nu awlins ag said:

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"The inventory numbers are significant - refineries seemed to jump back to activity, gasoline demand jumped back so that's definitely positive," said Phil Flynn, senior analyst at Price Futures Group in Chicago. "It seems that we're back on the track of the drawdown on supplies."

Just before this, it was demand worries because of the pandemic, which has been constant since April/May. Face it, demand here in the states has been increasing, so all this crap about "demand and the pandemic" are slightly over played at this point. With the hurricane, production of 2-4 million barrels has been shut in, which is a good amount since last week's draw was 4.4 million, down to 496 million which is at the lowest point since April. This is where prices should be in my opinion based on all over information.

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Few things I'd add here:

1) We are coming out of summer driving season (however muted it may have been this year) - that's something you need to take into account. US Refinery utilization is down almost 10% month over month.

2) While yes, it's a positive sign inventories are the lowest since April, that level is still almost 50 mmbbls higher than inventories in the Jan - March time frame. WTI averaged ~$16 in April ($19 excluding 4/20). Obviously there was a lot more uncertainty and panic in April than today (still a lot of uncertainty though).

There's still a lot of wood to chop - I think $40 makes sense right now. But barring some event, I don't see us clawing back towards $45 or above until mid-2021. Maybe demand surprises to the upside, but I just don't see it right now, especially using refinery utilization as a proxy for demand.

You ever look at pipeline capacity? You should...

What are you getting at with pipeline capacity in this situation?

Oh geez....never mind man.

EOG exploring in Oman... is this the kiss of death for shale?

Agree on the WS pullback, but I don't think negative prices had a material, long-term impact on the E&P side. Regardless, EOG looking for greener pastures is pretty wild to me.

There should be almost no L48 oil drilling right now, but people are going to continue to put holes in the ground as long as they can to justify their jobs and to cash flow debt. If they haven't already done it on any RBLs, I would expect significant additional cash sweep provisions being forced into existing facilities during this redetermination.

I spent the week in Carlsbad, NM for work and I have never seen the man camp so full. It was near 100% capacity. There are lots of frack crews out there completing DUCs right now. Saw very few rigs on the horizons.

CPDAggie10 said:

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I spent the week in Carlsbad, NM for work and I have never seen the man camp so full. It was near 100% capacity. There are lots of frack crews out there completing DUCs right now. Saw very few rigs on the horizons.

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Do the oil guys in the Delaware have MVC on the pipelines?

Oman position conventional ? I think any large public needs a better asset mix between short cycle and conventional.

topher06 said:

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There should be almost no L48 oil drilling right now, but people are going to continue to put holes in the ground as long as they can to justify their jobs and to cash flow debt. If they haven't already done it on any RBLs, I would expect significant additional cash sweep provisions being forced into existing facilities during this redetermination.

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Actually there really isn't much drilling going on. Some have no option but to drill. Drill times have come down considerably over the last 4 or so month's. You shouldn't see many rigs added over the next 6 months or so. There are roughly 7400 DUC's in the L48, with almost half in the Permian. There are around 80+ plus frac crews and the number will grow, but slowly.

CaptnCarl said:

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E&P CEO in letter to shareholders and employees:

"We have decided to cease all operations including drilling and completions to sacrifice the company for the greater good of oil supply and demand economics. We wish to no longer remain competitive and try to keep your jobs and investments alive because some guy on an online message board said it's what we should be doing. We are therefore throwing in the towel."

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Think they could cash flow back most of the debt, but maybe I'm wrong. I know a lot of people have jobs that need the Permian to keep pumping money into the ground though, but I think the banks are wising up.

I seriously wonder how many of those DUCs are worth a darn.

Purely conjecture, but there has to be a good number that were poorly drilled and aren't worth completing in any price environment.

topher06 said:

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CaptnCarl said:

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E&P CEO in letter to shareholders and employees:

"We have decided to cease all operations including drilling and completions to sacrifice the company for the greater good of oil supply and demand economics. We wish to no longer remain competitive and try to keep your jobs and investments alive because some guy on an online message board said it's what we should be doing. We are therefore throwing in the towel."

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Think they could cash flow back most of the debt, but maybe I'm wrong. I know a lot of people have jobs that need the Permian to keep pumping money into the ground though, but I think the banks are wising up.

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Please understand I'm not poking at you. I'm satirically pointing out that ceasing D&C is only going to happen if it's in the best interest of the company, not the market.

I think it's more about managing a down cycle than preserving jobs.

Boodlum said:

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Lester Freamon said:

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That new VP for Strategy and ESG, the ex McKinsey chick, is a total nut case. Watched her video on their new strategy and I felt like I was watching the O&G edition of Silicon Valley.

Exactly what you would expect from ex McKinsey rolling out ESG initiatives as "strategy" at a major

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McKinsey in general is a scam with many of their experts being booksmart but real world inept.

I dealt with them as part of a transformation project for about 2 years and I was constantly amazed at how incompetent they were.

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But she has a unique accent...

CaptnCarl said:

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topher06 said:

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CaptnCarl said:

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E&P CEO in letter to shareholders and employees:

"We have decided to cease all operations including drilling and completions to sacrifice the company for the greater good of oil supply and demand economics. We wish to no longer remain competitive and try to keep your jobs and investments alive because some guy on an online message board said it's what we should be doing. We are therefore throwing in the towel."

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Think they could cash flow back most of the debt, but maybe I'm wrong. I know a lot of people have jobs that need the Permian to keep pumping money into the ground though, but I think the banks are wising up.

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Please understand I'm not poking at you. I'm satirically pointing out that ceasing D&C is only going to happen if it's in the best interest of the company, not the market.

I think it's more about managing a down cycle than preserving jobs.

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You're welcome to poke at me all you want, it is a message board. I just don't think these decisions, except at the best run companies, are going to remain in management's hands much longer. The debtholders are going to force the issue, and I suspect these teams are completing wells while they have some liquidity ahead of the next redetermination. There will probably be even more busted covenants this time.

But you don't know they're poorly drilled until you complete them. Until then, its just a DD staying up all night hitting targets from a drilling engineer who was told to use statistical analysis.

realwizardharry said:

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Agree on the WS pullback, but I don't think negative prices had a material, long-term impact on the E&P side. Regardless, EOG looking for greener pastures is pretty wild to me.

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Should've said this latest price crash. Shale is now a short cycle investment in the portfolio with the large international and GOM discoveries being the new focus of reserve growth.

That said, if oil rebounds to 80 in a few years then I'm sure we'll start this vicious cycle all over again as money talks and WS might be quick to forget.

https://tulsaworld.com/business/chesapeake-energy-cutting-200-from-its-workforce-today-the-oklahoman-reports/article_006bfa80-f9b5-11ea-ba17-cf5d8650b3c0.html

Chesapeake laying off 15% today

should not or will not?

both.

so you don't think they will emerge from bankruptcy? That it will go to auction not reorg?

They will and they will destroy value for their unsecureds which now are equity owners.

I meant to say the CHKS of the world should no longer exist.

Cyp0111 said:

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McKinsey is all that is wrong w capitalism.

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Agreed.

Also of note, the "leader" McKinsey recommended we bring on as a consultant we also terminated immediately after he was arrested in the college bribery scandal. Real quality recommendation they made.

To be fair, McKinsey is brought in to justify and polish what mgmt wants to do and gives a KYC to either board or c suite if big companh

Cyp0111 said:

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They will and they will destroy value for their unsecureds which now are equity owners.

I meant to say the CHKS of the world should no longer exist.

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Agree. Should've Chp 7 and moved on. The one that gets me was Rosehill Resources. Rock still mostly sucks and it's not like a new management team or equity holder is going to create anymore value.

Yep, 363 would crystallize the losses at wherever the fulcrum debt is in any specific deal.