Tesla: files to postpone annual meeting. Perhaps more to follow.
Occidental, EOG: upgraded at SunTrust on free cash flow.
Movies: AMC reverses course; will require masks on theater-goers.
Apple: may announce Intel divorce as soon as Monday, June 22, 2020.
Exxon: restores Guyana oil production.
Rigs don't matter: this is such a great article.
- Natural gas production didn't drop as much as we had thought at the beginning of the oil production shut-in.
- Our NG bull thesis was predicated on the idea that once US shale oil producers shut-in production, the proportional amount of associated gas production will be lost. Since US oil production fell from ~12.5 mb/d down to ~10 mb/d, this drop of 20% should've translated to ~6 Bcf/d of production loss in associated gas production. Instead, we've only seen a drop of ~3 Bcf/d.
- Isn't that interesting? LOL. Too bad HFIR didn't go into greater depth on why natural gas production did not drop. Something wrong with their model? Will they adjust their model?
- For bulls, it looks like all HFIR can count on is hotter weather, increased a/c demand. We'll see.
Wuhan flu: may have been in Italy as early as December, 2019. If true, the global strategy to flatten the curve may have been the worst possible strategy chosen in early 2020. If so, the CDC / WHO let policy makers down. It appears that in the big scheme of things, the "lockdown" did little to change the virulence of the virus or its spread, and has merely drawn out the pandemic. We have not even entered the "second wave" which many predicted by now.
And right on cue, I found this after posting the above note:
One last comment: all of this suggests no one really understands viruses. Or at least, how to make rational public policy.
Couple of reasons for slower decline of gas production;
ReplyDelete-Shale gas wells deplete at a lower rate than shale oil wells, 50%vs. 70% for first year.
-With less gas production from shale oil, now less flaring of gas, still plenty going into pipelines.
-Rig count down for oil wells is -75%, vs -58% for gas wells as per EIA report.
And it would seem that HRIF analysts would have known all that. They must have missed something else. Or their model was too simplistic. It would have been interesting to hear more from them -- why they think their models were wrong.
DeleteMy model is simplistic, rig count, depletion rate, flaring, pipeline constraints
ReplyDeleteQuality data available for free on the net including your website. I'm in my 60s now and remember the 1973-4 fuel shortage, and have seen my fair share of ups and downs of oil and ng prices. I like to look at the big picture of supply and demand. Demand vs. price of crude oil has a narrow elastic range. A 3% imbalance of supply vs. demand will easily raise or lower price by 50% or more in a few months.
IMHO is the author of this article does not truly understand the upstream oil/gas business and how the shale revolution has changed it in the past decades.Look back 12-15 years ago when NG price was $8-15 per thousand cuft until the Marcellus was figured out.
The best "detail" you note: a 3% imbalance will drive huge price swings.
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