COP's EPS Double What Analysts Forecast; At $50 Oil; More Talk Of Natural Gas Pipeline Constraints -- October 26, 2017 -- Venezuela To Default By This Weekend? Big Oil Target: Make Money At $30-Oil

Ford shares jump 1.5% pre-market as earnings blow through estimates -- 39 cents/share vs 24 cents/share a year earlier. Adjusted, 46 cents beat by a wide margin the consensus of 33 cents. This is the important take-away:

• the 1.5% is a non-story
• the big story is this: another US success story -- making America great
• for the past three months, nothing but concerns about how Ford might be doing
• folks wouldn't be buying cars, SUVs, trucks if they weren't optimistic; if the economy wasn't doing well
• this story: reflects the health of the US economy
• remember: GM had great quarter also; link here; cost-cutting; shift to higher-margin trucks and SUVs; shares jumped to record high; reduced glut; blew through estimates; $1.32 vs forecast of $1.14;
• in the case of the automakers, U.S. car and light truck sales have so far defied predictions of a significant slump. September sales hit the fastest pace in 12 years as residents of Texas and Florida rushed to replace cars damaged by storms

Texas Two-Step: two huge Texas companies set to merge. Vistra Energy nears deal to buy Dynegy.  Each company has enterprise values north of $10 billion; may announce a deal as soon as next week.

Russia: ready to exit "production pact deal" with OPEC if pact not extended. Saudi indicates they will push for extension of pact through end of 2018; most of OPEC seems to agree.

Big Oil set to make "Facebook"-level cash with $50 oil: from Bloomberg. 

Crude may still be languishing near $50, but Big Oil is on track to rejoin the world’s corporate elite by squeezing more cash from each barrel.

The five biggest oil producers generated about $34 billion of cash from operations in the third quarter, according to estimates from Jefferies LLC. That puts each of them at least on a par with tech giant Facebook Inc., a welcome return to the top tier of global business after three years on the skids.

The oil majors are reaping the benefits of deep cost cuts, but they’re still not doing quite enough. The target: being able to fully fund dividends and investments at $40, or even $30 a barrel.

“It’s not peak diet yet,” said Dudley, who sees potential for even more stringent cost and spending discipline. “Our industry is going through a great, massive change in the cost structure.”

Total SA, Exxon Mobil Corp. and Chevron Corp. are scheduled to announce results on Oct. 27, BP on Oct. 31 and  Royal Dutch Shell Plc two days later. Here are five things to look out for in third-quarter earnings.

COP: 3Q17 EPS of 16 cents beats by 8 cents. Or another way to put it, earnings per share double  what analysts forecast. Double. More at SeekinagAlpha.

Hess: shares fall on "slashed" guidance for 4Q17.

Whiting: quarterly loss shrinks as oil prices rise. The loss this quarter: 79 cents/share; same period one year ago, $2.47. Whiting posted a third-quarter net loss of $286.4 million, or 79 cents per share, compared with $693.1 million, or $2.47 per share, in the year-ago period. See this post, also.

Excluding one-time items, including taxes and hedging gains, Whiting lost 14 cents per share. By that measure, analysts expected a loss of 20 cents per share, according to Thomson Reuters I/B/E/S. Slides here. Whiting reports 3Q17 earnings:

• EPS: a loss of 14 cents but beats by 6 cents
• revenue: misses by $1.96 million

Whiting Petroleum Corp, the largest oil producer in North Dakota's Bakken shale formation, posted a quarterly loss on Wednesday that was smaller than analysts had expected, due in part to higher crude prices.

The results came the day after Whiting said long-time Chief Executive James Volker would retire and be replaced by Brad Holly, a former Anadarko Petroleum Corp executive.

Whiting carries a debt load that eclipses its market value, and has struggled in recent years to capitalize on its position as a Bakken leader.

• Press release here:
• average production: 114,350 boe/d
• new McKenzie County Koala wells tracking 1.5 million boepd type curve (previously posted)
• new Williams County Nelson wells tracking 1.5 million boepd type curve (previously posted)

Active rigs:

$52.17→	10/26/2017	10/26/2016	10/26/2015	10/26/2014	10/26/2013
Active Rigs	54	36	68	194	182

RBN Energy: is the US gas market headed for more oversupply, pipeline constraints? At least for me, what the headline implies is absolutely staggering for me. Absolutely staggering.

Midstreamers in recent years have been in overdrive to de-bottleneck the Marcellus/Utica natural gas supply region as well as other growing gas supply basins and connect producers to where the demand is increasing. Significant transportation capacity has been added in recent years and much more is on the way.

Constraints are starting to ease and producers are finding relief. But with production growing again, there are signs of potential new bottlenecks on the horizon. The RBN Growth Scenario estimates that Lower-48 gas production could increase to 92 Bcf/d by 2022. Demand is expected to grow too — primarily from exports — but no more (and potentially less) than supply in the same timeframe, leaving the market in a precarious equilibrium over the next five years.

Thus, it will be all the more critical that incremental supply can access what new demand there will be. At the same time, demand growth will be concentrated in one geographic region — in the Gulf Coast states. In today’s blog, we explore the potential risks of overproduction as producers crank up drilling activity.

As we covered in Part 1, after slumping in 2016, both U.S. crude oil and Lower-48 natural gas production are climbing again. At the current price level near $50/bbl — our Cutback Scenario — the RBN Production Economics and Production Forecasting Models indicate that crude production would grow to 10 MMb/d by 2022. If prices climb to $57/bbl — RBN’s Growth Scenario — production would increase to 11.2 MMb/d by 2022. But if prices increase to $65/bbl — as in our Advance Scenario — crude production could rise to 12.5 MMb/d in five years’ time. Invariably, the incremental crude production will bring with it associated natural gas production.

Venezuela: watch for a lot of stories over the next few days about Venezuela defaulting over the weekend or next week. Start here. More than $2 billion due over the next several days.