Cities Can't Ban Fracking In State -- Colorado State Supreme Court -- May 3, 2016

From the EIA today:

Since June 2014, decreases in crude oil and natural gas prices have reduced household energy costs. According to initial figures from the U.S. Bureau of Labor Statistics (BLS), the chained consumer price index for urban consumers (C-CPI-U) decreased by 1.2% from June 2014 to February 2016. Lower energy prices had a significant impact on this decrease in spite of increases in the food and shelter components of the overall index, which represent larger shares of household expenses. --- EIA

And that's despite the administration's best efforts to kill the US energy sector. Maybe Hillary can complete the task.

The EIA finding/report today comes close to a Geico Rock Award nomination.

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Lou Holtz endorses The Donald.

Colorado Supreme Court: local rules banning fracking are illegal. The Wall Street Journal is reporting:

The Colorado Supreme Court ruled Monday that municipalities can’t bar hydraulic fracturing, a long awaited decision in a legal battle that has rippled across this energy rich state.

In a pair of rulings, Colorado’s high court found that measures passed by the cities of Fort Collins and Longmont that sought to halt the controversial drilling technique known as fracking “were preempted by state law and, therefore… invalid and unenforceable.”

The decisions uphold lower court rulings and come amid a long-running battle over fracking across northeastern Colorado, which sits atop a large shale formation.

In recent years, cities along the state’s fast growing Front Range have sought to limit the practice amid concerns that drilling is taking place too close to population centers and complaints from environmental groups.

Active rigs:

	5/3/2016	05/03/2015	05/03/2014	05/03/2013	05/03/2012
Active Rigs	27	86	185	192	209

RBN Energy: financial struggles, chapter 11, asset sales, asset purchases.

On Friday of last week, two more large E&Ps filed for Chapter 11 – Ultra petroleum with $3.8 billion in unsecured debt and Midstates Petroleum filing with a $2 billion debt-for-equity swap deal. 

Over the past 18 months there have been 65 E&P bankruptcies – mostly small companies, but nine companies make up 75% of the $28 billion in total debt exposure of all of these firms.   This chaos in the oil, gas, and NGL markets is having all kinds of financial and strategic ramifications.  One of the consequences of all of the turmoil could be a wave of asset sales, demands for contract restructuring, and more bankruptcy proceedings. 

But there can be some real opportunities in all this chaos if you know what to look for, understand where the needs and pitfalls can lie, and especially to recognize that “the sun’ll come up tomorrow.” 

For the last decade, the U.S. oil and gas industry has been very exciting.  It continues to be very exciting.  Of course, there are different kinds of “exciting.” 

There’s skiing in the Rockies, hurtling down a steep slope at 35 miles per hour, with nothing between you and disaster but your skill and your luck.  That’s the kind of excitement some look for on purpose.  Then there’s driving home to Denver, hurtling down I-70 at 70 miles an hour and finding an unexpected patch of ice on a downhill curve.  That’s not the kind of excitement you go looking for on purpose.

From the mid-2000s to 2014, the oil and gas industry was the first kind of “exciting,” -- companies running and gunning to get out in front of competitors, developing a resource that changed the world by reducing the U.S. dependence on imported energy and pushing global markets into oversupply, with a disastrous impact on crude oil prices.  So for the last 18 months or so, the industry has been experiencing the second kind of excitement, the I-70-on-ice kind, where you depend on all of your skill and luck just to keep you from hitting something or going off a cliff.  Like I-70, this is not the kind of excitement you seek out.

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Not All Bankruptcies Are In The Oil Patch

Aeropostale. The Wall Street Journal is reporting:

Aeropostale is preparing to file for bankruptcy protection this week and close more than 100 stores, according to people familiar with the matter, as the teen-apparel retailer contends with mounting losses and falling sales.

New York-based Aéropostale plans to seek chapter 11 protection in the next few days before May rent payments are due, the people said. It is in advanced talks with specialty lender Crystal Financial LLC on a loan to finance its operations in bankruptcy, they added.

The retailer would close more than 100 of its roughly 800 stores soon after filing and potentially more later, the people said. The company plans to reorganize around its remaining stores, but the precise contours of its restructuring plan remain unclear.

New York Fairway Supermarkets. The Wall Street Journal is reporting:

New York supermarket chain Fairway Group Holdings Corp. said late Monday it had filed for chapter 11 bankruptcy protection, months after warning of the possibility of breaching its loan agreement.

Fairway, the parent company of the U.S. grocery chain Fairway Market, and some of its units have filed a “joint prepackaged” chapter 11 plan of reorganization to implement financial restructuring.

The reorganization will eliminate about $140 million of senior secured debt and provide financing to restructure the firm’s balance sheet, Fairway said. It added that store operations were expected to continue with no impact on customers, suppliers or employees.

Sports Authority. Bankruptcy could close remaining stores. CNN Money is reporting: 

Sports Authority, the struggling chain which filed for bankruptcy in March, is weighing a sale of its assets that could be end up closing most if not all of its 450 stores. [Update, May 19, 2016: Sports Authority will close all stores.]

Under its original bankruptcy filing, the chain had planned to close 140 stores and to keep the rest open under the Sports Authority name.

But attorneys for Sports Authority notified the federal bankruptcy court in Delaware last week that it could not win approval for that reorganization plan from its creditors and lenders.

But experts say it's now likely that the large majority, if not all, of the chain's stores will go away in relatively short order.