PE is pretty constrained imo.
Houston..we have a problem....
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Last: 3 days ago by one MEEN Ag
Legacy APC GOM properties?DripAG08 said:
What does Oxy have to sell that would fetch $5B in this market right now? I know private equity has been quiet but consider me skeptical on that number.
Feel like GOM is a good position to have at the moment to offer a nice balance to the portfolio.BrokeAssAggie said:Legacy APC GOM properties?DripAG08 said:
What does Oxy have to sell that would fetch $5B in this market right now? I know private equity has been quiet but consider me skeptical on that number.
I would think DJ would be on the chopping block but who knows how that would transact.
Feel like the GOM position is a good hedge against Vicki.
There's nothing to monetize. No contracts, no physical assets other than the plant site and the production reserves. Charif sold the site and leased it back under really bad terms in a last gasp effort to get capital.BCG Disciple said:Outside of monetizing a piece of driftwood. Not sure why that project has taken so long to get off the ground, and it sucks to be negotiating from the position they're in.MAROON said:
I don't see any way they avoid bankruptcy.
They've offered equity to anybody who will sign a contract - Total might have actually bought in, but I can't recollect and they would certainly have written it off by now.
I think they liquidate.
Cyp0111 said:
Feel like the GOM position is a good hedge against Vicki.
I don't often agree with what you say but this is spot on
Nevermind. I found it on XOM website.
Background of the merger begins on page 50.
http://investor.exxonmobil.com/sec-filings/all-sec-filings/content/0001193125-23-281591/0001193125-23-281591.pdf
http://investor.exxonmobil.com/sec-filings/all-sec-filings/content/0001193125-23-281591/0001193125-23-281591.pdf
I forgot he sold the site already.
Does the OXY acquisition include CrownQuest's minerals? Didn't CQ have a large mineral position in the Midland? Maybe that's why it's screening so expensive?
I don't know about large but yes.
Sims said:nu awlins ag said:
From the companies I just spoke with, all are projecting flat in 2024. The increases will come again from, efficiencies.
We're looking at a very large, unexpected RFQ from one of the names on the FT image on the previous page for 1H 2024. This is a long time customer so we're used to their purchasing habits. This doesn't scream flat 2024 to me. Anecdotal obviously but we're really excited about it.
Thought this was worth following up on - The RFQ was withdrawn. We spoke with the other vendor we know that received the same and they were told it was withdrawn as well. My little ray of anecdotal sunshine was ahead of its time!
I guess it is all relative but they do have a pretty sizeable mineral portfolio. A lot of it is under their leasehold as well.nu awlins ag said:
I don't know about large but yes.
They do, but one's definition of large maybe different than mine or yours.BourbonAg said:I guess it is all relative but they do have a pretty sizeable mineral portfolio. A lot of it is under their leasehold as well.nu awlins ag said:
I don't know about large but yes.
no, it did not include the vast majority of their minerals.
included all the Midland Basin minerals if I read it correctly
Curious what the Haynesville and Marcellus boys thinking right now. Rockcliff and Aethon, on santas naughty list.
Yeah, uh, so about that $6 billion…..
It'll be interesting to see 4Q hedging activity and who got caught with their pants down with the warm weather and Golden Pass. Had a small window but that shut end of October. A lot of talk about tentatively adding rig(s) end of 24 in earnings calls. Shoot, how about 2026?!
We should know something on Rockcliff in a few days.
Like I said, not so sure about that chart.
Why are Aethon and RockCliff on the naughty list?
Their valuations will be brutal at this gas strip.
Aethon had to do a bunch of agressive stuff to outrun the hedge book a few years back. Now they ran strip into ditch, god bless
ChatCypTranslation: Aethon hedged their product when the prices were extremely low. They thought they were preventing further price degradation by buying hedges. Prices improved, but any real gains went to the hedgers, not Aethon. To alleviate this, companies drill new wells whose capacity aren't included in any hedges.Cyp0111 said:
Aethon had to do a bunch of agressive stuff to outrun the hedge book a few years back. Now they ran strip into ditch, god bless
This was the story of every. single. NAL operator coming out of covid. Banks demanded hedges. Hedgers happily obliged. This meant that oil price improvements for about a year post covid went to hedgers not oil companies, and also saw an increase of oil production with whatever cash they could scrape together.
From my buddies on the operator side, a lot of banks were playing middle man between oil companies wanting to reduce their oil price volatility and airlines wanting to limit their jet fuel cost exposure. Any more details are hazy to me as the beers started to win the battle during this conversation.
The problem with that thesis is most airlines were not hedging during that time period (2020/2021) as they were very concerned with demand projections for tickets and most were deep out of the money on hedges placed in 2019/early 2020.
A lot of groups hedged projected volumes associated with capex plans to (check notes) reduce risk. The problem with that is you now have a hedge book to outrun.
Final point, hedge providers largely use balance sheets to provide market liquidity. Shorts and longs come in but almost never at the same time. The longs/shorts from consumers and producers help the hedge provider balance the hedge book with the exchange as most producer require non-margin terms for obvious regions.
The margins relative to the working capital/interest rate and credit/default risk are not great.
A lot of groups hedged projected volumes associated with capex plans to (check notes) reduce risk. The problem with that is you now have a hedge book to outrun.
Final point, hedge providers largely use balance sheets to provide market liquidity. Shorts and longs come in but almost never at the same time. The longs/shorts from consumers and producers help the hedge provider balance the hedge book with the exchange as most producer require non-margin terms for obvious regions.
The margins relative to the working capital/interest rate and credit/default risk are not great.
I get why companies hedge.
I used to have to sit in monthly hedging meeting and provide production projections and argue with finance until we "agreed" on the hedge. I'm sure it happened, but I can't recall a time that the result of hedging seemed to be worth the cost and time dedicated to doing so. Probably just bias from something no one enjoyed doing.
And to clarify it wasn't apples to apples with this. It was currency / tax hedging for all the major forgings, components, assemblies, etc. from dozens of countries around the world for a large OEM.
I used to have to sit in monthly hedging meeting and provide production projections and argue with finance until we "agreed" on the hedge. I'm sure it happened, but I can't recall a time that the result of hedging seemed to be worth the cost and time dedicated to doing so. Probably just bias from something no one enjoyed doing.
And to clarify it wasn't apples to apples with this. It was currency / tax hedging for all the major forgings, components, assemblies, etc. from dozens of countries around the world for a large OEM.
SWA was very good at this.....
Hedging to reduce risk seems to have really screwed many operators recently, particularly natural gas. Three way collars going into COVID that didn't actually protect against downside risk, which were unwound at losses or into below market swaps or collars. Massive price recovery for both oil and natural gas, but at a time when hedges are already locked into place at COVID or COVID-unwinding prices, so producers try to outdrill the hedge book to capture some of the premium pricing. Now natural gas price collapsing and oil price not doing well, so the excess production isn't worth nearly as much (unless that was hedged) and future drilling prospects are screwed.
Banks have killed it in this process though (although offset by all the ****Co COVID bankruptcies).
Banks have killed it in this process though (although offset by all the ****Co COVID bankruptcies).
Hey man, I'm way over my skis. Just reporting back what little info I get from very close friends who are very high up at very small oil and gas companies.Cyp0111 said:
The problem with that thesis is most airlines were not hedging during that time period (2020/2021) as they were very concerned with demand projections for tickets and most were deep out of the money on hedges placed in 2019/early 2020.
A lot of groups hedged projected volumes associated with capex plans to (check notes) reduce risk. The problem with that is you now have a hedge book to outrun.
Final point, hedge providers largely use balance sheets to provide market liquidity. Shorts and longs come in but almost never at the same time. The longs/shorts from consumers and producers help the hedge provider balance the hedge book with the exchange as most producer require non-margin terms for obvious regions.
The margins relative to the working capital/interest rate and credit/default risk are not great.
They wanted to go no hedge or way higher hedge seeing the post covid upside, but the banks wanted to see hedges or further debt issuance was off.
**Scene opens, 20th floor of dated houston high rise, a short while after covid scare has passed**
Small Oil Operator: I would like to reduce my risk of oil dropping by selling you a cut of potential profits off the top in exchange for a price floor.
Bank: Let me see if there is someone who will take the other side of this so our books aren't exposed to direct price action.
Airlines: I would like to reduce my risk of oil rallying by purchasing a potential cut of the profits off of the top of oil in exchange for a price ceiling.
Bank: I would like to make money on the time value of money at play, and for facilitating this trade. We also need to cover the cost for our new breakroom sign 'The House Always Wins.'
**End scene**
Buffet buying more Oxy.
https://occidentalpetroleum.gcs-web.com/static-files/286e40da-242d-45dd-82fe-3597c9274e52
https://occidentalpetroleum.gcs-web.com/static-files/286e40da-242d-45dd-82fe-3597c9274e52
He seems to buy around this price often.
Also should note how hard it is to hedge on the futures curve. Peak Russia-Ukraine on 2021 was a great time to hedge, but the curve was steeply backward so hedging a year out the curve maybe gets you $90/bbl even though spot is $140. Not many people wanted to do that.
the problem with hedging, in a tight, rising market, the curve is always backwardated. It's the natural pull of a tight market....
How do hedge prices usually compare to the strip? For example, if today's strip is showing $70/bbl next year, would I be able to execute a hedge today at $70/bbl with maybe a slight discount for 2024?