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Hey Oil Barons.......

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

Rimbo
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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The Royal We

The Royal We 3,065

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I'm a lowly insurance broker, but 95% of my clients are E&P companies - and 50%+ of those are PE backed companies.  Their whole business model has been collapsing underneath them since 2018 or so.  The whole build for 3-5 years and flip it out to someone larger strategy starts to fall apart pretty fast when the number of buyers shrinks rapidly. 

I have a few clients that always seem to be out in front of the curve that are well hedged through the rest of '20 and most of '21, but everyone else will be lucky to make it.  My largest client filed last fall and I've picked up a few of the new companies that scooped up some of their assets, but it's nowhere near the size (revenue to my firm) of the original client.  This downturn is going to be a reckoning even for people like me who are on the fringes of the oil and gas business.

And my side hustles have been investments in a mineral fund, a non-op WI fund, and a tiny equity stake in a small E&P company.  FML.  Write-offs for years - assuming I have anything to write if off against.

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Archer

Archer 474

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1 hour ago, NotActuallyALonghorn said:

The barrel costs more than the oil. The oil is just the cheapest thing to put in the barrel to keep anybody from stealing your valuable barrel.

I told my wife I wasn’t drinking today, you assholes keep making jokes like this and I’m going to have to renege on my word. 

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The Royal We

The Royal We 3,065

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I got a random email from an old client last night asking me for insurance pricing projections on them using some idle tank batteries to store physical oil.  They P&A'd most all of their wells in South Texas but I guess they still hadn't moved all the old batteries out of there yet.  I don't know how much exactly how much capacity he has, but I think it's ~5,000 bbls or so. 

He pretty much rolled up the sidewalks on his company back in 2016, but shooters gonna shoot I guess.

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Parliament

Parliament 14,133

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Y’all help me understand something I should know the answer to - if a company has WTI hedges and a Mid-Cush basis swap of +1, but they have physical difficulty getting their volumes out of the Permian, what do they do?
On one hand this is a basic question but on the other it’s multi-faceted. In this particular instance, they have 4 wells recently (mostly) drilled and a completion decision will come later in May when prices become more apparent. It’d make a lot of sense in a vacuum to NOT complete these wells, as curtailment could cause shut-ins and as you can guess these are large hz wells where you can’t predict how they’ll come back on when they do. However, in this instance they have a very high NRI and these wells are economic at a much lower price than anyone would think. 
Wait! I know this. Sir, your answer is...

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Coyote

Coyote 269

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Y’all help me understand something I should know the answer to - if a company has WTI hedges and a Mid-Cush basis swap of +1, but they have physical difficulty getting their volumes out of the Permian, what do they do?

On one hand this is a basic question but on the other it’s multi-faceted. In this particular instance, they have 4 wells recently (mostly) drilled and a completion decision will come later in May when prices become more apparent. It’d make a lot of sense in a vacuum to NOT complete these wells, as curtailment could cause shut-ins and as you can guess these are large hz wells where you can’t predict how they’ll come back on when they do. However, in this instance they have a very high NRI and these wells are economic at a much lower price than anyone would think. 

From an operations standpoint there are a lot of things to consider in deciding whether or not you want to go ahead with completing and bringing the well online.

 

What is the initial form of artificial lift? Are they tailing resin during the frac job or do they anticipate a good amount of sand with the initial production?

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Archer

Archer 474

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1 hour ago, Dr. Beeper said:

Y’all help me understand something I should know the answer to - if a company has WTI hedges and a Mid-Cush basis swap of +1, but they have physical difficulty getting their volumes out of the Permian, what do they do?

On one hand this is a basic question but on the other it’s multi-faceted. In this particular instance, they have 4 wells recently (mostly) drilled and a completion decision will come later in May when prices become more apparent. It’d make a lot of sense in a vacuum to NOT complete these wells, as curtailment could cause shut-ins and as you can guess these are large hz wells where you can’t predict how they’ll come back on when they do. However, in this instance they have a very high NRI and these wells are economic at a much lower price than anyone would think. 

I think I’m tracking the question but if not sorry. 
 

I was recently informed we do not have to actually produce the volumes we have hedged to receive the hedged amounts. I’ve never gotten deep into hedges so this was news to me. 
 

If their hedges are set up the same way they could DUC the wells and still receive the net benefit of the hedges. 
 

Unfortunately that is about all I know on the topic 

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tequila

tequila 317

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Dr. Beeper: the hedges are a financial contract that don’t actually require the production of barrels. If they’re hedges with BP -and don’t have the bank as a counter party, I don’t see why there would be a problem.

If the wells are as prolific as you describe, there’s not much likelihood that they’ve hedged 100% of the expected production from the new wells as most credit facilities frown upon greater than 75-80% coverage of actual produced PDP volumes. I just went through a similar situation with 3 wells coming online at the end of the year. I didn’t hedge until I got too nervous to roll naked on the production and didn’t have any early decline to model. We’ve ended up slowing our ESPs down to maximize hedge coverage, essentially self curtailing.

In this case, with the hedges in the money and no completion on the new wells, I would be inclined to believe the banks would waive the coverage percentage as long as excess proceeds were used to repay outstanding borrowings.

Ultimately, I think we’re going to need some people to step up in leadership and state it’s in in the best interest of the domestic producers to slam on the breaks and self curtail before we see low single digits. Unfortunately, I think demand is off 30% and will be for at least another 2 months, especially if we’re quarantined into the summer. We need to avoid maxing out storage ASAP, because it’s inevitable. We can do it voluntarily or be forced to do it when we have to shut in due to the evaporation of takeaway capacity.


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Archer

Archer 474

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22 minutes ago, Dr. Beeper said:

But can they even get the crude out of the basin?  

Simple question but how good are their oil purchasing/transport contracts? Is it on pipe or truck? I see a lot more trucking shut down with pipes still flowing. That could change as more production has to come off line.

 

A buddy just had all of his oil purchasing contracts canceled so his crude isn’t moving.  We have a X bbl purchase commitment with one of our pipelines so we’re still flowing, of course they could claim Force Majeure and cancel all of the commitments tomorrow. 

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Rusty Shackelford

Rusty Shackelford 414

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1 hour ago, DCA_HORN said:
7 hours ago, tx 3 putt said:
Dumb Question - why doesn’t the WH drop a 30 or 60 day pseudo embargo on foreign oil ?

You should know this one. We geared our refineries to process heavy sour crude 20-25 years ago. We aren't setup to refine all of the shale oil we produce today

This is news to former Secretary of Energy.

https://www.foxnews.com/media/rick-perry-us-oil-industry-massive-collapse

Wait, actually it's not news to him because he still doesn't know it.

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HoustonFrog

HoustonFrog 368

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Oh yeah. The official stories (publicized) were from his time at Anadarko. Plenty of articles written about the sexual harassment. Apparently he and another guy routinely banged two subordinates in the office, during work hours. The woman in the office next door eventually blew the whistle

Company is a total shitshow garbage operation

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Hate

Hate 20,103

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Posted
Whoa whoa whoa. Story, please?

Well, let's see. First the earth cooled. And then the dinosaurs came, but they got too big and fat, so they all died and they turned into oil. And then the Arabs came and they bought Mercedes Benzes. And Prince Charles started wearing all of Lady Di's clothes. I couldn't believe it.”
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Llano Estacado

Llano Estacado 1,257

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Welp, got the call today. Taking my sizable haircut immediately and for the foreseeable future, but still employed with benefits. Not to the bone, but definitely took some meat with bloat for sure. I was expecting it, but was hoping to sneak through for another couple pay cycles.

Seeing the caller ID on the cell phone hit like a Mack Truck.

FWIW - Contract staff position with E&P company supporting GoM Operations.

Be safe out there gentlemen.

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WBT

WBT 20,418

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11 minutes ago, Okie State said:
17 minutes ago, Lobwedgephil said:
 

I really don't understand why this shit continues to happen. Oh yeah because they get away with it.

Corporate governance is a joke.  Bunch of good old boys sitting on each other's boards with no one looking out for the shareholders' interests.

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Johnny Chimpo

Johnny Chimpo 478

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16 minutes ago, jimmyjazz said:

Buddy is contract in Kuwait.  He can't get over there (and wouldn't want to).  He can't believe they haven't cut him yet.

I’m rotational to Kazakhstan. Finished my 28 day hitch on the 4th March and can’t get back either. Might not be able to until July they’re saying now. 

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Hate

Hate 20,103

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I don’t think you really want to be over there during this. I heard about one of the Stans over there where they are acting like this isn’t even a thing. According to the guys on the radio, they are arresting anyone even wearing a mask in public.

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Fudge Nuggets

Fudge Nuggets 19,149

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9 hours ago, Johnny Chimpo said:

I’m rotational to Kazakhstan. Finished my 28 day hitch on the 4th March and can’t get back either. Might not be able to until July they’re saying now. 

I think we may work for the same company.  Someone I know was supposed to crew change out of Kazakhstan a couple of days before the lockdown started.  They've been there seven weeks now with no end in sight.

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