AuthorTopic: Fracker Debt Bubble  (Read 120913 times)

Offline RE

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🛢️ Rig Count Crashes Most In 4 Years As Oil Shock Rocks U.S. Shale
« Reply #480 on: March 28, 2020, 08:00:44 AM »
...and another House of Cards comes crashing down...



They probably have run out of money to keep paying Moriart to Troll.   :icon_sunny:

RE

https://oilprice.com/Energy/Energy-General/Rig-Count-Crashes-Most-In-4-Years-As-Oil-Shock-Rocks-US-Shale.html

Rig Count Crashes Most In 4 Years As Oil Shock Rocks U.S. Shale
By Julianne Geiger - Mar 27, 2020, 12:15 PM CDT


Baker Hughes reported that the number of oil and gas rigs in the US fell again this week by 44, falling to 728, with the total oil and gas rigs clocking in at 278 fewer than this time last year. It is the largest single-week drop since February 2016.

In the runup to the published rig count, analysts were predicting that the results would show a steep drop off in the number of active rigs, and three of the biggest drilling operators in Texas made significant budget cuts, indicating that the industry is bracing for tougher times ahead.

The number of oil rigs decreased for the week, by 40 rigs, according to Baker Hughes data, bringing the total to 624—a 192-rig loss year over year.

The total number of active gas rigs in the United States fell by 4 according to the report, to 102. This compares to 190 a year ago.

The miscellaneous rig count stayed the same this week, for a total of 2 miscellaneous rigs.

Despite the sharp drop off in rigs, the EIA’s estimate is that the United States produced 13 million barrels of oil per day on average this week, just 100,O00 bpd off the all-time high.

The number of rigs in the most prolific basin, the Permian, fell by 23 this week to 382, compared to 454 rigs one year ago. The second largest basin, the Eagle Ford, lost 4 rigs this week, for a total of 63 rigs, compared to 78 a year ago. 
Related: Not Even The $2 Trillion Stimulus Package Can Save Oil Markets

The WTI benchmark at 12:15 pm was trading at $21.26 (-5.93%) per barrel—almost $3 per barrel below last week levels as market fears entrench deeply that the industry will get squeezed beyond repair between oversupply coming from Saudi Arabia and Russia, and lack of demand coming from the Covid-19 lockdowns that are widespread throughout the world’s largest oil consuming nation, the United States.

Further pressure was put on oil prices today when it became clear that the $2 trillion stimulus bill might not sail through the House unopposed, as fiscal hawks threaten to delay the process.

The Brent benchmark was trading at $27.33 (-4.61%)—roughly $2.50 per barrel below last week’s levels. 

Canada’s overall rig count decreased by 44 rigs as well this week, to a total of just 54 rigs. Oil and gas rigs in Canada are now down 34 year on year.

WTI was trading down by 4.42% on the day at 1:08pm EDT, with Brent trading down 3.60%.

By Julianne Geiger for Oilprice.com
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Offline RE

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🛢️ Banks Could Start Seizing Shale Assets
« Reply #481 on: April 11, 2020, 05:15:09 AM »
Maybee they'll seize Moriarty's assets!  :icon_sunny:

RE

https://oilprice.com/Energy/Crude-Oil/Banks-Could-Start-Seizing-Shale-Assets.html

Banks Could Start Seizing Shale Assets
By Irina Slav - Apr 10, 2020, 11:00 AM CDT


U.S. banks are preparing to start seizing the assets of ailing shale oil companies, Reuters reported today, citing unnamed sources in the know, who said that the banks must take this dramatic step if they want to avoid losses on the loans they extended to the industry.

U.S. shale companies rely heavily on loans, and now that they are facing the perfect storm of slack demand and low oil prices—even after the tentative deal OPEC+ announced yesterday—the chances or survival for many of them are slim to nonexistent.

The situation is aggravated by the fact that new wells are falling short of expectations concerning yields. This made banks wary of extending more loans to the industry a few months ago before the worst hit. Now, with more than $200 billion in debt backed by their assets, many oil and gas companies in the shale patch are on the brink.

Reuters reports that several large players in the shale field have hired debt advisors, including Chesapeake Energy Corp, Denbury Resources, and Callon Petroleum. Meanwhile, Whiting Petroleum became the first oil company to file for bankruptcy protection, citing the “severe downturn.”

Others, including the supermajors, are slashing spending, cutting costs, and asking oilfield service providers for substantial discounts for their services.

Meanwhile, even the news that OPEC+ was ready to cut 10 million bpd in daily production did not do much for prices. Both Brent crude and West Texas Intermediate were down at the time of writing, with WTI at $22.76 a barrel, down by more than 9 percent. Part of the reason was that few believe these cuts will be enough, and another part is that not everyone in OPEC+ is on board with the cuts, with Mexico balking.

By Irina Slav for Oilprice.com
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Offline JRM

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Re: Fracker Debt Bubble
« Reply #482 on: April 11, 2020, 09:56:18 AM »
Perfect timing for a perfect storm.
My "avatar" graphic is Japanese calligraphy (shodō) forming the word shoshin, meaning "beginner's mind". --  http://en.wikipedia.org/wiki/Shoshin -- It is with shoshin that I am now and always "meeting my breath" for the first time. Try it!

Offline Eddie

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Re: Fracker Debt Bubble
« Reply #483 on: April 11, 2020, 10:04:15 AM »
We will pay to bail out the frackers. Get ready for it. No limits. Bend over and prepare to be taxed.

It doesn't really matter if banks seize some fracker assets. I don't know how many dollars will have to be printed for the dollar to fail, but we are clearly now on the course to find out. No plan B now......just keep printing more until collapse.

The US government and the Fed are supported by one thing...a huge tax base that can be squeezed quite a bit harder than it is being squeezed in recent years. But it can only be squeezed if people have income.  The dollar will fall when the turnip finally gets squeezed and nothing comes out. We are headed there, but we aren't there yet.

If we fall into a real prolonged depression because of Nuevo Corona, we could get there pretty fast.
« Last Edit: April 11, 2020, 10:07:44 AM by Eddie »
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Re: Fracker Debt Bubble
« Reply #484 on: April 11, 2020, 10:08:19 AM »
We will pay to bail out the frackers. Get ready for it. No limits. Bend over and prepare to be taxed.

It doesn't really matter if banks seize some fracker assets. I don't know how many dollars will have to be printed for the dollar to fail, but we are clearly now on the course to find out. No plan B now......just keep printing more until collapse.

That goes without saying. Expect some random bleating about, "preserving American energy independence," or some similarly-strung-together  nonsense syllables.

Funny how the phrase, "how you gonna pay for it"has disappeared from the conservative lexicon, just like "term limits." Expect both to reappear if, in spite of themselves and against all reason, the Ds win in November.
"Do not be daunted by the enormity of the world's grief. Do justly now, love mercy now, walk humbly now. You are not obligated to complete the work, but neither are you free to abandon it."

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🛢️ The Shale Suffering Has Only Just Begun
« Reply #485 on: April 26, 2020, 12:32:53 AM »
Scheudenfreud: Better than Sex.   ;D

RE

https://oilprice.com/Energy/Energy-General/The-Shale-Suffering-Has-Only-Just-Begun.html

The Shale Suffering Has Only Just Begun
By Tsvetana Paraskova - Apr 25, 2020, 12:00 PM CDT


A few weeks before the summer driving season begins, U.S. gasoline consumption has plummeted to levels last seen in the late 1960s, due to the lockdowns to contain the spreading of the coronavirus.

With demand for motor fuel plunging, refiners are cutting crude processing, and crude oil storage capacity in America is filling fast. The glut is set to worsen in the coming weeks, and storage capacity at Cushing, Oklahoma, could be full by the middle of May, analysts say. 

The fast demand destruction in the pandemic threatens to fill up storage across America soon, forcing oil prices lower and forcing oil producers to idle more rigs and curtail more production than initially thought. 

Total U.S. petroleum consumption stabilized in the latest reporting week to April 17 at 14.1 million barrels per day (bpd), up slightly from the 13.8 million bpd estimated consumption in the previous week, which was the lowest weekly consumption level in EIA’s statistics dating back to the early 1990s.

But crude oil and gasoline inventories continued to jump while crude refinery inputs continued to drop, according to EIA’s latest inventory report from this week.

U.S. crude oil refinery inputs averaged 12.5 million bpd during the week ending April 17, which was 209,000 bpd less than the previous week’s average. Refineries continued to cut run rates and operated at 67.6 percent of their capacity. To compare, refiners would typically operate at more than 90 percent capacity just ahead of the summer driving season. But this year, the summer driving season is postponed and is expected to be very weak.

Premium: Oil Storage Nears Its Limit

Gasoline consumption – the most significant part of U.S. petroleum consumption – has crashed the most since the lockdowns began, with the product supplied down by 40 percent to 5.3 million bpd as of the week ending April 17, from an average of 8.9 million bpd in 2020 through March 13.

Even if lockdowns across the U.S. were to be lifted tomorrow, gasoline demand is not expected to stage a V-shaped recovery. Instead, it would likely stay around the current levels for weeks and probably months, pushing both gasoline and crude oil inventories higher.

“As negative gasoline demand is still expected to plague the US throughout May, and a very weak driving season is expected during the summer, it is unlikely that demand for crude will return in the first half of the year,” Rystad Energy said this week.

To deplete swelling crude and gasoline inventories, which are higher than five-year averages, U.S. oil producers will need to cut oil production. They will do this because the market will force them to.

The glut in the U.S. and around the world is set to lead to the biggest-ever monthly decline in fracking activity in America, according to Rystad Energy.

“If we assume that no new horizontal wells are put on production from April 2020 onwards, total LTO production will decline by 1 million barrels per day (bpd) by May, 2 million bpd by July and by 3 million bpd by October to November, with the Permian Basin accounting for more than half of nationwide base decline,” the independent energy research company said.

Premium: The Oil Sector That Will Suffer The Most

According to Wood Mackenzie, “It’s possible that if current conditions continue, Cushing storage tanks could reach capacity by mid-May.”

“In large part, the damage is done for 2020, and we believe this significant slowdown will lead to a decline of one million to two million fewer barrels per day from activity reduction. Production shut-ins will add to that number as storage capacity peaks,” WoodMac said after WTI Crude May futures dipped into negative territory for the first time ever early this week.

As global oil demand is not expected to quickly return to its usual 100-million-bpd level – if ever, considering the change in our lives in this pandemic—U.S. producers are forced to react to the market forces and slash output much faster than they themselves and analysts had expected just a month ago, not to speak of at the beginning of this year. 

The 9.7 million bpd cuts pledged by OPEC+ for May and June will not come close to the demand loss. The OPEC+ intervention – even if every producer in the group fully comply with their quotas (for the first time ever)— will not be enough to prevent oil inventories in the U.S. and the world from overflowing within weeks.

That’s why the real rebalancing act will be the ‘intervention’ of market forces—producers in free markets such as the United States and Canada are not pledging quotas, but their producers are reacting to market conditions and will be slashing output, hoping to weather this perfect storm. 

By Tsvetana Paraskova for Oilprice.com
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Offline JRM

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Re: Fracker Debt Bubble
« Reply #486 on: April 26, 2020, 05:19:10 PM »
We will pay to bail out the frackers. Get ready for it. No limits. Bend over and prepare to be taxed.

It doesn't really matter if banks seize some fracker assets. I don't know how many dollars will have to be printed for the dollar to fail, but we are clearly now on the course to find out. No plan B now......just keep printing more until collapse.

That goes without saying. Expect some random bleating about, "preserving American energy independence," or some similarly-strung-together  nonsense syllables.

Funny how the phrase, "how you gonna pay for it"has disappeared from the conservative lexicon, just like "term limits." Expect both to reappear if, in spite of themselves and against all reason, the Ds win in November.

Sleepy Joe said he was running for another term in the Senate. Need I say more?
My "avatar" graphic is Japanese calligraphy (shodō) forming the word shoshin, meaning "beginner's mind". --  http://en.wikipedia.org/wiki/Shoshin -- It is with shoshin that I am now and always "meeting my breath" for the first time. Try it!

Offline Surly1

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Re: Fracker Debt Bubble
« Reply #487 on: April 26, 2020, 05:27:49 PM »
We will pay to bail out the frackers. Get ready for it. No limits. Bend over and prepare to be taxed.

It doesn't really matter if banks seize some fracker assets. I don't know how many dollars will have to be printed for the dollar to fail, but we are clearly now on the course to find out. No plan B now......just keep printing more until collapse.

That goes without saying. Expect some random bleating about, "preserving American energy independence," or some similarly-strung-together  nonsense syllables.

Funny how the phrase, "how you gonna pay for it"has disappeared from the conservative lexicon, just like "term limits." Expect both to reappear if, in spite of themselves and against all reason, the Ds win in November.

Sleepy Joe said he was running for another term in the Senate. Need I say more?


Last I looked he was running for president. Did I miss a memo?
"Do not be daunted by the enormity of the world's grief. Do justly now, love mercy now, walk humbly now. You are not obligated to complete the work, but neither are you free to abandon it."

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🛢️ Permian Bankruptcies Could Fuel A Buying Spree For Big Oil
« Reply #488 on: April 30, 2020, 02:57:49 AM »
...and the BKs will just keep moving up the ladder.  ::)

Who will be the last Oil Major left standing?

My bet is on Standard Oil, the original behemoth founded by John. D. Rockefeller.

RE

https://oilprice.com/Energy/Crude-Oil/Permian-Bankruptcies-Could-Fuel-A-Buying-Spree-For-Big-Oil.html

Permian Bankruptcies Could Fuel A Buying Spree For Big Oil
By Haley Zaremba - Apr 29, 2020, 4:00 PM CDT


The United States shale revolution is over. Production in the Permian Basin, which spreads across West Texas and Southeast New Mexico, has been slowing for months, but the novel coronavirus took things from bad to much, much worse for U.S. shale. The oil price shock that followed the spread of the COVID-19 pandemic, combined with a massive global oil glut spurred by a spat between with learning OPEC+ member countries of Russia and Saudi Arabia, drove West Texas Intermediate oil prices down to a previously unthinkable -$37.63 a barrel earlier this month.  While shale prices have since moderately rebounded, the Permian Basin is still in bad shape. The oil fields that made the United States the biggest crude oil producer in the world is now seeing tens of thousands of fired and furloughed employees as the region is rocked by a sweep of bankruptcies across the shale sector. Last week CNBC reported that “the oil industry shakeout is just beginning with more production cuts and bankruptcies ahead,” detailing that “U.S. oil companies are already paring back spending and closing wells, but wild trading in the futures market was a warning to curb production now because the world at some point will not be able to store any more supply.”

Just because the U.S. oil industry has hit a rough patch, however, doesn’t necessarily mean that the West Texas shale play is all played out. In fact, it stands to reason that, as competition dries up and blows away like so many tumbleweeds, Big Oil may step in and buy up faltering shale independents.

Related: How COVID-19 Will Change Oil Markets Forever

Not all industry experts agree on this outlook, however. “It may be tempting to think oil giants like Exxon Mobil Corp. will swoop in and pick up smaller crude producers at bargains, given the debt on a wide swath of weaker energy companies now trades at fire-sale prices, reported MarketWatch earlier this week. “But a takeover spree won’t be so easy to pull off, as depressed crude prices leave even the sector’s energy stalwarts without a clear picture of their own product’s worth. There’s also unease about when, and how much, crude will be needed once the coronavirus threat subsides.”

According to Bryant Dieffenbacher, an analyst for Franklin Templeton, “there are a lot of uncertainties, but perhaps the biggest of those is the price of oil.” He told MarketWatch that any potential candidates for mergers and acquisitions in the shale game to be “one-off, and driven by unique circumstances, rather than a widespread industry trend.”

In fact, the extreme volatility of the oil markets has led many industry experts to question whether investors should continue to put their money in oil at all. It was already common sentiment that the oil industry has kissed its glory days goodbye as the world edges further into a global energy transition in the face of catastrophic climate change. Even Saudi Aramco, in the biggest initial public offering in history, acknowledged that they expect to see peak oil by mid-century.

As the pandemic turns the entire global energy sector on its head, the World Economic Forum has suggested that if there were ever a time for an energy revolution, that time is now. The international economics organization posited the question, “as coronavirus shocks the energy sector and economy, is now the time for a new energy order?” in an article earlier this week. The answer, according to their writers, seems to be yes.

By Haley Zaremba for Oilprice.com
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Offline RE

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🛢️ The Wave Of Shale Well Closures Has Finally Begun
« Reply #489 on: May 02, 2020, 04:58:55 AM »
https://oilprice.com/Energy/Crude-Oil/The-Wave-Of-Shale-Well-Closures-Has-Finally-Begun.html

The Wave Of Shale Well Closures Has Finally Begun
By Alex Kimani - Apr 30, 2020, 6:00 PM CDT


U.S. shale oil producers have so far held up admirably, hanging on for dear life amidst the biggest oil demand collapse in history. American producers continued to pump at record highs in March, even after dozens of drillers laid out blueprints to limit production.

But with U.S. storage about to hit tank tops in a matter of weeks and the world deep in the throes of the biggest pandemic in modern history, the inevitable has begun to unfold: The arduous and costly process of well shut-ins.

Oil production in the country tumbled sharply to 12.2 million bpd in the third week of April, a good 900,000 bpd less than the record peak of 13.1 million bpd recorded just a month prior. That's a 7% production cut in the space of only a few weeks and the lowest level since July.

A lot more could be on the way.

More Production Cuts

Oklahoma-based Continental Resources (NYSE:CLR), the company controlled by billionaire Harold Hamm, has ceased all its shale operations in North Dakota and shut in most wells in its Bakken oil field totaling roughly 200,000 bpd.

The company, though, has refused to sell its contracted oil to pipelines at negative prices by declaring force majeure.

Continental has defended its stance by pointing out that the coronavirus outbreak has "...brought about conditions under which force majeure applies" while adding that selling its oil at negative prices constitutes waste.

Continental made the risky gamble of betting that economic growth would lift prices and, therefore, left itself heavily exposed to low oil prices by failing to employ the industry's usual playbook of hedging future production with derivatives.

Continental is in good company, though.

Rystad Energy via CNBC has reported that six major U.S. shale producers will shut another 300,000 bpd of crude in May and June. That's ~100,000 bpd more than April cuts, thus bringing the country's total production cuts to 1.2 million bpd. The cuts will come from Continental Resources, ConocoPhillips (NYSE:COP), Cimarex Energy (NYSE:XEC), Enerplus Corporation (NYSE:ERF), Parsley Energy (NYSE:PE) and PDC Energy (NYSE:PDCE).

Continental Resources is set to slash 69,000 bpd in April and nearly 150,000 in May and June while ConocoPhillips will lower output by 125,000 bpd of oil equivalent, including 60,000 bpd of oil.

Premium: The Oil Sector That Will Suffer The Most

Rystad's head of shale research, Artem Abramov, has estimated that the biggest shale fields--Permian, Eagle Ford, and Bakken--will cut a further 900,000 bpd, 250,000 bpd, and 400,000 bpd, respectively, throughout 2Q20, with shut-ins accounting for a staggering 60% in the early stages.

Expensive Shut-Ins

A well shut-in is considered a drastic action of last resort mainly because it can result in huge or even total loss of production.

That's a big consideration in these dire times, where even oilfield values are descending into negative territory due to liabilities such as plugging wells and land remediation.

Chris Atherton, president of EnergyNet, a company that deals in oil and gas operations, undeveloped acreage and royalty interests, has told Forbes that oilfield prices have tumbled from an average price of $42,000 per net flowing barrel per day when oil prices were around $60/barrel to under $20,000 currently. Buyers started getting picky and sellers more desperate in 2019 when oil prices were still relatively high.

Things have gone to the dogs now, with a shut-in field fetching only half the price of a virtually identical field but with oil still flowing.

As Bob Bracket of Bernstein Research revealed last week, "Shut-ins are not easy decisions. When production shuts-in, problems arise. Multi-phase well flows begin to separate out, while problematic hydrates, waxes, asphaltenes form which will have serious economic implications," citing numerous examples of fairly large wells with flows exceeding 1,000 barrels/day that could not be brought back to life after being shut-in.

That's the main reason why even heavily indebted shale companies, including bankrupt ones like Whiting Corp. (NYSE:WLL), insist on continuing to pump at all costs.
Related: The Death Of U.S. Oil

California Resources Corp. (NYSE:CRC) is a $133.7M (market cap) company drowning in debt to the tune of more than $4 billion due by the end of 2022. The company's average all-in cost per barrel of $35 means that it's losing ~$20 for each barrel of crude it pumps. Yet, the company is unable to shut-in its wells because they require a continuous injection of steam to keep them alive.

Deal Mania

A shut-in well is a tough proposition for a prospective oilfield buyer, too, because it's hard to determine how much oil can be coaxed out, especially after a lengthy layoff.

The only solace for the beleaguered oil sector is that there probably won't be a shortage of takers when the worst is finally over.

Atherton says that his company has 40,000 registered users with access to $17 billion in cash ready to make deals. He has predicted that distressed companies will "turn into a flood of assets available" in a year or so.

The bottom hunters will certainly be waiting to pounce, the downside being that many investments in the space could turn worthless due to the swelling wave of bankruptcy.

By Alex Kimani for Oilprice.com
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