RBN Energy: oil producers plot strong investment, output growth despite price headwind.
Hurricane Harvey and major flooding in Houston and other areas may affect energy markets and lead the 21 exploration and production companies in our Oil-Weighted Peer Group to readjust their 2017 investment programs. But in the weeks leading up to the Lone Star State’s most catastrophic weather event in decades, these E&Ps remained committed to their sharply accelerated 2017 capex plans.
Their updated guidance issued with first-half 2017 earnings releases reveal a 44% increase in 2017 capital spending over 2016’s level to $26.5 billion, only a 2% reduction from the $27 billion initially budgeted for this year. The peer group also stayed confident in the long-term profitability of the major U.S. resource plays, which are receiving 80% of their 2017 capex, despite investor concern about lower prices that have triggered a 23% decline in the median enterprise value per barrel of oil equivalent for the Oil-Weighted peers since December 2016. Today we continue our review of updated capital spending plans by 43 U.S.-based E&Ps, this time with a look at companies that focus on oil.Bakken 2.0: one year out, new Bakken wells are producing more than they were producing after the initial frack.
From the RBN Energy post linked above, regarding the Bakken:
Whiting Petroleum announced the largest reduction in capital spending — $148 million, or 14%, to $912 million (blue rectangle in Figure 1) — which was largely triggered by a decline in net cash from operating activities to $111 million in the second quarter of 2017 from $161 million in the same period in 2016. The company is dropping the rig on its Redtail field in the DJ Basin, where production declined to 6% of total output from 8% at year-end despite the allocation of 40% of total capex. The company cut its production growth forecast by 3% because of the sale of non-operated Williston Basin properties, but it still projects 14% output growth between the first and fourth quarters of 2017 because of enhanced completion techniques on its remaining core Bakken fields.WTI: operators are contractually committed to provide a certain amount of oil to refiners. If the spot price of oil drops significantly, operators can buy "cheap oil" on the open market to meet their contracts, keeping their own oil in storage underground.
Continental Resources and Hess Corp. each reduced its 2017 capital budget by $100 million but they also boosted their production forecasts by a total of 4.6 MMboe.
Utilities: CNBC reporting that utilities buck trend, move higher; utilities set record intraday high.
Consumer confidence index: beats expectations, 122.9 vs 120.7. The present situation index added nearly six points to 151.2, near a 16-year high. From CNBC, I may have mis-heard/mis-reported, but I think that's what I heard. Here's the story over at Yahoo!News.
US consumer confidence jumped for the second straight month in August, surpassing expectations amid buoyant feelings about the present situation.
However, the survey showed consumers' are not expecting the economy to improve much in the short-term.
The Consumer Confidence Index jumped nearly three points to 122.9, while the present situation index added nearly six points to 151.2, near a 16-year high. But the expectations index was up just a point to 104, after jumping more than three points in July.
Economists had expected consumer sentiment to remain about flat from July at 120.3. The index is still down from a high recorded in March of 124.9 points.