Top Story | Capex Decrease

Whats News - Week Ending March 7, 2020

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   |    Saturday,March 07,2020

In our Weekend edition of what's news.

From Shale Experts CEO Rons Dixon: A Word of Caution

Since most budgets were originally set using $50 WTI and $2.25 Henry Hub, the fact that crude oil futures are now trading around $43/bbl WTI could pose a problem for E&Ps. If commodity prices follows the forward curve ($43/bbl WTI) then we could see further downward revision of D&C / E&D budgets which would cause spending to fall to the tune of ~25% in 2020 vs 13% currently forecasted.  (currently trending down -13% according to data from 51 U.S. E&Ps).

Here is a chart from select U.S. E&Ps showing % change in Capex for 2020.

What This Means for Rigs, Frac Crews: This would translate into oil rig counts in the high 500s (10-15% reduction) and frac spreads at ~270ish. 

Hedges May Not Be Enough: Even though operators have hedges in place, it is likely not enough to cover the existing drilling & completion programs for 2020. On average, we noticed most U.S. E&Ps were only 45% hedged. However, several companies including EOG, Continental, Centennial and several others have no oil hedges in place.

Prices as of 3/6/2020

New Startups.

New Houston Based Company Gets Startup Capital from Large PE Firm

San Antonio Midstream Firm Scores $500 Million Startup Capital

People on the move.

Extraction CEO Departs Company; Owen Takes Helm

Bonanza Creek Reports Resignation of Director

more people on the move >>

Capital Markets (at market close 3/6/2020)

Stock trading under $1.00 : Chesapeake (NYSE:CHK), HighPoint (NYSE:HPR), Extraction (NYSE:XOG, Denbury (NYSE:DNR), Chaparral (NYSE:CHAP), Laredo Petroleum (NYSE:LPI), Oasis Petroleum (NYSE:OAS), Rosehill Resources (NYSE:ROSE) , Lonestar Resources (NYSE:LONE)

Stocks Trading between $1 and $2 : Ring Energy (NYSE:REI), Southwestern Energy (NYSE:SWN), Callon (NYSE:CPE), Antero (NYSE:AR), QEP Resources (NYSE:QEP), Centennial Resource (NYSE:CDEV), Whiting (NYSE:WLL)

EP Energy plan to emerge from bankruptcy in the next few months.   The company's $3.3 billion in debt was removed.

More capital markets >>

A&D Transactions

Deal Close : WPX closed on its acquisition of Felix Energy Holdings

PE-backed Crestone Peak Acquired ConocoPhillips DJ Basin Property for $380 million. 

Occidental Petroleum is said to be close to selling 1mm surface/4mm mineral acres in Wyoming for $1 billion.

Assets for sale :  Oklahoma E&P with assets in the STACK looking for buyer.

More Transactions >>

Completions/ Frac' Activity

As of March 7, 2020 there were 309 Active Frac fleets/Spreads.

Based on Data compiled from 41 U.S. E&Ps, 2020 completion/frac activity is only planned to be down 7% vs last year.   The 41 companies plan to complete 5,770 wells in 2020 vs 6,176 they completed/frac'd in 2019.

The deflation in oilfield service prices is on full display when you look look and see that operators plan to spend (-13%) less capital in 2020.