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Posted
1 minute ago, Trey3216 said:

Been talking about may all morning, just added the June contract post in there for some context.   

I don't think June will stay up there for long, the demand/storage/transportation situation will not improve in 1 month.

Posted
Just now, Rusty Shackelford said:

I don't think June will stay up there for long, the demand/storage/transportation situation will not improve in 1 month.

I hear ya.  May is getting pasted for the same reason, and because it expires tomorrow 

Posted
2 minutes ago, Parliament said:

You got a link?  Why are producers choosing to pay someone to take their oil, instead of just shutting down the well?  Is it "hard" on the well to just shut it off cold?  

They will soon. Their fieldhands probably havn't woken up yet. 

Posted
4 minutes ago, Parliament said:

You got a link?  Why are producers choosing to pay someone to take their oil, instead of just shutting down the well?  Is it "hard" on the well to just shut it off cold?  

Possibly because of transportation contract minimums

Posted
3 minutes ago, Parliament said:

You got a link?  Why are producers choosing to pay someone to take their oil, instead of just shutting down the well?  Is it "hard" on the well to just shut it off cold?  

If any of them do keep producing at negative pricing, it's because they cannot reach an agreement with their bankers to modify their credit agreements. Some CAs  have certain covenants requiring certain production levels, so if an operators production dips below a certain threshold, they will be in default. It's seems perverse now, but I don't think anybody ever incorporated a global pandemic into these agreements. 

Posted
On 4/17/2020 at 7:30 PM, Dr. Beeper said:

I plan on making an entry into both next week at an opportune time. I’ve always always always favored XOM. Why should get me excited about Chevron?

They rolled into this thing with the best balance sheet because of the failed APC acquisition. Thanks OXY! 

  • Like 1
Posted
If any of them do keep producing at negative pricing, it's because they cannot reach an agreement with their bankers to modify their credit agreements. Some CAs  have certain covenants requiring certain production levels, so if an operators production dips below a certain threshold, they will be in default. It's seems perverse now, but I don't think anybody ever incorporated a global pandemic into these agreements. 
Are you taking about hedging? Ive never heard of this otherwise.
Posted
Just now, DCA_HORN said:
4 minutes ago, Lagunamadre said:
If any of them do keep producing at negative pricing, it's because they cannot reach an agreement with their bankers to modify their credit agreements. Some CAs  have certain covenants requiring certain production levels, so if an operators production dips below a certain threshold, they will be in default. It's seems perverse now, but I don't think anybody ever incorporated a global pandemic into these agreements. 

Read more  

Are you taking about hedging? Ive never heard of this otherwise.

Some debt covenants are tied to production.  If you don’t produce x amount of product, you’re in default.  

Posted
Some debt covenants are tied to production.  If you don’t produce x amount of product, you’re in default.  
Dr. Beeper? Maybe because it's never been an issue I never realized this.
Posted
1 minute ago, Trey3216 said:

Some debt covenants are tied to production.  If you don’t produce x amount of product, you’re in default.  

Hence operators using debt to pay people to take their product in order to have access to more debt. Capitalism 2020 baby! 

Posted
Just now, DCA_HORN said:
6 minutes ago, Lagunamadre said:
Hence operators using debt to pay people to take their product in order to have access to more debt. Capitalism 2020 baby! 

Yeah that's not how any of this works.

Certainly not for long. 

  • Haha 1
Posted
6 minutes ago, Dr. Beeper said:

I don’t think many operators are selling crude below $10. And they’re certainly not going to be ruled by an obscure provision in their Credit Agreement, nor should they. They’re likely already in default anyway. 

What are your thoughts on MVCs in this environment?  

Posted
3 minutes ago, Dr. Beeper said:

Don’t jump, The Dude. This is temporary. Back at $25 or so by June/July. Back to normalcy in 2H’21. Go buy some properties. 

Oh I know.  I got nothing to jump to - I'm a one trick pony.

I wish I had more dry powder.

Posted (edited)

 

Quote

As long as nobody is using gasoline, it's gonna keep going down. The kung flu is a bitch. 

I drove from SA to Leaky yesterday in my F150.  Was going into about a 30-40 headwind the entire way.

Trust me, I did my part.

Edited by Cajun
  • Like 1
  • Haha 1
Posted
37 minutes ago, Eastwood said:

Yet, Diamondback, Devon, Baker Hughes, and SLB are up on the day.

I sold my GUSH ETF after it went up because I was sure it was going to drop hard. It has gone up another $1.50. Wtf?

Posted
2 hours ago, Dr. Beeper said:

@Trey3216@ryskeyhow much of the drop in prompt month price is due to delivery, and having a delivery option keeps futures prices tied to cash prices?

Pretty much everything.  At this point, the futures price has to basically get equal to the cash price by tomorrow.  So either the cash price has to come up, or the futures come down to the cellar party.  

  • Haha 1
Posted

Shouldn’t be surprised by this. Further out the price hasn’t changed much.

Not good but not quite as bad as it seems. I mean this is the end for many many shitcos, but the better people will survive

Posted
9 minutes ago, Trey3216 said:

Pretty much everything.  At this point, the futures price has to basically get equal to the cash price by tomorrow.  So either the cash price has to come up, or the futures come down to the cellar party.  

Bingo. No one wants to take delivery. 

Posted (edited)

Can someone explain the following to me? I just deal with the title/legal side of the biz but am trying to learn more about the economics and marketing aspects during downtime. 

Until the past week or so, XLE looks to pretty much be anchored to WTI price. 

wP52h7P.png?1

Edited by Storm the Field
Posted (edited)
16 minutes ago, Trey3216 said:

Pretty much everything.  At this point, the futures price has to basically get equal to the cash price by tomorrow.  So either the cash price has to come up, or the futures come down to the cellar party.  

Can you explain this again, but as if I'm really dumb. 

thanks in advance

Edited by Neonmoon
I'm dumb
Posted
2 minutes ago, Neonmoon said:

Can you explain this again, but like I'm really dumb. 

thanks in advance

as @BTW said, spot/cash prices in Midland right now are around $4.50.  I've read on other sites that there's some areas as low as $2.  WTI traded on NYMEX is still trading well above those levels.  Because the May contract is done tomorrow, and futures contracts are based on delivery of product, then the futures contracts will gravitate towards the cash/spot delivery prices at the various terminals/fields.  No one wants delivery right now, nowhere to put it.  Thus, we have what we are seeing right now.  

  • Like 1
Posted (edited)
5 minutes ago, TonyTexas said:

In hindsight, this futures settlement price action was predictable. Some smart oil traders are making a fortune. 

Unless the US Govt stepped in and bought 70+mm barrels for delivery to fill up the SPR, they'd be fisted because this would be back at 17 tomorrow afternoon.  (In theory)  

Edited by Trey3216
  • Like 1

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