go look at the port of Iberia. the pipe coating facility used to have yard after yard of pipe stacked 20' tall now it is a ghost town.The Original AG 76 said:ever driven from Lafayette down US 90? Not exactly paradise. Chocker block full of ( now largely empty) manufacturing/fab facilities. They managed to get plenty of labor over there. Bay City will do the same.nu awlins ag said:
I can see that. Who would want to live there?
Houston..we have a problem....
7,280,939 Views |
28678 Replies |
Last: 12 hrs ago by TxAg20
That's why Keystone and Dakota Access, etc., are so important.74OA said:
Wow. Australia is the world's #2 exporter of LNG, but has a domestic energy crisis: PPP
"Australia's plight is less likely in America, which is experiencing a gas glut and is boosting exports. The first LNG-export terminal in the lower 48 states opened in Louisiana last year, allowing exports by ship in addition to existing pipelines to Mexico and Canada. Energy Secretary Rick Perry said at his Senate confirmation hearing he wanted to boost natural-gas exports.
The U.S. is on track to become the world's No. 3 LNG exporter behind Qatar and Australia by 2020, according to the U.S. Energy Department.
Unlike Australia which has plentiful gas supplies in its west but no pipelines to get them to its gas-starved east the U.S. has a large pipeline grid, making it easier to move supplies during shortages. It also has largely avoided the kind of long-term export contracts that trapped Australian companies into giving foreign buyers priority."
I believe you are mistaken. Pipelines only lead to the death of the American Indian through the poisoning of their water supply. And to explosions... lots of explosions...
And mountains of trash abandoned by "environmentalist" SJWsFHKChE07 said:
I believe you are mistaken. Pipelines only lead to the death of the American Indian through the poisoning of their water supply. And to explosions... lots of explosions...
Good news for the company my Dad works for.
http://m.chron.com/business/energy/article/Houston-s-Talos-Energy-makes-significant-find-11283088.php#photo-5385525
http://m.chron.com/business/energy/article/Houston-s-Talos-Energy-makes-significant-find-11283088.php#photo-5385525
62strat said:
Good news for the company my Dad works for.
http://m.chron.com/business/energy/article/Houston-s-Talos-Energy-makes-significant-find-11283088.php#photo-5385525
Anyone I can get with about seeing if they need a rig?
compressor stations blow up everyday and entire communities go deaf. Every time I got to Virginia the propaganda tells me so.FHKChE07 said:
I believe you are mistaken. Pipelines only lead to the death of the American Indian through the poisoning of their water supply. And to explosions... lots of explosions...
uuggg
P66 has pretty much absorbed what was downtown Old Ocean. I heard that highway 35 bypasses it now. I lived there and in Sweeny for about 13 years. It was like the South Park of Texas.nu awlins ag said:Yes I have, many times. Not paradise, but better than Old Ocean that much I do know.The Original AG 76 said:ever driven from Lafayette down US 90? Not exactly paradise. Chocker block full of ( now largely empty) manufacturing/fab facilities. They managed to get plenty of labor over there. Bay City will do the same.nu awlins ag said:
I can see that. Who would want to live there?
well they're only estimating 1200bbls...so i wouldn't expect it to
But when you put it in gallons it sounds so much more intimidating. They should probably start quoting in ounces, just to be more alarmist.sts7049 said:
well they're only estimating 1200bbls...so i wouldn't expect it to
The projections for US LNG exports just keep getting better and better: Revolution!
"In addition to ongoing expansion of Cheniere's Sabine Pass facility in Louisiana (currently the only LNG export facility in the continental U.S.), four other LNG export facilities are slated to be in operation by the end of 2019.
Cameron LNG has a Louisiana facility under construction that is slated to open in 2018. Freeport LNG's Texas facility is also slated to open in 2018, while the Cove Point terminal in Maryland is scheduled to open later this year, and Cheniere's Corpus Christi facility will likely open in 2019.
All told, these new facilities will more than quadruple the U.S. current LNG exporting capacity from 13.5 MTPA (metric tons per annum) to 66 million tons per annum by 2019, only bolstering what has already been an impressive foray into the LNG exporting.
Cheniere shipped 381 billion cubic feet (Bcf) of LNG from February 2016 to April of this year, including 197.6 Bcf in first four months of 2017 and record shipments in May, as the above Bloomberg graphic shows.
U.S. LNG exporters currently have contracts to supply more than 80 million metric tons of LNG a year. So based on the following International Gas Union graphic showing 2016 LNG export data by country, this ideally positions the U.S. to challenge Qatar and Australia in terms of export capacity sooner rather than later."
"In addition to ongoing expansion of Cheniere's Sabine Pass facility in Louisiana (currently the only LNG export facility in the continental U.S.), four other LNG export facilities are slated to be in operation by the end of 2019.
Cameron LNG has a Louisiana facility under construction that is slated to open in 2018. Freeport LNG's Texas facility is also slated to open in 2018, while the Cove Point terminal in Maryland is scheduled to open later this year, and Cheniere's Corpus Christi facility will likely open in 2019.
All told, these new facilities will more than quadruple the U.S. current LNG exporting capacity from 13.5 MTPA (metric tons per annum) to 66 million tons per annum by 2019, only bolstering what has already been an impressive foray into the LNG exporting.
Cheniere shipped 381 billion cubic feet (Bcf) of LNG from February 2016 to April of this year, including 197.6 Bcf in first four months of 2017 and record shipments in May, as the above Bloomberg graphic shows.
U.S. LNG exporters currently have contracts to supply more than 80 million metric tons of LNG a year. So based on the following International Gas Union graphic showing 2016 LNG export data by country, this ideally positions the U.S. to challenge Qatar and Australia in terms of export capacity sooner rather than later."
And showing stock footage of baby seals covered in oiltopher06 said:But when you put it in gallons it sounds so much more intimidating. They should probably start quoting in ounces, just to be more alarmist.sts7049 said:
well they're only estimating 1200bbls...so i wouldn't expect it to
EnerVest fund belly flops from $2bn to $0.
http://www.foxbusiness.com/features/2017/07/16/from-2-billion-to-zero-private-equity-fund-goes-bust-in-oil-patch.html
I wouldn't be surprised if we hear more stories similar to this before year end.
http://www.foxbusiness.com/features/2017/07/16/from-2-billion-to-zero-private-equity-fund-goes-bust-in-oil-patch.html
I wouldn't be surprised if we hear more stories similar to this before year end.
If the stats in the article are true, it sounds like a fairly rare outcome, so I think it would be pretty surprising for it to happen again to others but you never know.
They were more aggressive with debt at the fund level. Structure to an extent was atypical.
So Enervest was a fund but also an operator? Same company right?
Agreed. It's rare for PE funds to perform that poorly to begin with, which was partially explained by how that one was structured and operated.
Not sure. They have a public MLP (EV Energy Partners), and they also have these funds. Not sure where Enervest Operating LLC falls in that complicated family tree.aggielee03 said:
So Enervest was a fund but also an operator? Same company right?
Yes. They raise money and operate.
I believe fund 14 is still going strong.
Looks to me like fund 13 failed primarily because the assets were Barnett and Granite Wash.
I believe fund 14 is still going strong.
Looks to me like fund 13 failed primarily because the assets were Barnett and Granite Wash.
It failed because they bought at the peak and leveraged it highly with debt such that now the assets are worth less than the debt, so the investors get bumpkis. I'm sure the location of the properties didn't help but the model sucked.
The timing is the main issue. The model can work if the underlying commodity prices are rising or stable. Doesn't work very well in a falling price market
The timing is the main issue. The model can work if the underlying commodity prices are rising or stable. Doesn't work very well in a falling price market
That's the model that all PE funds use. You lever up to the hilt to acquire assets/companies and then use the cash flows to pay down the debt and drastically increase the value of your equity stake. The model wasn't the problem so much as the timing.
That is not correct. Leverage is often times a component to total returns but most acquisitions are cash financed with leverage added to induce returns. However, most debt has remained 1L basis vs multi-tiered.
Portfolio companies have gotten in trouble but I would say the biggest offenders have been the small-mid-size public companies which took on unsecured bonds outside the 1L to fund acreage acquisitions. aka the CHK model.
Portfolio companies have gotten in trouble but I would say the biggest offenders have been the small-mid-size public companies which took on unsecured bonds outside the 1L to fund acreage acquisitions. aka the CHK model.
No doubt timing had an impact.
But if you bought Permian instead of Granite Wash/Barnett, you are probably flipping for 2-3x even if you bought during 2013-2015.
Barnett hasn't made much money in a long time and Granite Wash never has made much as far as I know so I am not sure pricing bails you out of those predicaments.
If the new drills on the acreage were valuable due to decreased service cost over time, you could buy out the banks with higher interest debt and put liens on the acreage also. But their acreage was worthless. That's the reason they are sunk and others aren't.
But if you bought Permian instead of Granite Wash/Barnett, you are probably flipping for 2-3x even if you bought during 2013-2015.
Barnett hasn't made much money in a long time and Granite Wash never has made much as far as I know so I am not sure pricing bails you out of those predicaments.
If the new drills on the acreage were valuable due to decreased service cost over time, you could buy out the banks with higher interest debt and put liens on the acreage also. But their acreage was worthless. That's the reason they are sunk and others aren't.
Right, I'm talking the PE model in general, not just O&G. In the E&P space they aren't necessarily maxing leverage to acquire the acreage but the portfolio companies, especially with deep-pocketed sponsors, are not at all averse to maxing out their 1L/RBL to fund development programs. Even without taking on additional tranches of debt, if oil prices plummet and you're writing off reserves then you can easily end up way over-levered.
I believe that the spectacular failure of EnerVest 2013 might trigger more failures as analysts take a closer look at the negative cash flows of many energy companies. I know that at least one major bank is looking at their entire energy-lending portfolio as a result of EnerVest's failure.GarlandAg2012 said:
If the stats in the article are true, it sounds like a fairly rare outcome, so I think it would be pretty surprising for it to happen again to others but you never know.
A recent Goldman-Sachs report cited $55 oil as the break-even point for shale drilling. At today's prices, most of the major shale oil producers have negative cash flows. Some alarmists are even making comparisons to the dot.com and real estate bubbles.
so should we start looking for who GS shorted around the same time?VaultingChemist said:I believe that the spectacular failure of EnerVest 2013 might trigger more failures as analysts take a closer look at the negative cash flows of many energy companies. I know that at least one major bank is looking at their entire energy-lending portfolio as a result of EnerVest's failure.GarlandAg2012 said:
If the stats in the article are true, it sounds like a fairly rare outcome, so I think it would be pretty surprising for it to happen again to others but you never know.
A recent Goldman-Sachs report cited $55 oil as the break-even point for shale drilling. At today's prices, most of the major shale oil producers have negative cash flows. Some alarmists are even making comparisons to the dot.com and real estate bubbles.
This is still not accurate. Yes, a portfolio company uses debt to drive returns, but I suspect the average portfolio company is only marginally higher than your average non-major E&P. The one I work for has probably lower RBL utilization percentage than most non-majors.Ag2012 said:
Right, I'm talking the PE model in general, not just O&G. In the E&P space they aren't necessarily maxing leverage to acquire the acreage but the portfolio companies, especially with deep-pocketed sponsors, are not at all averse to maxing out their 1L/RBL to fund development programs. Even without taking on additional tranches of debt, if oil prices plummet and you're writing off reserves then you can easily end up way over-levered.
The EnerVest model was problematic for, among other reasons, the lack of oversight of a PE overseer (it appears EnerVest was also acting as the PE overseer). They were receiving the waterfall without someone above them limiting the debt ratios.
You should read the "New Darlings of Wall Street" (dated June 28, 2017).
New Darlings of Wall Street
The report refers to an older analysis of Pioneer Resources
This is where I got that $55 oil figure. EnerVest might be the canary in the coal mine.
New Darlings of Wall Street
The report refers to an older analysis of Pioneer Resources
This is where I got that $55 oil figure. EnerVest might be the canary in the coal mine.
Should I really feel stupid for not having the slightest idea what the above said ? We are damn near as bad as the military in jargontopher06 said:This is still not accurate. Yes, a portfolio company uses debt to drive returns, but I suspect the average portfolio company is only marginally higher than your average non-major E&P. The one I work for has probably lower RBL utilization percentage than most non-majors.Ag2012 said:
Right, I'm talking the PE model in general, not just O&G. In the E&P space they aren't necessarily maxing leverage to acquire the acreage but the portfolio companies, especially with deep-pocketed sponsors, are not at all averse to maxing out their 1L/RBL to fund development programs. Even without taking on additional tranches of debt, if oil prices plummet and you're writing off reserves then you can easily end up way over-levered.
The EnerVest model was problematic for, among other reasons, the lack of oversight of a PE overseer (it appears EnerVest was also acting as the PE overseer). They were receiving the waterfall without someone above them limiting the debt ratios.
VaultingChemist said:I believe that the spectacular failure of EnerVest 2013 might trigger more failures as analysts take a closer look at the negative cash flows of many energy companies. I know that at least one major bank is looking at their entire energy-lending portfolio as a result of EnerVest's failure.GarlandAg2012 said:
If the stats in the article are true, it sounds like a fairly rare outcome, so I think it would be pretty surprising for it to happen again to others but you never know.
A recent Goldman-Sachs report cited $55 oil as the break-even point for shale drilling. At today's prices, most of the major shale oil producers have negative cash flows. Some alarmists are even making comparisons to the dot.com and real estate bubbles.
You can have negative cash flows and be generating a ton of value. Why is it like the dot com or real estate bubbles? Many of the companies you mention with negative cash flows are growing their business ~20% y/y. If a company is growing 20% y/y for the next several years and they hold a net cash position or barely any net debt, why would there be a bubble? The problem with your theory is that many (if not most) of the negative cash flow companies you reference have basically no leverage for their size when you add their cash position. And their negative cash flow is shrinking rapidly, quarter after quarter.
Fears about cash flow negative companies that are actively developing shows a fundamental lack of understanding of the industry. I spend $7MM on a well that provides cash flow for years if not decades to come. Should I not invest in that well because it doesn't provide $7MM in that quarter? It's like if everybody looked at a small manufacturing company as they built their big factor and said they were a bubble due to being cash flow negative. In oil and gas you are doing the equivalent of building a massive factory, but as you build certain pieces they begin providing cash flow. If you stopped capital investment you'd be cash flow positive, but you should probably continue to spend money to build out the rest of the factory.
Furthermore, "breakeven prices" really annoy me, because they can be changed dramatically by different completions, different recovery methods,
significant shifts in capital efficiency, etc. Thus magical $55 is not a fixed number and frankly, it's probably way out of date. All the major shale players in the Permian are boasting 40-60% ROR. That means they are definitely outdoing "breakeven".
I think you are not quite understanding the structural issues with the specific Enervest Fund.
The assets were lower tier with minimal options for non Proven divestitures to bolster liquidity outside of the Wells Fargo RBL. Enervest leveraged the company from the onset and bought the assets at the wrong time. The company likely had minimal options to boost liquidity.
I think the biggest issue facing the industry was the prevalence of bonds financing land/minimal PDP asset packages. That market has been largely minimized after 2015 forward.
The assets were lower tier with minimal options for non Proven divestitures to bolster liquidity outside of the Wells Fargo RBL. Enervest leveraged the company from the onset and bought the assets at the wrong time. The company likely had minimal options to boost liquidity.
I think the biggest issue facing the industry was the prevalence of bonds financing land/minimal PDP asset packages. That market has been largely minimized after 2015 forward.
I posted two articles that analyzed the financial health of two shale companies, Pioneer and Diamondback. Can you provide a reasoned argument that would refute the findings of those articles?
What is your question?
Owning equity in a pure play Permian asset that likely is overvalued or that negative FCF for a growing oil and gas company is not a sustainable business model? I personally would not invest equity into a Permian player as I feel the market is currently over valued due to lack of alternative basins (at this point).
I agree that continued negative FCF generation is not ideal, however, if the company is moderately levered (the original premise that not all PE is bad) and operating within EBITDAX requirements the concern should not be that big.
Some of the failure in the narrative is that although the rapid investment criteria to continue to grow production stresses short term cash flow, it in fact creates a future cash flow stream (that can be hedged).
Investing in pure play frackers is almost more about asset value more so than FCF generation. This can prove very costly as witnessed by the destruction of equity and unsecured bonds the past 4-5 years.
If you want to invest in a company with FCF positive status look at the super majors that have sold downstream operations that act as a cash flow hedge.
Owning equity in a pure play Permian asset that likely is overvalued or that negative FCF for a growing oil and gas company is not a sustainable business model? I personally would not invest equity into a Permian player as I feel the market is currently over valued due to lack of alternative basins (at this point).
I agree that continued negative FCF generation is not ideal, however, if the company is moderately levered (the original premise that not all PE is bad) and operating within EBITDAX requirements the concern should not be that big.
Some of the failure in the narrative is that although the rapid investment criteria to continue to grow production stresses short term cash flow, it in fact creates a future cash flow stream (that can be hedged).
Investing in pure play frackers is almost more about asset value more so than FCF generation. This can prove very costly as witnessed by the destruction of equity and unsecured bonds the past 4-5 years.
If you want to invest in a company with FCF positive status look at the super majors that have sold downstream operations that act as a cash flow hedge.
Featured Stories
See All
24:46
10h ago
21k
'The Other Kid': A&M dismantles Mizzou in Weigman's return, 41-10
by Olin Buchanan
22:57
12h ago
15k
Post Game Review: No. 25 Texas A&M 41, No. 9 Missouri 10
by Kay Naegeli
138:15
19h ago
6.0k