TGIF -- WTI Holds Above $70 -- June 16, 2023

Locator: 44948GMA.  

101 days of summer: day 20.

• biking weather on scale of 1 - 10: a seven; quite windy
  

Wow. What a day. Yesterday. Today it's going to be even busier as far as blogging goes. A lot of charts to update.

WTI: a reader sent a chart corroborating my thoughts on the price of oil -- thoughts I posted yesterday or the day before.

Short squeeze: it took awhile but I finally one mention of the phenomenon that propelled the market yesterday to new highs across the board. FOMO-->rally-->short squeeze-->profit taking.

Apple: one or two more updates today. Truly incredible, the technology for such a low price. The brand new 15-inch M2 Macbook Air is already on sale at Amazon, from $1,299 to $1,199. 

Atmospheric CO2: new numbers out. No surprises.

My favorite chart: new numbers out and a big surprise.

TGT: Barron's writer "missed" the big story. I'll update the TGT post later.

ERCOT: easily meeting demand. Most recent electricity rates by state (EIA data) posted. Of the cities in the lower 48 (does not include Hawaii or Alaska) guess which major city has the highest electric rate. You might be surprised. Or not.

GDPNow: new chart released yesterday.

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Back to the Bakken

WTI: $70.76.

Sunday, June 18, 2023: 36 for the month; 144 for the quarter, 399 for the year
39398, conf, Kraken, Wiseman 31-36-35-34 2H,
39303, conf, CLR, Meadowlark FIU 8-6H,

Saturday, June 17, 2023: 34 for the month; 142 for the quarter, 397 for the year
38633, conf, SOGC (Sinclair), Grasslands Federal 14-15-2H,

Friday, June 16, 2023: 33 for the month; 141 for the quarter, 396 for the year
39397, conf, Krakken, Wiseman 31-36-35-34 3H,

 

RBN Energy: E&Ps face tougher decisions about allocating dwindling free cash flow.

We’re now in the midst of the summer vacation season, but a recent survey showed that just two out of five Americans are planning a trip that requires a flight and/or hotel stay — the fact is, inflation has whittled away at discretionary income. U.S. E&P companies are in a similar boat. After a brutal decade marked by intense commodity price volatility, oil and gas producers over the past couple of years have won back investors with a new fiscally conservative approach that prioritizes harvesting free cash flow to fund surging shareholder returns. But more recently, lower commodity prices and persistent inflation have significantly eroded the funds available for dividends and share repurchases. In today’s RBN blog, we analyze the increasingly difficult cash allocation decisions oil and gas producers made in Q1 2023 and are likely to face in future quarters.

First, a couple definitions. Discretionary income is what’s left after we pay our taxes and fixed costs like housing, food, and clothing. We can use the remainder to save or invest, treat ourselves to luxuries, donate to charity, indulge in recreation, etc. The equivalent for E&Ps is cash flow from operating activities (CFOA), which is the net income the company generates adjusted for non-cash expenses like depreciation and stock-based compensation, and for changes in working capital. The largest allocation of this cash is investing in replenishing oil and gas reserves and growing production through capital expenditures. What’s left is free cash flow, the funds available to fund acquisitions, pay down debt, and return capital to shareholders through dividends and share buybacks.