In a long note like this, there will be content and typographical errors. If this is important to you, go to the source.
CLR is scheduled to report 3Q21 earnings, November 1, 2021.
EPS: previous two quarters:
- estimate, both quarters: 55 cents:
- actual, both quarters: 91 cents
EPS: 3Q21, forecast: $1.17
This might be a good time to remind folks of CLR's 2Q21 earnings call. Transcript here.
Some highlights, facts and comments interspersed; hard to tell the difference:
- earnings call focused mostly on the Bakken;
- no mention of the Tuscaloosa Marine Shale; watch for that in the 3Q21 earnings call; my hunch: won't be mentioned
- significant free cash flow being returned to shareholders
- quarterly dividend increased to 15 cents per share; previous 11 cents
- opted for $1 billion share buyback vs larger dividend
- record-breaking $634 million free cash flow
- reduced net debt by $284 million; 2Q21 debt: $4.59 billion
- $284 million / $4.59 billion = at this rate, only 16 quarters to go, or four years -- in the big scheme of things, that seems pretty amazing;
- ytd: $1.34 billion in free cash flow
- most recent quarter accounted for 21%; straight-line: 25%
- exceeded production guidance; currently delivering 167,000 boepd
- hedging
- unhedged on crude oil
- natural gas: 50% of CLR's volume currently hedged
- but no hedging whatsoever in 2022
- free cash flow
- as of the end of 2Q21, CLR had already generated free cash flow forecast for the entirety of 2021
- free cash flow potential this year: $2.4 billion; that would be at a slightly fast rater than first half 2021;
- CAPEX: has not changed; reinvestment rate is trending toward 35%
- debt outlook looks great at $50 - $55 WTI
- production forecast, for 2021:
- 900,000 to one million bcf/day (that needs to be fact checked; transcript error)
- reminder: new futures contract to start trading by end of year: the Midland WTI American Gulf Coast
- task force led by Harold Hamm; along with efforts by Magellan and EPD
- operations
- brought on 108 gross operated wells: 70 - Bakken; 38 - Oklahoma
- Bakken type curves right on track
- 45% more boe per $1,000 spent in the first twelve months than CLR did in 2018
- DAPL: 1.6 million bopd; Bakken produced on average 1.1 million bopd in May, 2021
- Long Creek Unit: eleven completions in 2Q21; costing $6.1 million / well
- most interesting: CLR feels there is an excess of five million bbls/day crude oil production on a global basis;
"CLR feels there is an excess of five million bbls/day crude oil production on a global basis;"
ReplyDeleteVery rational. They believe in the OPEC+ withdrawn production. Unlike the peak oiler conspiracy nuts that think OPEC+ can't pump.
I think those are two separate issues.
DeleteBut if there's a 5-million bopd overhang, for whatever reason, it certainly explains why shale operators are hesitant to drill more wells.
WTI strip indicates markets see a danger.
ReplyDeleteprompt (NOV21): $82.66
DEC22: $72.81
DEC23: $66.14
DEC24: $61.79
Also, even shale operators look at the future price, not prompt. If you order a rig now, you're probably not getting the first oil until mid 2022. IOW you're not getting 80.
That said, I also think Brandon is depressing activity (because even $65 is healthy). Both directly (leasing/permit blocking) as well as just the implicit threat. Who wants to invest in gathering pipelines when there's a fear of future windfall profits taxes, more transmission pipe projects getting kiboshed, etc.?
Companies look at political risk, when evaluating projects. They do the same with the US as with Nigeria. Granted Us is better. But it's still affecting decisions. Look at the money companies lost leasing Marcellus acreage in NY state.
It's similar to how companies look at investing in California. Doesn't mean they won't ever do it...just that the projects have a higher hurdle. And when you raise the hurdle, less stuff clears it.
I think markets take a percentage risk approach. Obviously OPEC+ has good discipline now. But as time goes on, more and more danger of cohesion cracking. So the prompt is at 82. But if say, half of that 5 MM dropped (and Saudis could do that on their own overnight, or the cheaters could over time), we're at $40. So markets say 50% chance of that happening two years from now. So price is down 20.
DeleteAnd of course the financial markets can't predict the future. But it's like betting on the ponies. They incorporate the risks (horses) into future prices (odds). And we might be 100 or 40, two years from now. Who knows. But the overall "track odds" is for prices to drop.
Many, many articles on this very issue. I was going to post something regarding those articles. I will probably get around to it, but right now not they don't particularly interest me.
DeleteThese are some random one-liners that would require much analysis:
1. This is called backwardation and it's been in a "thing" for quite some months now. Nothing new.
2. If oil companies can make money on $25 WTI (see COP in the Permian) they will do well at $60 oil.
3. Unless the DAPL is shut down (still a possibility) the meme that the Bakken is landlocked is just that ... a meme.
4. I'm not convinced we will see that GTL project in Trenton, but if we do, that's a game-changer for the Bakken.
5. Lots of talk about Biden affecting fossil fuels. There's a much, much bigger issue. Much bigger than Biden. That issue is literally mentioned every day, multiple times, on CNBC, and in corporate earnings calls, especially in the energy sector. We'll see if anyone knows what I'm talking about. It's pretty obvious. I'm just curious.
Does anybody ever look at these numbers?
Delete$80 now.
$70 a year from now.
$60 through 2024.
Analysts can't even agree on what the price of oil will be one month from now, much less three years from now.
But $60 through the next three years is a pretty good bet when you can make money on much less than this.
With regard to oil dropping to $20 ... along with Bitcoin dropping to $100. LOL.
DeleteAt $20 oil, China and India will do very, very, very well. Saudi Arabia? Not so much.
Delete