agdaddy04 said:

---

Anyone have a good pressure vessel fabricator connection ?

---

Not sure what you're after but we'd like to give a look...

[email received]

The market is really providing minimal value uplift for PUds outside of great acreage. The only way the smaller privates can exit is with drilling to get to cash flow and getting a valuation assigned to that.

Cyp0111 said:

---

The market is really providing minimal value uplift for PUds outside of great acreage. The only way the smaller privates can exit is with drilling to get to cash flow and getting a valuation assigned to that.

---

Boy is that true

Cyp0111 said:

---

The market is really providing minimal value uplift for PUds outside of great acreage.

---

Agreed. Although deals with any cash flow premium must have economic upside (or say hello to 2.0 - 2.2x NTM cash flow multiple).

Cyp0111 said:

---

The only way the smaller privates can exit is with drilling to get to cash flow and getting a valuation assigned to that.

---

This is more of a double edged sword situation for most privates wanting to exit. Yes, no one is paying for upside so privates/private equity feel that they need to drill and convert opps to cash flow... However, what we have seen in the transaction markets is that people are super weary of newer production with <12-18 months.

Per the WSJ article linked, this could be one of the drivers for reduced private activity - lots of private companies came to market with fresh production this year and expected to be paid PDP PV10+ for it. The market quickly told them that isn't how this works anymore and many of the deals failed to transact.

So, as a private company looking to exit, potential buyers want to see recent activity (if you weren't drilling at $100 oil/$10 natural gas, this play must suck!) but those same buyers turn around and say, "yeah, it is good you have recent activity but I'm not paying you for it because I can't get comfortable with the decline profile".

Ultimately, just adding ANOTHER item to what is causing the large gap between buyer bidding and seller asking price points.

True. Seeing it first hand as a private seller.

You guys are speaking my language.

In short, buyers have the upper hand and debt and equity are still hard to come up with, esp. equity on the private side it seems.

You have publics pushing the market down to 2-2.5x NTM cash flow so everything is falling behind that.

No one willing to assign value to new production but will zero even good puds without recent production to justify TPs.

I've seen a few Haynesville deals get done with PUD value but that is it in the private markets.

Seems like it'll sort itself out.

Wonder if we will see more privates just take a longer term view. I know some of the PE groups have finite (and even approaching end) fund lives, but certainly there must be something they can do to tack on extensions and allow these groups to drill into a cash flow vehicle. Even with the price pullback and cost inflation, some of these wells are absolute monsters.

They're trying everything they can. They already went through the smashco experiment a few years back to push scale and collapse mgmt teams. The problem for a lot of these guys is the valuation game changed in the Spring of 2022 and given lead times etc. most had to commit to capital plans with the expecatation they would get more credit for wells recently completed.

Most of the inv. banks were telling people to get value for recent well designs and PUD uplift in spring 22. That didnt play out.

topher06 said:

---

Wonder if we will see more privates just take a longer term view. I know some of the PE groups have finite (and even approaching end) fund lives, but certainly there must be something they can do to tack on extensions and allow these groups to drill into a cash flow vehicle. Even with the price pullback and cost inflation, some of these wells are absolute monsters.

---

Comp structures will need to be adjusted. Extending fund lives increases the preferred returns, squeezing the teams out.

Just a tough environment and even more difficult when accounting for low valuations for mgmt teams.

Some PE shops (names Carnelian) seem to be doing good work throughout.

topher06 said:

---

Wonder if we will see more privates just take a longer term view. I know some of the PE groups have finite (and even approaching end) fund lives, but certainly there must be something they can do to tack on extensions and allow these groups to drill into a cash flow vehicle. Even with the price pullback and cost inflation, some of these wells are absolute monsters.

---

I'm wondering if there is some kind of play for a major or mid major to improve the ESG by buying a private to get wells instead of having a larger drilling program.

If CO2/CH4 intensity really starts to matter, you could offload a good chunk of it by not having a drilling/completion program. With pneumatics going no bleed in NM and likely new/existing federal regs, combustion (and associated methane slip) will be the largest percentage of emissions. Offloading upstream compression would be another option. Not sure there's much value just yet though and the NGOs are watching pretty closely. The whole thing is ridiculous.

Where is oil going over the next 6-18 months?

That chart is a replica of 2014

Not the same rig count according to Baker Hughes.

it's the strength of the dollar.

MAROON said:

---

it's the strength of the dollar.

---

And oil reserves being released; whatever the contribution mix - they are both adding to the falling price.

We are now down to a reserve of 427; a year ago it was 619.

SpreadsheetAg said:

---

MAROON said:

---

it's the strength of the dollar.

---

And oil reserves being released.

---

Seriously, why wouldn't they stop releasing at this point?

SpreadsheetAg said:

---

---

This is even lower now

Are there any publicly traded oil storage companies that would benefit if/when oil futures go to contango?

All of them? I don't see many hedging much beyond prompt.

moses1084ever said:

---

Are there any publicly traded oil storage companies that would benefit if/when oil futures go to contango?

---

If you mean KM, Magellan, Enterprise et al., there's probably some benefit they'll reap via incremental tank leases &/or increased storage fees, but balanced by lost variable cost on the throughput side. There's divisions within each that'll do well well, but net basis it's probably flat IMO

Hope this isn't too much of a derail, but I thought it would be best to ask here with all of the traffic. Can anyone recommend someone to do contract work for 3D modeling, general arrangement drawings, etc. for pump skids, LACTs, vessels, etc.?

I feel like the current workload is really more of a one person job so don't really need the engineering horsepower from a big EPC or anything like that. Feel free to PM with any questions or more detail.

That grammar…..ugh…"wreak the benefits"…just wow

An amazing man. RIP.

Yep, great company and know a lot of good people at many levels.

Those guys print $$$$$

"Wreak the benefits" is that like reaping havoc? (Sic)