Pioneer; XOM; Saudi; Tesla; And All That Jazz -- April 2, 2021

Pioneer to acquire DoublePoint Energy assets, press release here:

• bolt-on acquisition
• Midland Basin
• $6.4 billion
  
• 97,000 high quality (tier 1) net acres
• back of the envelope: $6.4 billion / 97,000 net acres = $66,000 / acre
• 27.2 million shares of Pioneer common stock
• $1 billion in cash
• $0.9 billion in debt and liabilities
• forward:
• the deal "will lead to an increase in the expected per share variable dividend beginning in 2022"

At almost $70K/net acre, social media is having a field day with this one. Lots of talk that "we're" back to lack of fiscal discipline in the shale sector. 

Link here.

Link here.

 

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XOM vs BP
Reality vs Renewables

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Saudi Aramco

Aramco may slash dividend -- not "cut," but "slash" dividend -- to boost Saudi economic growth plan. 

Link here. 

 

Saudi Arabia's de facto leader Crown Prince Mohammed bin Salman said on March 30, 2021, that 24 Saudi listed companies, including Aramco and Saudi Basic Industries Corp, or SABIC, and National Shipping Co. will reduce their dividend payouts to the government and redirect the money into the local economy. The plan targets the contribution of $1.33 trillion of domestic capital from the companies over the next ten years.

Government: code for "rich princes."

It was not clear when this decision was made. However, in Aramco's 2020 financial results presentation on March 20, CEO Amin Nasser stated the company intends to pay $75 billion in 2021.

The Saudi economy is floundering, with woes further compounded by the demand destruction caused by the pandemic, seeing its budget deficit widen to about $79 billion in 2020.

Some 40% of the Kingdom's GDP is derived from oil revenues generated by Aramco, according to data from the country's finance ministry.

As part of its pitch to investors during the 2019 IPO, Aramco pledged to issue a $75 billion dividend annually for five years. The Saudi government, which owns 98.5% of the company, is the primary benefactor of this payment. Therefore, the new scheme will see Aramco funds diverted away from the government's budget.

The burden of the $75 billion dividend plus the weak oil price environment due to the pandemic weighs heavy on the company's operations. This has meant it has had to delay payments to its contractors by several months, Platts reported in January.

Additionally, the company was forced to slash its 2020 capex budget in half, to around $25 billion. For 2021, its capex will be an estimated $35 billion, below previous guidance of $40 billion to $45 billion, Aramco said in March.

Meme: cost to lift Saudi oil is less than $5/bbl compared to $50 / bbl for US shale. US shale will cut CAPEX and maintain production (maybe increase production); and, here we have Saudi Arabia having to raise CAPEX to meet demand, much of it domestic, for air conditioning. 

Salman's announcement drew skepticism from analysts on whether it will provide an economic boost to the country.

"While this may drive diversification efforts, there is a risk that it leads to a misallocation of resources and damages economic growth in the long run," said Capital Economics, a UK-based consultancy.

Inshallah. 

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Luxury Used Car Worth $20,000;
Needs $22,000 Battery Replacement

Link here. 

The good news: the new battery will be even better.

And "no" maintenance according to the seller.

Predicted years ago on the blog. 

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Tesla (Almost) Meets Delivery Goal
Two Years Late, But I Don't Think Anyone Cares

Link here.

Tesla announced today, April 1, 2021, April Fool's Day, that it finally almost reached 500,000 deliveries in a calendar year, with its 499,550 vehicles delivered globally in 2020, and that it finally hit its target of producing 500,000 vehicles a year – two years behind its promises. 

Back in May 2016, it had promised in its quarterly report that it would produce 500,000 vehicles in 2018. But it didn’t happen in 2018, far from it, and it didn’t happen in 2019 either. It finally happened in 2020.

That promise in May 2016, like so many of Tesla’s and CEO Elon Musk’s promises, had caused its shares to surge.

Tesla will report 1Q21 deliveries sometime next week, previously posted. The linked article provides projections of a few analysts. The number to watch: 150,000 units.