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936horn

By 936horn
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T’Boo Ted Marshall

T’Boo Ted Marshall 2727

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They moved to a red hot office market from a market where they have something like 450,000 SF of space on the sublease market.  The move makes no financial sense from an office occupancy cost standpoint. 
Separately, I was speaking to buddy of mine last weekend who owns an oil field services/wastewater disposal company that mostly operates in the Permian.  He is expecting a huge slow down in drilling/fracking due to take off capacity being maxed out.  He says the forward contracts for his services are about to crawl after blowing and going for the last year plus.  What is the surly consensus?  Is the market about to slow down?

Among the PE groups I have talked with about the OFS company I’m selling, the sentiment seems to be very optimistic but they have lowered their valuation multiples due to the bottleneck issue.
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19 hours ago, heinhorn said:

They moved to a red hot office market from a market where they have something like 450,000 SF of space on the sublease market.  The move makes no financial sense from an office occupancy cost standpoint. 

Separately, I was speaking to buddy of mine last weekend who owns an oil field services/wastewater disposal company that mostly operates in the Permian.  He is expecting a huge slow down in drilling/fracking due to take off capacity being maxed out.  He says the forward contracts for his services are about to crawl after blowing and going for the last year plus.  What is the surly consensus?  Is the market about to slow down?

What does your buddy’s company do?  Sounds like they’re a water hauler via trucks?

The market isn’t going to slow down; there are a shit ton of DUCs in the Permian. I know a half dozen water disposal companies in the Permian pretty well. They’re all busy as hell. They all have predominantly piped water as opposed to trucked water. 

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NotActuallyALonghorn

NotActuallyALonghorn 4968

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On 9/17/2018 at 10:49 AM, Storm the Field said:

Hearing from clients and others in industry that there's a good chance Colorado's Initiative 97 will pass this November. That's gonna basically shut down drilling on non-federal land in the state. The new 2500 foot setback requirement would make almost all privately-owned land off limits to new drilling.

Seems like something that has potential to eventually end up at SCOTUS. Would effectively wipe out billions of dollars of value associated with mineral rights.

That's going to be a hard hit on some of the smaller towns that depend on O&G for jobs during the up cycles.

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Hate

Hate 20104

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$100 a barrel on the horizon again?  I think I would rather it just stay in the $70-80 range for a few years.

https://www.chron.com/business/energy/article/Return-of-100-Oil-Seen-by-Top-Traders-as-U-S-13252768.php

 

Major oil trading houses are predicting the return of $100 crude for the first time since 2014 as OPEC and its allies struggle to compensate for U.S. sanctions on Iran’s exports.

With Brent crude already jumping to an almost four-year high on Monday, that’s exactly the kind of price surge President Donald Trump has been seeking to prevent by pressuring the Organization of Petroleum Exporting Countries to raise production. Yet the cartel and its allies gave mixed signals at a meeting in Algiers on Sunday, ultimately showing little sign they would heed U.S. demands to rapidly push down crude prices.

OPEC’s reticence, combined with signs of accelerating supply losses from Iran, created a bullish mood the annual gathering of the Asian oil industry, traders, refiners and bankers in

When Trump in May announced plans to reimpose sanctions on Iran’s oil exports, the market estimated a cut of about 300,000 to 700,000 barrels a day, said Trafigura Group co-head of oil trading Ben Luckock. However, the consensus has now moved to as much as 1.5 million barrels daily as the U.S. is “incredibly serious” about its measures, he said.

 

Iran’s production “is going to be significantly less than it was, and probably lower than most people expected when the sanctions were announced,” Luckock said at the APPEC event. He sees $90 oil by Christmas and $100 in early 2019.

Brent crude, the benchmark for more than half the world’s oil, rose 2.5 percent to $80.56 a barrel at 11:40 a.m. in London, after earlier jumping to the highest level since November 2014.

OPEC isn’t just grappling with U.S. sanctions cutting Iranian supply. Output in Venezuela is also slumping due to an economic crisis. The biggest source of new global supply, U.S. shale, is also experiencing growing pains as pipeline bottlenecks and workforce issues hamper growth.

For all these urgent supply pressures, the world’s largest oil producers adopted a sit-back-and-wait approach at their meeting in the Algerian capital on Sunday. Saudi Arabia, Russia and the United Arab Emirates insisted they had the spare capacity to satisfy the market’s needs, but wouldn’t tap it preemptively.

“Our plan is to meet demand,” said Saudi Energy Minister Khalid Al-Falih. “The reason Saudi Arabia didn’t increase more is because all of our customers are receiving all of the barrels they want.” The kingdom does expect to pump more in September and increase again in October, he said, without pledging specific volumes.

Major oil companies took some solace from OPEC’s assurances. While the group didn’t take action on Sunday, it seems set on making sure the market doesn’t get too carried away, said Mark Quartermain, Royal Dutch Shell Plc’s vice president for global crude oil trading and supply.

Oil at $100 may not be sustainable in the longer-term because demand may be threatened by the U.S.-China trade war and supply, especially from the U.S., was seen sufficient in the next 12 months, said Janet Kong, BP Plc’s head of trading in Asia.

Wall Street bankers and hedge funds also saw some caveats to the bullish mood.

Francisco Blanch, head of commodities research at Bank of America Corp., said in a note to clients on Monday that signals from OPEC mean "the likelihood of an oil spike and crash scenario akin to the one observed in 2008 has increased."

A decade ago, Brent crude surged to nearly $150 a barrel, only to crash just months later as high fuel prices and the global financial crisis triggered a slump in demand. This time, the deepening trade war between the U.S. and China threatens economic growth in Asia and turmoil in emerging countries could amplify the impact of higher prices on global demand growth.

Bank of America’s main scenario is for oil prices next year of around $80 a barrel, according to the note. Citigroup Inc. sees crude at that level in the fourth quarter, but sees risks that it will go higher.

“Balances are precarious and the lack of spare capacity could see crude pricing well above $90 or even $100, should all of the potential risk in the market materialize,” analysts including Ed Morse said in the note.

--With assistance from Sharon Cho and Serene Cheong.

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Chewbacca

Chewbacca 7730

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On 9/17/2018 at 9:49 AM, Storm the Field said:

Hearing from clients and others in industry that there's a good chance Colorado's Initiative 97 will pass this November. That's gonna basically shut down drilling on non-federal land in the state. The new 2500 foot setback requirement would make almost all privately-owned land off limits to new drilling.

Seems like something that has potential to eventually end up at SCOTUS. Would effectively wipe out billions of dollars of value associated with mineral rights.

Proposition 112 is what you are referring to (although I think it used to be called Prop 97?).  It would have to pass with 55% or more in order to go into effect.  Even Jared Polis is against it.  It would do severe damage to our economy up here, and could even trigger a statewide recession.  It would also amount to a huge taking of private property and the state would be tied up with lawsuits forever.  

 

I know a lot of O&G folks up here are very nervous about this one, but I hope they can do a better job of educating the voters so it goes down in flames, as it should.

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Trey3216

Trey3216 15325

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Crude +8.0M barrels vs. +2.0M consensus, +1.9M last week.

Gasoline -0.5M barrels vs. +1.3M consensus, +1.5M last week.

Distillates -1.8M barrels vs. -1.3M consensus, -2.2M last week.

 

Betting we have a big draw next week.  This looks like a refinery throughput logjam.  

 

Meanwhile, natty sitting at 3.242.  Holy shit what a run

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Eastwood

Eastwood 4394

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7 minutes ago, Trey3216 said:

Crude +8.0M barrels vs. +2.0M consensus, +1.9M last week.

Gasoline -0.5M barrels vs. +1.3M consensus, +1.5M last week.

Distillates -1.8M barrels vs. -1.3M consensus, -2.2M last week.

 

Betting we have a big draw next week.  This looks like a refinery throughput logjam.  

 

Meanwhile, natty sitting at 3.242.  Holy shit what a run

Market seems to agree with you. Still up after the report.

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Storm the Field

Storm the Field 5274

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On 10/1/2018 at 11:33 AM, Storm the Field said:

WTI just hit $74.70 a little while ago.

That's the Highest price in 4 years, dating back to when the 2014 bust really kicked into gear. Price on 10/1/14 was somewhere in the high 80's, and by Xmas we were flirting with the $40's.

 

3 weeks of bad news for WTI since this post. Have shaved off $7 in that time, giving up all gains since late August.

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skipmcgee

skipmcgee 194

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1 hour ago, T’Boo Ted Marshall said:

I can't imagine that Prop passes.  I'm surprised it has gotten this far.  

Last poll has it at 52% for.  Amendments need to get 55% to pass.  What's funny is that Prop 74, which essentially would allow everyone effected by this to sue the state of Colorado is polling at 63% for.  Both passing would create quite the shitstorm.

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Trey3216

Trey3216 15325

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17 minutes ago, skipmcgee said:

Last poll has it at 52% for.  Amendments need to get 55% to pass.  What's funny is that Prop 74, which essentially would allow everyone effected by this to sue the state of Colorado is polling at 63% for.  Both passing would create quite the shitstorm.

Well there it is.gif

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Chewbacca

Chewbacca 7730

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1 hour ago, skipmcgee said:

Last poll has it at 52% for.  Amendments need to get 55% to pass.  What's funny is that Prop 74, which essentially would allow everyone effected by this to sue the state of Colorado is polling at 63% for.  Both passing would create quite the shitstorm.

Unfortunately it's not an amendment, so it only needs 50%.  If the shitheads in my state are dumb enough to pass that piece of shit, we deserve the ensuing recession we will give ourselves.  Saw a news piece on this that said O&G contributes over $1 billion to schools (via taxes paid) in this state.  With school funding already having problems, I can't wait for the wailing to come from these mouth breathers who vote for this thing.  It will essentially close the DJ basin off to new development, which is exactly what the assholes who wrote it want.

 

And if 74 passes as well, look out.  That will create a mega shitstorm of epic proportions.

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skipmcgee

skipmcgee 194

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43 minutes ago, Chewbacca said:

Unfortunately it's not an amendment, so it only needs 50%.  If the shitheads in my state are dumb enough to pass that piece of shit, we deserve the ensuing recession we will give ourselves.  Saw a news piece on this that said O&G contributes over $1 billion to schools (via taxes paid) in this state.  With school funding already having problems, I can't wait for the wailing to come from these mouth breathers who vote for this thing.  It will essentially close the DJ basin off to new development, which is exactly what the assholes who wrote it want.

 

And if 74 passes as well, look out.  That will create a mega shitstorm of epic proportions.

Oh shit.  Then the scenario of both happening is even more likely.  I hope the state likes lawsuits larger in size than its entire budget.

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Johnny Chimpo

Johnny Chimpo 478

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When I was working in California in 2016 Monterey county passed an initiative banning wastewater injection, which essentially would have shut down all oilfield production operations in the county since the WOR is so high on the fields out there. 

The oil company lawyers got to work and the decision ended up getting reversed. I imagine the same would happen in Colorado after legal challenges. 

https://www.thecalifornian.com/story/news/2018/01/02/judge-issues-ruling-measure-z/998276001/

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Trey3216

Trey3216 15325

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10 minutes ago, Eastwood said:

That's a 50k barrel a day play that hasn't his the decline curves on the bulk of their wells, yet. It'll start turning a profit in about 5 years if prices average around $55 or more over that time.

And it'll show up immediately accretive to the balance sheet.  

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Neonmoon

Neonmoon 38127

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https://www.washingtonpost.com/business/its-short-story-time-for-shale-frackers/2018/10/30/ffcce83e-dc63-11e8-8bac-bfe01fcdc3a6_story.html?utm_term=.a8755be39e8d

Spoiler

 

If the past week or so is any guide, then E&P companies had best know one thing: Investors aren’t playing.

Consider Denbury Resources Inc. The specialist in enhanced oil recovery this past weekend announced a cash-and-stock offer for Penn Virginia Corp., which operates in the Eagle Ford shale basin in Texas, worth $1.2 billion, or $79.80 a share. Or at least it was worth that based on Friday’s closing prices. Investors have wiped 29 percent off Denbury’s stock since then. Remarkably, having been offered a nominal premium of 18 percent, Penn Virginia’s shareholders are now being enticed with a 6 percent discount on the stock they owned heading into the weekend.

On Tuesday, Chesapeake Energy Corp. announced its own foray into the Eagle Ford, with a deal for WildHorse Resource Development Corp. worth about $4 billion including assumed debt. Before the market opened, the offer implied a premium of as much as 24 percent. By mid-morning, the slump in Chesapeake’s stock had taken that below 10 percent. And that’s despite Chesapeake simultaneously unveiling earnings that beat forecasts handily.

In both cases, the acquirers may be wondering exactly what they did to cause offense. Denbury’s deal provides exposure to a shale play outside its core business, with an option to potentially apply its enhanced-recovery skills in a new area. Chesapeake’s deal, meanwhile, accelerates its shift away from natural gas production toward more valuable liquids and claims hefty synergies, worth perhaps half the transaction cost at the upper end of assumptions (on a 10 times multiple).

The problem is that, while the E&P sector never lacks for good stories, investors really aren’t listening. They’re long facts on the ground. They’re short stories.

The most glaring example of recent yore is EQT Corp., which has dropped 21 percent since reporting earnings last week (the sector’s down 4 percent). EQT took the, er, opportunity to reset its medium-term growth story lower. On one level, this is actually welcome for a producer in the woefully oversupplied U.S. natural gas market.

But on another level – the one where most investors hang out, apparently – EQT may as well have been talking about 2123, not 2023. It made the cardinal mistake of raising its capital expenditure budget for this year while simultaneously reducing production guidance. This is as close to taboo as it gets in E&P investor circles these days, having been scarred by years of go-go growth expectations that helped foster a crash in energy prices, high debts and poor returns 

Like EQT, while Denbury and Chesapeake no doubt see medium-to-long-term opportunities in their approach, investors see surprises and risks for which their tolerance has shriveled. While Denbury has yet to announce third-quarter results, both Chesapeake and EQT notably reported negative free cash flow again in their results.

It is perhaps unfortunate for EQT that its results arrived the same day as those of ConocoPhillips. Besides beating expectations, Conoco stuck doggedly to its established message of low costs, spending restraint and payouts. Free cash flow increased more than a third versus the second quarter, and was positive for the fourth quarter in a row. There were more references to – and, importantly, evidence of – “discipline” in Conoco’s earnings announcement and analyst call than your average “Fifty Shades” novel.

And that seems to be what the punters want.

 

Interesting article 

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