Poking Around -- June 19, 2022

ELMS: files for bankruptcy protection; previously posted. So, I was curious. Any news on Rivian? 

Link here. Three days ago. 

From that linked article:

CLR: Why might Harold Hamm want to go private? Link here. From the linked article:

Department of Mineral Resources (DMR) Director Lynn Helms told reporters on Tuesday that North Dakota’s privately held exploration and production (E&P) companies have returned to pre-pandemic production levels, while output from their publicly traded counterparts is still well below that amount.

“Going private appears to have opened the door to better leveraging your cash flow, to private venture capital, to less scrutiny from the administration,” Helms said. “If we see more of that, I think we could see more rapid production growth.”

Public E&Ps have faced pressure from investors to keep production in check, and to deliver on environmental, social and governance metrics. 

Public E&Ps have faced pressure from investors to keep production in check, and to deliver on environmental, social and governance metrics. Helms also referenced enhanced climate disclosure requirements that the Securities and Exchange Commission (SEC) has proposed for public E&Ps.

The new SEC rules if adopted would require public E&Ps to disclose risks climate change poses to their business, and to disclose their own greenhouse gas emissions.

“That’s probably the biggest [factor] pushing companies to want to go private, and get out of the public investment realm because those SEC requirements are very draconian and very difficult to meet,” Helms said. “It’s also driving public investment out of the oil and gas area.”

In a letter to Continental employees explaining the rationale to take the company private, Hamm said, “We have consistently said that as long as we were appreciated in the market, we would remain a public company, but if our opportunities were limited by being public, we should look at alternatives. We have determined that the opportunity today is with private companies who have the freedom to operate and aren’t limited by public markets, similar to the way that we operated approximately 15 years ago, prior to becoming a public entity.”

Helms, meanwhile, said North Dakota’s public E&Ps are planning to increase production in the state by 1-2% in 2022, while private producers are “much more optimistic than that.” He added, “I think it’s been borne out by what we’ve seen in the rig count.”

The trend is playing out elsewhere in the Lower 48 as well. In the Permian Basin, private companies more than doubled their collective rig count between January 2021 and April 2022. The Permian privates are expected to raise their collective capital spending to nearly $9 billion in 2022 from $5.8 billion in 2021, according to recent analysis by Rystad Energy.

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