Whiting Petroleum (my only current position)- Bakken Oil producer. They missed earnings but shares gained when they said they might consider adding rigs (from 11 in the back half of this year) if oil were to go up to $70 (nymex). They said they expected to grow production in the high single digits yoy at $50 oil and spend inside of cash flow. The vast majority of discussion was about ways to streamline costs and the technical improvements in their fracs. They've seen costs in Bakken come down from $8.5mm per well to about $6.5mm and they think there's another 20% of cost to come out yet. Some of the technical talk was about major improvements from going to "slickwater" fracs instead of gel-fracs. They are seeing big improvements in the 90 day rates in the bakken. These are on top of the improvements from the last several years related to moving to cemented liners, increasing sand, and frac stages. The overall gist is that the economics are indeed improving on multiple fronts, and the so called "breakeven" point continues to drop.
Cabot- Dry gas North-East Marcellus Producer. They are reporting cash costs of $.80 per mmbtu of gas, plus F&D (capex) cost of about $.45. The wells they are drilling in North East Marcellus have estimated ultimate recoveries of 20 BCF of gas. If all gas wells were this productive you'd only have to drill about 4 wells per day, and you could supply the whole US's gas consumption with about 60 rigs. They also report that they can do 80% IRRs on $2.45 gas price realizations. Its not even low gas prices that are holding up production, it is lack of takeaway infrastructure. Capacity out of North East Pennsylvania is set to double to 12 BCF/d over the next four years. If you have any thoughts that natural gas prices might go up significantly in the USA, listen to their conference call.
Range Resources- South East Marcellus producer. Similar themes to Cabot. The resource size is hard to conceive, and cost continue to go lower. In Range Resources's 400,000 acres they may have enough gas to satisfy US demand for 6-8 years at current consumption levels, based on their resource estimate for the Marcellus, plus the Utica and Devonian potential for the same acreage. The stock has been hot for the past few weeks.
Those are the only transcripts I've read.
The majors crushed earnings estimates
Exxon at $1.17 beats by .35
Total at $1.13, beats by .28
BP (NYSE) $.82, beats by .22
Chevron $1.37, beats by $.57
Almost all of the beats were due to refining, transportation and chemicals. It is rather amazing that estimates could be that far off and so consistently.... some of these companies had only half of their earnings from upstream.
US inventories are still building, but only at 1.9 million barrels last week, though some of this moderation in the build may be due to seasonality, as we are starting to get into a seasonal draw period as the refineries run at a high utilization rate into the summer.
Cabot- Dry gas North-East Marcellus Producer. They are reporting cash costs of $.80 per mmbtu of gas, plus F&D (capex) cost of about $.45. The wells they are drilling in North East Marcellus have estimated ultimate recoveries of 20 BCF of gas. If all gas wells were this productive you'd only have to drill about 4 wells per day, and you could supply the whole US's gas consumption with about 60 rigs. They also report that they can do 80% IRRs on $2.45 gas price realizations. Its not even low gas prices that are holding up production, it is lack of takeaway infrastructure. Capacity out of North East Pennsylvania is set to double to 12 BCF/d over the next four years. If you have any thoughts that natural gas prices might go up significantly in the USA, listen to their conference call.
Range Resources- South East Marcellus producer. Similar themes to Cabot. The resource size is hard to conceive, and cost continue to go lower. In Range Resources's 400,000 acres they may have enough gas to satisfy US demand for 6-8 years at current consumption levels, based on their resource estimate for the Marcellus, plus the Utica and Devonian potential for the same acreage. The stock has been hot for the past few weeks.
Those are the only transcripts I've read.
The majors crushed earnings estimates
Exxon at $1.17 beats by .35
Total at $1.13, beats by .28
BP (NYSE) $.82, beats by .22
Chevron $1.37, beats by $.57
Almost all of the beats were due to refining, transportation and chemicals. It is rather amazing that estimates could be that far off and so consistently.... some of these companies had only half of their earnings from upstream.
US inventories are still building, but only at 1.9 million barrels last week, though some of this moderation in the build may be due to seasonality, as we are starting to get into a seasonal draw period as the refineries run at a high utilization rate into the summer.
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