Tuesday, March 7, 2017

Why I Love To Blog -- Reason #25 -- March 7, 2017

In an earlier post that I updated about 5:30 p.m. earlier today I wrote, putting in bold red now which will relate to a SeekingAlpha article linked below:
Down: both the Dow and WTI closed down a bit by the end of the day. The Dow down 30 points (inconsequential); WTI down 40 cents, again, below $53 -- which is really bad news for Saudi Arabia: a) the actual price; b) the "stubborness" of the price to move; and, c) the trend (down).

The Permian
: on that note, those companies paying $40,000/mineral acre in the Permian were also betting on a better price / better trend with regard to WTI. I'm not so sure folks are going to look back on some of those deals and wonder "what in the world were they thinking?" Even at $100 oil, one wonders if one can make the math work at $40,000/acre; and, at $50 -- well, I've said all I should say.
After writing that, I closed the computer, picked up our oldest granddaughter and drove her to water polo practice. At 7:10 p.m. I got back on the computer, only to find this over at SeekingAlpha:
  • ConocoPhillips CEO Ryan Lance says the company is planning for oil in the low $50s for the next couple of years, and says it can "not only survive but thrive in those kind of prices" since the company now boasts some of the lowest breakeven costs in the business
  • "We're thinking lower for longer and we're thinking with a lot of volatility, so we've got to be prepared," Lance tells the CERAWeek energy conference. "We may see $70, $80 in the next couple years [but] if we do, we're going to see $40 on the back end of it."
  • Lance says COP's standard on new projects is that hey must be able to generate a 10% return at $50/bbl for Brent crude
  • the CEO also is surprised that companies are rushing so quickly to increase production out of the red-hot Permian Basin when he says much about the geology of the play still needs to be understood, making mistakes and less productive wells likely

A couple of hours ago I thought about the craziness of $40,000/Permian acre and then this from the CEO over at ConocoPhillips / SeekingAlpha

I know readers disagree with me but a few days ago (or was it yesterday) that I even questioned Exxon's "doubling down" in the Permian.

But for the Saudis: "ConocoPhillips CEO Ryan Lance says the company is planning for oil in the low $50s for the next couple of years." Really, really, really bad news.

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