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936horn

By 936horn
in Business and Markets

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Pescado_Rojo
Pescado_Rojo

I bet you could score a Lafayette 10 for a mani/pedi gift card and a pound of boudin right now.  I was sitting in a Starbucks by the med center in Laffy once, and a brand new white Escalade, lift

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Rimbo

If you're Trump right now, you're watching Fox News, eating a cheeseburger, and getting mad about the lyin' media and preparing your next tweet about how some lupus treatment should be given to your s

fattyflattie
fattyflattie

My time finally came last Friday AM. I have survived around a dozen, give or take 1-2, since ‘08.  I was consulting for a project set to go in ‘22, but with all the uncertainty, it sounds like they’ve

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Trey3216

Trey3216 15325

Posted
Posted
1 minute ago, Lobwedgephil said:

Thinking is lower oil prices will will lead to lower drilling so lower associated natural gas production and higher nat gas prices. Guess we will see. 

Yep.  Natgas is the only thing that stands to gain from lower shale drilling 

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WBT

WBT 20415

Posted
Posted (edited)
18 minutes ago, Trey3216 said:

Callon having a nice day today...

 

15 minutes ago, Neonmoon said:

Holy shit, Apache is down 46%

Apache -48%, Pioneer -33%, Diamondback -44%, Concho -20%, Oxy -38%, Devon -36%, Marathon -45%, and you're big winner is Callon -58%

 

 

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LurkingHorn

LurkingHorn 1044

Posted
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43 minutes ago, Trey3216 said:

We could actually see a major reversal in the natural gas market.  Oil getting demolished is the best thing that could happen to revive the death trap that has been the natty trade.  Sad, sick, but real.    

Can you explain why for a simpleton? Obviously demand isn’t going to be going up so I’m trying to understand what is going to happen which causes a reversal for NG. 

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Girdwood

Girdwood 118

Posted
Posted (edited)
5 minutes ago, LurkingHorn said:

Can you explain why for a simpleton? Obviously demand isn’t going to be going up so I’m trying to understand what is going to happen which causes a reversal for NG. 

Lower oil prices = less unconventional oil wells = less produced associated natural gas

Edited by Girdwood
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Lagunamadre

Lagunamadre 1975

Posted
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1 hour ago, Tailgate said:

Newbie question here. How does this affect coal? Knew a guy who was in the coal business and got me curious.

Coal's biggest competitor is Natural Gas. Cheap natural gas means more domestic power is generated by NG, replacing coal's spot. In the short term, this is really bad for coal. You could make an argument that a massive slash in shale cap ex will in the longer term lead to higher commodity prices due to less supply which would be a boon for coal as it would be a cheaper option than NG to generate power. 

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Guest Lobo

Guest Lobo

Posted
Posted

Ah yes, the long game to bring back coal jobs.  Took us awhile and few hundred thousand will have to die from a weirdly named virus, but Lagunamadre is right---there is a midterm window up ahead where coal can make one last surge back to significance if unconventional well production heads south faster than thought.  

The sons of the coal workers still won't have jobs when they get older, but they'll inherit a more kick-ass Dodge.  

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Guest Lobo

Guest Lobo

Posted
Posted (edited)

So are people who think coal is coming back.  Doesn't change the fact that Laguna is right...there could certainly be a short-term bump for NG, then a mid-term window (possibly) for a chance for coal to bump up a tad on NG, before next cycle/who knows what on the regulatory side a few years down the road.  

This a thread about energy, no?  Somebody is gonna have to tell all the dead men walking, that their dicks are hard because of rigor mortis, not due to hookers.

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MaybeACoordinator

MaybeACoordinator 8349

Posted
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42 minutes ago, Lagunamadre said:

Coal's biggest competitor is Natural Gas. Cheap natural gas means more domestic power is generated by NG, replacing coal's spot. In the short term, this is really bad for coal. You could make an argument that a massive slash in shale cap ex will in the longer term lead to higher commodity prices due to less supply which would be a boon for coal as it would be a cheaper option than NG to generate power. 

So this is just more 4d chess for Trump and West Virginia is gonna be great again? (no cr)

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Guest Lobo

Guest Lobo

Posted
Posted
1 minute ago, Dr. Beeper said:

Interesting given I’m a black dude. 

Cool, I’m a Mexican dude.  So few of us in the energy industry, even here in Texas.  

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Trey3216

Trey3216 15325

Posted
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1 hour ago, LurkingHorn said:

Can you explain why for a simpleton? Obviously demand isn’t going to be going up so I’m trying to understand what is going to happen which causes a reversal for NG. 

Several reasons.  First, Natural gas demand has slowed, but not by much.  Because it is so cheap, it is being gobbled up for electric power production right now.    Secondly, rig counts and production growth have been declining/rolling over for months now.  We are already on the way to seeing much lower supply in the market.  Thirdly, shale/non-conventional oil production has already been getting crushed, and was likely dealt a death blow over the weekend.  A massive decline in oil production in the shale plays will lead to much lower associated gas production, meaning that there will be much less natural gas supply online going forward.  I don't see demand destruction outweighing supply declines by any means, therefore the price of natural gas could/will rebound, and it could happen in very short order.   

 

Last but not least, there is an incredibly crowded Long Oil/Short Natural Gas trade that has been in place for going on 4 years.  That trade is in the process of a spectacular unwind.  Unwinding this will take days/weeks, a massive squeeze could happen and natty prices will skyrocket higher, only to settle down (still higher)  in a comfortable/economical area.

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zork

zork 629

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Posted

@ryskey, Is this front month or short term or long term  and/or what are your thoughts in general?  Were people hedging the fuck out of that short run to $60 recently?  If you thought the lows today in Oil and Gas were near the bottom or within a small percentage of the actual bottom, where would you invest?

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Brisketexan

Brisketexan 104558

Posted
Posted
1 hour ago, Trey3216 said:

Several reasons.  First, Natural gas demand has slowed, but not by much.  Because it is so cheap, it is being gobbled up for electric power production right now.    Secondly, rig counts and production growth have been declining/rolling over for months now.  We are already on the way to seeing much lower supply in the market.  Thirdly, shale/non-conventional oil production has already been getting crushed, and was likely dealt a death blow over the weekend.  A massive decline in oil production in the shale plays will lead to much lower associated gas production, meaning that there will be much less natural gas supply online going forward.  I don't see demand destruction outweighing supply declines by any means, therefore the price of natural gas could/will rebound, and it could happen in very short order.   

 

Last but not least, there is an incredibly crowded Long Oil/Short Natural Gas trade that has been in place for going on 4 years.  That trade is in the process of a spectacular unwind.  Unwinding this will take days/weeks, a massive squeeze could happen and natty prices will skyrocket higher, only to settle down (still higher)  in a comfortable/economical area.

I'm definitely curious as to what this will end up doing to NG prices, as the price of NG is the primary driver of the price of generated power in Texas these days.  Might we be seeing power prices going up significantly?

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Trey3216

Trey3216 15325

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20 minutes ago, Dr. Beeper said:

No. Gas will stay very cheap for a very long time. We might have prices pop a little here and there but I can’t see ‘20 upside above $2.50. 

I think we’ll see north of that for very short periods due to short-covering. I could see it running to 4 or above if a long oil/short gas  fund implodes, which wouldn’t surprise me at all.  

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Trey3216

Trey3216 15325

Posted
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1 minute ago, Dr. Beeper said:

Brisket I didn’t read this before I responded and I’d listen to Trey. Trey, define “skyrocket”. 

I spoke with an oil and gas economist I really really trust, and intro’d him to our execs for a meeting last week. This was in the midst of coronavirus demand destruction, last Wednesday, and was already speaking of Russian bluster in Vienna. He thought cooler heads would prevail but caveated that the Russians could throw a wrench in crude recovery last week. He could not have predicted the apocalypse that occurred Friday and Saturday. 

Anyway, his firm predicted steady increases in gas throughout the year that’d average $2.50 in the winter months and average $2.18 in FY’20. This of course presumed his $55 oil price prediction in the last two quarters of the year - assuming coronavirus demand destruction dissipated between now and end of 2Q’20. It presumed the resumption of Permian oil development in the back half of ‘20, and associated gas therefrom coming into play with the Permian Highway in early ‘21.  

Now that that seems to be shot to shit, what say you on natty?

I would agree with the steady increase.  But natty always overshoots.  The shear amount of short positions in natural gas right now (as well as oil longs) will cause an unwinding of that trade.  As those positions are unwound, prices will overshoot.  In Nov 18, natural gas went from 2.50-4.90 in about 8 sessions.  I wouldn’t be surprised to see it run to 4.00 on a print or two before returning to the area you just stated, which is pretty much what I said in the post you quoted.  
 

short term skyrocket overshoot as trades are unwound, settling back to an area where it is more comfortable shortly thereafter, but is still higher than where we’re at currently.  

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ryskey

ryskey 447

Posted
Posted
2 hours ago, zork said:

@ryskey, Is this front month or short term or long term  and/or what are your thoughts in general?  Were people hedging the fuck out of that short run to $60 recently?  If you thought the lows today in Oil and Gas were near the bottom or within a small percentage of the actual bottom, where would you invest?

Long term, at least through the end of this year.  Shale production will be sticky for a 1-2 more quarters.  The decline won't be immediate.  There will be some last gasps and death throes from a lot of companies using the last bit of their liquidity desperately trying to stay on the good side of their debt covenants.  That'll exacerbate the problem.  

Don't buy any shale-focused penny stock E&Ps unless it comes out of your Vegas or sports betting budget. 

Stocks- if you think the bottom is in, then the majors can't be wrong.  Chevron will be the last one standing in the Permian because they own the royalties.  Exxon's Permian bonanza is weird and seems very forced though.  Probably not a bad buy but I like CVX better.  Independents, PXD has very low leverage and will survive just about anything.  There are some Canadian E&Ps with very low leverage and whose stocks don't make sense unless you think we'll be at $30 oil forever (e.g. Crescent Point).  

Now isn't a bad time to jump in.  But it'll probably get worse.  Maybe dollar cost average a bit.

Best value is in some of the HY debt that is still covered at these prices but trading at $0.50 because of panic selling.  Have to be reeeeaaaalllly picky though.  Get a big dividend for a year and the underlying should double in that time too.  

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Okie State

Okie State 3788

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I'm definitely curious as to what this will end up doing to NG prices, as the price of NG is the primary driver of the price of generated power in Texas these days.  Might we be seeing power prices going up significantly?

Prices are already much higher than they were just a few years ago even with NG in the shitter. Not really sure what's driving that, but it's noticeable when I'm trying to renew rates. Maybe it's a switch to more renewables or away from coal or just swelling demand in the state.

 

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ChiTownDoc

ChiTownDoc 21098

Posted
Posted
11 hours ago, Auto Driller said:

Russia, on the other hand, seems to be almost completely united behind Putin. They have also endured far, far worse suffering than whatever low oil prices will bring. They have a pretty good record in wars of attrition.

Haha, understatement of the century, or any century...these fuckers are the Harlem Globetrotters when it comes to winning wars of attrition. 

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ChiTownDoc

ChiTownDoc 21098

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9 minutes ago, Trey3216 said:

Except that little excursion in Afghanistan. 

Lot of insurgent fighting with mujahideen etc there.  "The conventional army loses if it does not win.  The guerilla wins if he does not lose."  - Kissinger

But yes, that was a blemish on their record.    

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Trey3216

Trey3216 15325

Posted
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1 minute ago, ChiTownDoc said:

Lot of insurgent fighting with mujahideen etc there.  "The conventional army loses if it does not win.  The guerilla wins if he does not lose."  - Kissinger

But yes, that was a blemish on their record.    

No doubt.   Was just throwing that ex’s ole out there.  

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