy.

Similar opposition could derail the Trump administration’s new plan too. Democratic leaders have said they oppose anything that smacks of a “big oil bailout.” And though environmentalists have favored a “keep-it-in-the-ground” approach to phasing out fossil fuel production, Trump’s venture is aimed at sustaining the industry -- not ending it.

With some 635 million barrels already socked away inside underground salt caverns in Texas and Louisiana, the government has authority to snap up 365 million more as long as Congress doles out money for the transaction. At current prices it could cost at least $7 billion.

Energy Secretary Dan Brouillette said in an interview on Bloomberg TV this week that he would “be working closely with Congress” on a possible storage expansion -- though he didn’t mention the keep-it-in-the-ground idea.

“It’s something that the Congress should consider,” Brouillette said. “They will of course make the ultimate decision as to whether or not they want to pursue that. But we’re going to make some I think very strong and credible arguments why additional storage capacity is important to the country.”

The government has created comparable programs to help other important sectors, such as New Deal subsidies meant to help farmers after the Great Depression, said Kevin Book, managing director of research firm ClearView Energy Partners. An existing federal conservation initiative now pays people for growing erosion-preventing crops on their land instead of farming or ranching it.

At today’s low prices, the U.S. government could fare well on the deal. Buying 365 million barrels at the current price of $19.87 a barrel -- and selling at the 2019 average price of $57.04 would yield more than $13 billion profit. Even selling at just $30 a barrel could net nearly $4 billion, minus any transport and holding costs.

It’s an idea not lost on Trump, who in an April 3 meeting with oil executives wondered why everyone wasn’t socking away cheap crude to sell later.

“At these prices,” Trump mused, “you would think you’d want to fill up every cavity that we have in this country.”
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The Democratic whining about a big oil bailout is politics at its worst. The blocking of the SPR purchase because of their insistence on clean energy investments is incredibly stupid. 

Devil’s advocate...if you wait to purchase oil for SPR until crude pricing goes lower...say below $10 for WTI...doesn’t the government get a better deal?
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Don’t want them infringing on GOP sacred ground or something?  We all know team R loves them some bailouts.

This is true too. But General Zod is right. I was drunk when I posted that. Sorry for ruining your black gold party.

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New Mexico is going to allow producers that have leases with the state shut in for 30-120 days...

State Land Office Public Tele-Hearing Friday, April 17th at 1:00 PM Regarding Emergency Oil Well Shut-In Rule

 

SANTA FE, NM – The State Land Office initiated emergency rulemaking to allow oil lessees to temporarily stop producing without penalty for at least thirty days, with a possible extension up to 120 days when Commissioner Garcia Richard initiates a longer-term rule change process.  

 

The emergency rulemaking process is a response to low oil prices due to COVID-19 and compounded by the global price war between Russia and Saudi Arabia. The State Land Office manages over 13 million mineral acres for the benefit of New Mexico public schools, hospitals, and universities. It is in the best interest of these vital public institutions to allow temporary oil well shut-ins to assure the best value for non-renewable resources on state trust land.

 

A public tele-hearing will take place Friday, April 17th, 2020 starting at 1:00 pm.

https://aaplconnect.landman.org/communities/community-home/digestviewer/viewthread?MessageKey=610b1317-5b12-4958-9f73-3a49d6269dc8&CommunityKey=782d4397-8f47-4fd1-9440-47b81437922a&tab=digestviewer&ssopc=1#bm610b1317-5b12-4958-9f73-3a49d6269dc8

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For Permian producers, May's pricing using the standard WTI posting (not Nymex) formula, with about a week to go for determining the P+ and the WTI/Cushing differential (for Permian crude), is currently at P+  $-2.3, WTI/Cush diff  $-5.00.  So subtract whatever your deduct/trucking number is from the oil purchaser (maybe around $2.50 as an estimate for leases in the Permian).  In this scenario you are looking at (using current monthly averages for P+, and WTI/Cush diff.) around $-10.00/bbl + whatever the WTI posting averages for May. 

Right now WTI posting is in the $16 to $17 dollar range.  If that pricing continues into May (most people think it will, but who knows), you are looking at $6 to $7 a barrel for oil at the wellhead price for producers in May.

tldr: lots of wells are going to be shut-in in the upcoming months

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18 minutes ago, Dr. Beeper said:

Yep. Same in south Texas. That’s why people worried about proration or the Russians worried about ensuring the US mandate cuts (or Parliament above) are ill-informed, worried about nothing, or have an agenda (Sheffield). This shit is going to take care of itself and ultra quickly. 

Nobody’s gonna sell for $6-$7 realized prices. Ain’t nobody got time for that. 

We operate one lease in Hidalgo County, Tx (deep south Texas). It's one of the worst areas in Texas for transportation costs.  Our trucking/deduct number is going to $13.00/barrel in May. Using the standard purchasing formula (subbing Houston/Cush differential for the Mid/Cush diff.) for that lease, the May oil price numbers are likely to be negative!  We would have to pay the oil purchaser to come get our oil...😬

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1 hour ago, stone oak said:

At the company I work for, we are catching up on our P&A liability this year because service companies are working for pennies on the dollar just to stay afloat.

That's the worst silver lining I think I've ever heard.

I have a client that runs P&A spreads in state waters and on the shelf and he has told me recently that there is a big bag of nothing going on for him at the moment.  And I think his rates have had very little margin in them for the last 18 months+.  I hope he can hang on through this but I think it's a long shot.

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28 minutes ago, The Royal We said:

I have a client that runs P&A spreads in state waters and on the shelf and he has told me recently that there is a big bag of nothing going on for him at the moment.  And I think his rates have had very little margin in them for the last 18 months+.  I hope he can hang on through this but I think it's a long shot.

Damn, that's rough. Yeah no way those guys can be making much money with low customer volume and current price environment.

I work all onshore legacy South Texas stuff with high P&A liability so it makes sense for us an operator to take advantage right now.

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Agreed.  His only hope is that he wins a few BSEE contracts to plug orphaned wells, but that's not moving at the moment either.  That would be a fantastic stimulus plan - plugging wells/removing platforms that are legit dangerous while also keeping lots of blue collar workers in S. Louisiana employed.

He also told me that BSEE won't approve any permits at the moment and that they may actually play a role in curtailing production offshore by mandating all workers on platforms have to come back home.  That would be some un-american shit, so it's probably going to be crammed through by our current administration. 

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1 hour ago, The Royal We said:

I have a client that runs P&A spreads in state waters and on the shelf and he has told me recently that there is a big bag of nothing going on for him at the moment.  And I think his rates have had very little margin in them for the last 18 months+.  I hope he can hang on through this but I think it's a long shot.

I checked in on a few guys from my past life in that work, and they told me almost all their clients have already scrapped '20's decommissioning efforts.  Only 1 of the 5  he mentioned had left something for '20, and it was only 20% of their original '20 campaign.  My guess would be something they kicked down the road too long and absolutely HAS to come out.  So it's about to get even rougher for some of the construction/P&A outfits.    Last time this happened, we cannibalized each other and ruined our own market just to get off the dock.  I would assume '21 will be rough as well, plenty of work but all bid at (-)5 to 0% just to have revenue.  Those days fucking sucked.

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The geologists and PEs will most likely correct me, but isn't there a risk of damaging the reserves if too many wells in the region shut in? I know stopping the flow of a well too much or producing too much can both damage the reserves. Any new production coming online this year probably needs to pump.


Shutting in a well temporarily can damage it, with production never getting back to the pre-shifting levels.
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2 hours ago, PenelopeWitherspoon said:

 


Shutting in a well temporarily can damage it, with production never getting back to the pre-shifting levels.

 

 Very dependent on the rock, I’ve seen some that will pop right back on trend and others that are permanently damaged. 
 

Ive heard some discussion that if people don’t want to DUC wells of completing them flowing back the load to get to res conditions and then SI. 

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11 minutes ago, Fudge Nuggets said:

TDA shows it at $25 and change, but down 1%.  I noticed they have it listed as /CLM20 which is the June contract.

Yeah, they jumped the gun.   Still trading May contracts today.  They’re gonna squeeze every drop of blood as they can out of this one 

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