Wow, wow, wow: about a week ago I mentioned the only way upstream companies could grow. LOL. Now, validated. See RBN Energy below. Wow.
Fight of his life: he's been through worse, but right now Jim Cramer looks like he could be very, very vulnerable. Jim coined "FANG." He says he is now trying to get the "N" out of there. CNBC now shows chart of F.A.A.N.G. New mantra:
Buy real companies making real money on real profits.
NFLX: in free fall. Pre-market suggests it could fall another 20% today. But, the fact remains: NFLX is way ahead of what the other streaming companies are doing. NFLX is cash flow positive and it will be years before other streaming companies will be cash flow positive. At the open, drops $126; drops 25%; now trading well below $400. Salvation:
- pivot to metaverse
- (on a side note: hate him or love him, Zuckerberg's pivot seems to have been incredibly prescient)
- buy a huge gaming company
Bitcoin: it got much worse overnight; early in the evening last night, down 5% in after market trading; this morning, pre-market trading, trending toward down 10%.
INTC: to build $20 billion chip factory in Ohio.
Investors: time to average down? Buffett's advice? Memo to self: google Buffett quote greedy fearful.
Disclaimer: this is not an investment site. Do not make any investment, financial, job, career, travel, or relationship decisions based on what you read here or think you may have read here.
Gasoline demand: is anyone paying attention? See this post.
*********************************
Back to the Bakken
Active rigs:
| $84.97 | 1/21/2022 | 01/21/2021 | 01/21/2020 | 01/21/2019 | 01/21/2018 |
|---|---|---|---|---|---|
| Active Rigs | 28 | 12 | 53 | 67 | 58 |
Friday, January 21, 2022: 35 for the month, 35 for the quarter, 35 for the year
- 37336, conf, Whiting, Miller 44-10TFHU, Sanish, nice well, but not all that great for the Sanish; first production, 8/21; t--; cum 30K 11/21; see this post.
RBN Energy: upstream consolidation surges on drive to maximize cash flow. Archived.
In March 2020, the collapse of the OPEC-plus coalition, the initiation of COVID-19 lockdowns, and other factors pushed the U.S. E&P sector to the brink of insolvency. Crude oil prices had crashed to $20/bbl — one-third their level at the start of that fateful year — and producers had shifted to survival mode, slashing capex, cancelling infrastructure projects, and eyeing new, more dire worst-case scenarios. Who would have thought that only 22 months later E&Ps would be winning back investors and enjoying sky-high share prices? Of course, the recovery in commodity prices played a major role in this reversal. But another driver has been an unexpected wave of corporate consolidation that has allowed many E&Ps to boost their inventories of high-margin assets, accelerate free cash flow generation, and grow shareholder returns while slashing capital and corporate expenditures. In today’s RBN blog, we examine the forces behind — and the implications of — the most important surge of corporate upstream deals in two decades.
In the past 18 months, the value of announced U.S. corporate transactions in the E&P space soared to $82 billion, more than eight times the total of the previous 12 months. Most significantly, these deals involving publicly traded companies accounted for three-quarters of total M&A transaction value and included more than 20 transactions valued at over $400 million. Concurrently, several major private equity firms have been merging their portfolio companies into a single entity — or “smash-co,” to use the industry term.
One can't help but think that the March 2020 collapse was staged. Whatever happened to Harold Hamm's attempt to find out the truth of that fiasco? I always have doubted the so called reliance of gas prices on the price of oil. If this were an iron clad fact then when oil hit -$40. a barrel, gas should have been free or better yet customers given a rebate on filling up their tanks.........but we all know better at this point.
ReplyDeleteWhen arbitragers in the oil market sign a contract for oil, they are signing a contract that says they will take delivery of oil -- real, physical oil. Many of these arbitragers are working out of offices in cities like NYC and literally have no storage facilities for oil. My hunch is that the collapse occurred simply because more oil was bought by contract some months earlier than there was storage available for this oil. These white-collar folks in high-rise buildings were doing anything they could to "sell" their oil -- if not, they were going to pay day-rates on storage wherever that oil happened to be at that moment in time -- because they themselves had no storage facilities. And so, they sold their oil at a loss ("the collapse" to negative numbers) simply because there were no other options.
DeleteThat's why the oil community needed a new "WTI benchmark," other than Cushing so this would not happen again. And we now have that new benchmark, a Texas Permian WTI benchmark.
Oil is the number one commodity traded around the world; millions (?), certainly thousands of traders involved -- no one can control / corner the oil market like the Hunt brothers tried cornering the silver market some decades ago -- so, no, the "collapse" was not "staged" by one or two or more traders.
I was not aware of Harold Hamm's attempt to find the cause: the fact that nothing has been said since then suggests there was no "smoking gun" to suggest a "staged" collapse.
Well stated Bruce. Have always looked at the "collapse" as a perfect storm of bad coincidences/timing
ReplyDeleteThank you. That reply was certainly "not ready for prime time" but I thought the reader's comment demanded my thoughts on the subject. I appreciate you taking time to weigh in.
Delete