Sign in to follow this  
Followers 0
RG

What shale companies will survive the blood

Recommended Posts

What SHALE companies will survive the, slowing of production, the lack of capital, and etc. 

Share this post


Link to post
Share on other sites

17 minutes ago, zbest1966 said:

What SHALE companies will survive the, slowing of production, the lack of capital, and etc. 

With all due respect, production isn't apt to slow very much. Sure, 300 rigs have been laid down but these new bottomhole assemblies can perform the darnedest things! MWD used to be exciting; now it's mind-blowing. Wells that used to take a month to drill--more if you hit a long range of granite--can now be performed in a week, tops. The bit ever seeks oil-bearing rock because there's machine learning. When Exxon paid the Bass Brothers 6.6 billion for their Delaware sub-Basin property, they meant business. They, along with Chevron, Occidental, Conoco and Marathon are going to hammer the shale. 

On the flip side, it's going to be increasingly difficult for any company without a refinery to make it in the shale business. This won't be the last bust we have to endure: when the price of wellhead oil is low, refineries usually do well, unless a recession is raging. And vice versa. In short, a refinery has always been a great hedge for oil companies, but now more and more petrochemical companies have been added to the mix, so the hedge is even greater. The "pioneers" of shale--EOG, Continental, Zavanna, Concho, and the pioneer itself (Pioneer)--are likely going to be bought out, or if they made a wrong acquisition at the wrong time (think Whiting), fall by the wayside. 

The next two years are going to see a flurry of mergers and acquisitions and no small number of failures, what with $126 billion of floated bonds coming due. No one on Wall Street is ponying up money for what has been an endless loss leader: there's no big Big lurking just around the corner. So, sadly, some really well-thought-out companies are going to fall because they just don't have the money to make the next jump. 

  • Like 1
  • Great Response! 1

Share this post


Link to post
Share on other sites

What do think Zell making an investment

Share this post


Link to post
Share on other sites

17 minutes ago, zbest1966 said:

What do think Zell making an investment

Because he's getting oil in the ground (rock) for about ten cents on the dollar. 

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
You are posting as a guest. If you have an account, please sign in.
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  
Followers 0