Wonder if we start to see a flow of midstream consolidation with such a big move. Buckeye, Zenith would be interesting for one of big terminal operators to snag.

Agree, Tulsa couldn't afford to lose another corporate to Houston.

So reading the OneOk link

• From a tax perspective, ONEOK expects to benefit from the step-up in Magellan's tax basis from the transaction, thus deferring the expected impact of the new corporate alternative minimum tax from 2024 to 2027. The benefit from the basis step-up has an estimated total value of approximately $3.0 billion, which has an estimated net present value of approximately $1.5 billion. Utilization of expected tax attributes could increase if additional capital projects are put into service or acquisitions are completed, which may increase the net present value of future tax deferrals.

Does this mean that there is some benefit that others could see from similar consolidation due to the corporate AMT?

I have a friend at a mid stream/down stream company and he said he hears rumors that they might spin mid stream off. At the time I suspected this would be because refining and chemicals would demand a bigger multiple versus pipeline, but it looks like it may get done for tax purposes.

Any thought?

Looks like Cox Operating took the chapter 11 plunge. Will there be any fallout in the GOM?

interesting players structure on that one. Looking at the docket, $100MM + in trade payables

Anyone know the story on this? Majority oil producer can't pay its bills in $70/bbl environment? Got to be something else behind the scenes to this.

I think $70 provides minimal buffer in current environment. Throw in most guys are split stream and most guys are just treading water. From what I see, to recycle collateral etc, and have coverage , is $80-85+

MAROON said:

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Anyone know the story on this? Majority oil producer can't pay its bills in $70/bbl environment? Got to be something else behind the scenes to this.

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I think it's an interesting discussion on pricing needs for conventional vs frac. Love to hear y'alls take.

My experience is subsea, but from people I've talked to the ratio on amount of cash that get burned through to frac to revenue gained just doesn't seem to ever be what is expected. And really needs a well above average price to work.

I'm sure technology and process get more efficient every day, but prime acreage doesn't. As an outsider so far this seems like a phase that I wonder will still be happening in the next 10 years.

You're going to see a lot of privates and smaller publics pop up with current ratio/liquidity issues.

Cyp0111 said:

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You had a lot of people finishing out driling contracts and not completing. I think you start seeing quite a few guys start popping up with liquidity issues on the private side. The publics are going to have to start making hard decisions.

Curious how much the Aethon boys drop.

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Aethon has always been interesting to me. They've been consistent with running a lot of rigs even in some of the large down swings. I did see an interesting chart today showing Aethon's decline rate as second highest on a 12-month basis and first on a 36-month basis out of about 40 operators. I would expect their decline rates to be a lot less based on how much they choke back their wells. Their EURs aren't bad compared to other Haynesville producers based on the data I track.

If this decline rate is true then I don't see them dropping a significant amount of rigs. I think if they drop rigs they are taking themselves off the market and push back their exit date to 2025-26ish. They cant afford to have production start to roll over as they are actively shopping themselves.

Cyp0111 said:

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You're going to see a lot of privates and smaller publics pop up with current ratio/liquidity issues.

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For sure, seeing little signs of that already.

Never seen as many producers at 1.5x leverage or less and effectively out of cash and busting current rations in my life.

Cyp0111 said:

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Never seen as many producers at 1.5x leverage or less and effectively out of cash and busting current rations in my life.

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Producers, practically speaking or drillers?

Anyone that has been under any type of capex program the last 12 months. The gas boys especially brutal.

Cyp0111 said:

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Anyone that has been under any type of capex program the last 12 months. The gas boys especially brutal.

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so every public company then?

They generally have more flexibility.

https://www.ft.com/content/d66f640c-babf-48e2-b13f-75006df3bc53

Behind a pay wall.

I googled the headline and was able to open it

txaggie_08 said:

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I googled the headline and was able to open it

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Same. Also, lets buy those rigs!!!

I'm in! Know anyone who can drill a well?

BackRoad Dan said:

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I'm in! Know anyone who can drill a well?

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I got a guy.

Better question is do you know a guy that will pay for it.

AgLA06 said:

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BackRoad Dan said:

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I'm in! Know anyone who can drill a well?

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I got a guy.

Better question is do you know a guy that will pay for it.

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Shhh. He thinks Im that guy.

Dropped another 11 rigs.

Gonna keep dropping, economics don't make sense right now, liquidity isn't there below the big boys.

BourbonAg said:

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I don't disagree but these sharp drops are going to cause a sharp rise in price at some point.

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Unless China's demand is weaker than we realize and we're headed to a global recession or something. I think the interesting thing is US demand is actually surprisingly strong right now - certainly better than last year. OPEC cutting production by 1.5MM bbls, and capex getting cut and we still haven't moved the needle in sentiment.

Aren't most publics already forecasting production higher or equal to their 2022 production?

Makes me think production I'm 2024 might be lower - then we could have some price effects. Pure unadulterated guess on my part. I don't make my living trading these commodities.

Spec short interest is historically high.

Cyp0111 said:

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Spec short interest is historically high.

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Agreed on that. Point is if they are right then there won't be a quick bounce in price. And fundamentally on the domestic side demand is strong right now, so they are positioned that way for macro reasons.

The short interest in my opinion is a macro way to express a view. The effective short interest isn't tracking the underlying physical market but crude is an effective way to show general positioning towards economic outlook.

I think if the debt deal gets done with the feds, and we roll forward a few weeks to continued drawns, the pop could be dramatic given the shorts that will need to unwind into an echo chamber.

With that said, it's also likely we bounce around between high 60's and high 70s which makes capital investment very difficult in the private makets.

The financial markets (paper wti) have given up on the bull thesis even though S&D is turning the corner to bullish.

Interesting.

Quote:

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In other news, data from Baker Hughes on Friday showed a third-straight weekly decline in the number of active U.S. rigs drilling for oil down 11 to 575 this week.

"A slowdown in U.S. drilling activity is a concern for the oil market, which is expected to see a sizable deficit over the second half of this year. Producers appear to be responding to the weaker price environment, rather than expectations for a tighter market later in the year," said Warren Patterson and Ewa Manthey, commodity strategists at ING, in a note.

"The macro picture is also likely making producers a little more hesitant. However, the trend will be good news for OPEC+, as it suggests that they will be able to continue supporting prices without the risk of losing market share to U.S. producers," they wrote.

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https://www.marketwatch.com/amp/story/oil-steady-after-snapping-streak-of-four-straight-losing-weeks-6023ee7a