Musings -- May 16, 2016; Sandridge Files For Bankruptcy

Sandridge Energy files for bankruptcy.

...filing for bankruptcy protection Monday after reaching a deal with its creditors to swap $3.7 billion in debt for control of the oil and gas company.

The Oklahoma City company filed for chapter 11 protection in U.S. Bankruptcy Court in Houston after reaching a deal with the majority of its lenders and bondholders on the terms of a “prearranged” debt restructuring pact.

SandRidge Chief Executive James Bennett said the proposed debt swap, which requires court approval, will allow the reorganized company to concentrate on oil and gas exploration and development in our active Oklahoma and Colorado project areas.

The company will stay open during the chapter 11 case and expects to exit bankruptcy “with minimal disruption to our business,” Mr. Bennett said.

SandRidge says it has enough cash to fund its ongoing operations without a bankruptcy loan. Among its initial bankruptcy request is the authority to pay operating expenses associated with production activities, royalties and wages to its workers. The company also intends to pay all suppliers and vendors in full during the bankruptcy.

This is sort of what the government does when it does bailouts. 

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Page 3 (the most important page of The Wall Street Journal), above the fold, the headline: mass balloon releases prompt lawsuit. The mass balloon releases are the balloons that are released at the beginning of college football games, for example. Activists say such mass balloon releases after an "adverse effect on the environment.

On the op-ed page, the WSJ editors remind us that activists are not concerned that the Obama administration feels 5,000 bald eagle deaths/year is not too big a price to pay for wind energy.

And so it goes.

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Daniel Yergin who is probably the most trust name in "oil" has a long op-ed piece in today's WSJ: Where oil prices go from here.?With political change in Saudi Arabia and the market rebalancing, look for $50 a barrey by the fall. As I've said before, $50/bbl for Saudi Arabia is no better than $30 oil when they budget for $100 oil and are losing $5 billlion in cash reserves each month.

For the US oil and gas industry, $40 oil is a lifeline, $50 oil means more will survive, and $60 oil -- long term -- is just fine.

It helps that GS is now "talking oil up" in light of the imminent SaudiAramco IPO. Monetizing less than 5% of their company suggests that it's more about the headline than the substance of the story.

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Putin, Twitter, And The CIA

Twitter says it will no longer allow the CIA to mine its data (at least not a formal, paying basis). Twitter will continue to allow Putin to mine is data. I can't make this stuff up.