CM - There’s no masking the spread of debt flotation - June 2020As has been the pattern, bonds continue to be the preferred way for energy companies to raise cash. As Q2 comes to an end, the industry is closing in on $120 billion principal amount of bond sales YTD, more than triple the $35 billion principal amount of bonds issued in the same time frame last year, according to data compiled by Enverus’ Capitalize platform. Upstream bond issuers this cycle include Comstock Resources (PG.1) and WPX Energy (PG.3). Midstream issuers include Plains All...
Jun 26, 2020
PS - Analyst Notes - June 14, 2020Bakken Differential Outlook: Watching differentials The Bakken has been one of the hardest hit basins from a curtailment perspective as the state regulator indicated over 500mbopd of production had been taken offline in May at the peak. This compares to production in February/March of ~1.45mmbopd. The drop in production alleviated pressure on Cushing and has dramatically improved in-basin pricing with spot realizations moving to a slight premium to WTI at one point. Given the...
Jun 24, 2020
A&D - Black Stone makes $155MM trimming Permian minerals - June 2020Black Stone Minerals, the largest pure-play oil and gas mineral and royalty owner in the US, struck two deals to sell mineral and royalty properties in the Permian Basin for a total of $155 million. The move continues both the company’s debt-reduction efforts in response to lower commodity prices and its shift in focus to its large natural gas holdings primarily in the East Texas Haynesville. Black Stone estimates that the production associated with the divested properties is 1,800 boe/d, or 4%...
Jun 12, 2020
PS - US E&Ps execute significant Q2 oil curtailments - June 2020The coronavirus pandemic has resulted in unprecedented demand destruction for oil markets. The International Energy Agency projects that global demand will fall by a record 9.3 MMbo/d in 2020. In the middle of the lockdown, April demand was down 29 MMbo/d YOY. In response to greatly oversupplied oil markets, OPEC+ agreed in mid-April to cut 9.7 MMbo/d in May and June. The IEA estimated that global output would fall 12 MMbo/d in May. Outside of the OPEC+ cuts, major and independent US producers...
Jun 03, 2020
PS - E&Ps narrow focus as WTI rules some plays uneconomic - June 2020Capex revisions, reductions in operational plans and curtailments continue to remain at the top of the news for E&P companies. WTI spot prices spent the last two weeks of May in a $32-$35 range, marking a notable improvement from April’s last two weeks, which saw negative to sub-$20 prices. Now in the last third of Q2, many industry watchers seem to feel like we’ve weathered the worst 2020 has to serve. Of course, we’ll all get to re-live the horrors of H1 in late July and August when Q2...
Jun 03, 2020
MCS - Cimarex Energy Highlights - May 20, 2020Cimarex Energy participated with very low working interest in 19 gross wells that were brought online during Q1 in the Midcontinent. At quarter’s end, the company had stakes in 47 DUCs (4% WI) in the region, which it does not expect to be completed this year. Cimarex does not anticipate any drilling activity either. Q1 production fell 15% sequentially and 20% YOY to 72,700...
May 20, 2020
CM - Cimarex makes deeper spending cuts, stays flexible - May 2020Cimarex Energy is decreasing its original $1.25-1.35 billion guidance by 55- 60% to $552.5 million at midpoint, even deeper cuts than the 40- 50% spending reduction announced in March. The new budget contemplates spending $300- 400 million on drilling and completions and $40 million on midstream and saltwater disposal. The company said it will remain flexible for H2, with the ability to adjust its investment as conditions change. CEO Tom Jorden reiterated the commitment to its balance...
May 15, 2020
PS - Oil goes negative, E&P firms continue cuts - April 2020The spread of the coronavirus has put the economy in what could be described as a medically induced coma. An economy incapacitated doesn’t need much oil, and that is becoming a very big problem. The WTI May contract reached expiry on April 21, and the panic to exit positions the day prior brought about the worst day for oil in history. If one holds the contract at expiration, delivery of volumes is required, but storage facilities are nearly full and access is very expensive. The May contract...
Apr 22, 2020
PS - Cimarex curtails 30% of May volumes, cuts capex further - April 2020Cimarex Energy announced additional capital expenditure reductions for 2020 and planned curtailments for May. The company is trimming its original $1.25-1.35 billion guidance by 55-60% to $552.5 million at midpoint. These reductions, announced April 15, cut deeper than the 40- 50% spending decrease that had been announced March 17. On the curtailments side, May volumes will be reduced by 30%—the company produced 292,709 boe/d in 4Q19. Cimarex will defer all completions until further notice and...
Apr 22, 2020
PS - Analyst Notes - April 22, 2020Devon Energy (DVN; $6.29-April 2; Buy; PT-$10) As expected, DVN continues to prudently pare back its capital program in order to live within cash flow. The company announced that it is cutting $300MM from its previous guidance towards $1B in capital spending.This program is more insulated against lower prices than our $800MM spending estimate, likely driven by a combination of a moderate improvement in strip vs. our model expectations and likely better capital efficiencies. Company...
Apr 22, 2020
MCS - Cimarex Energy Highlights - April 8, 2020Cimarex Energy is reducing its 2020 capex by 40-50% from the original guidance of $1.25-1.34 billion. The company said it will continue to monitor commodity price developments and adjust capital spending plans in response to this “dynamic...
Apr 08, 2020
CM - News Briefs - June 26, 2020Bonanza Creek Energy Inc. and lenders led by JP Morgan reduced the company’s borrowing base to $260 million from $375 million and the elected loan limit to $260 million from $350 million. The company will also have a weekly mandatory prepayment requirement if its consolidated cash balance is over $35 million. Also, the maximum permitted net leverage ratio was reduced to 3.5x from 4.0x, and to 2.75x from 3.25x in cases of restricted payments, investments or redemptions. Cimarex Energy...
Jun 26, 2020
PS - News Briefs - June 2020During 2020, EOG Resources plans to bring online 30 net wells in the Powder River Basin, 11 of which were turned to sales in Q1. New completion technology is improving well results, with Niobrara wells using the new design showing 45%-higher cumulative oil production at around 300 days. Mowry wells with the new design are delivering 70%-higher oil volumes at the one-year mark. On its Shannon Secondary Recovery Unit in the Powder River Basin, 13 of Cuda Oil and Gas’ 34 producing...
Jun 03, 2020
CM - Earnings & Capex Briefs - April 24, 2020Cimarex Energy is reducing its 2020 capex by 40-50% from the original guidance of $1.25-1.34 billion. The company said it will continue to monitor commodity price developments and adjust capital spending plans in response to this “dynamic environment.” The company has also deferred completion activities and will drop all but one drilling rig in early May. President and CEO Tom Jorden said Cimarex retains the flexibility to adjust its investment in Q2 as conditions change. Lilis Energy,...
Apr 24, 2020
PS - Permian Briefs - March 30, 2020Centennial Resource Development shifted from a five-rig program at the end of February to one rig currently. Previously, the company had planned to go to a four-rig program in April through year’s end. The reduction to one rig will lower planned capex by 50% to around $320 million if that one rig is held constant through year’s end. Additionally, the company has entered into fixed-price oil swaps for April through September to protect against possible additional near-term declines in oil...
Mar 30, 2020