Question - What if there are no buyers for Chevron's Appalachia Assets?

[Anthony Okrongly + 114]

https://www.thestreet.com/investing/chevron-slips-on-shale-gas-writedown

There's the story. Here's the question. What if there are no buyers? Does it cause a cascade?  

If Chevron tries to sell non-producing assets that it paid a lot for and no one buys them... why would they buy them if Chevron can't make money with them then why can anyone else assume they would?  The money used to buy these assets would have to come from the markets or banks... if the markets and banks are getting OUT of shale instead of into shale then where does this money come from?  As long as asset prices are rising then there is an investment model to follow, but once they start dropping then the model is to wait for them to drop more. This is the classic deflationary model.  What keeps the entire area from collapsing? What keeps it from creeping into West Texas planning as well?

 

https://www.spglobal.com/marketintelligence/en/news-insights/trending/0dpqkfujkpgdt5jkh13ulq2

Edited February 19, 2020 by Anthony Okrongly

[Gerry Maddoux + 3,627]

2 hours ago, Anthony Okrongly said:

https://www.thestreet.com/investing/chevron-slips-on-shale-gas-writedown

There's the story. Here's the question. What if there are no buyers? Does it cause a cascade?  

If Chevron tries to sell non-producing assets that it paid a lot for and no one buys them... why would they buy them if Chevron can't make money with them then why can anyone else assume they would?  The money used to buy these assets would have to come from the markets or banks... if the markets and banks are getting OUT of shale instead of into shale then where does this money come from?  As long as asset prices are rising then there is an investment model to follow, but once they start dropping then the model is to wait for them to drop more. This is the classic deflationary model.  What keeps the entire area from collapsing? What keeps it from creeping into West Texas planning as well?

 

https://www.spglobal.com/marketintelligence/en/news-insights/trending/0dpqkfujkpgdt5jkh13ulq2

Nothing is real (as you like to say) except supply and demand. At the time Chevron bought that property, there wasn't such a godawful amount of by-product gas coming off the shale oil fields. And no one knew that as certain prolific shale oil wells get to a certain juncture in decline, they get gassier in a logarithmic manner.

No doubt about it, all this gas has us over a barrel (pun intended).

[BLA + 1,666]

3 hours ago, Gerry Maddoux said:

Nothing is real (as you like to say) except supply and demand. At the time Chevron bought that property, there wasn't such a godawful amount of by-product gas coming off the shale oil fields. And no one knew that as certain prolific shale oil wells get to a certain juncture in decline, they get gassier in a logarithmic manner.

No doubt about it, all this gas has us over a barrel (pun intended).

Exxon's Appalachia NG assets are 3x that of Chevron.  They bought XTO for $41 Billion .  

[Gerry Maddoux + 3,627]

Here is a list of the top 8 countries with coal-fired utility plants as of about a year ago: EU 468, Turkey 56, S. Africa 79, India 589, Philippines 19, S. Korea 58, Japan 90, China . . . . . . . . 3,363.

Oh, I forgot USA, 15. 

All of the top 8 have added in the last year. Not the USA.

The conclusion is that it matters not how much Democrats rant on about saving the planet, or how much the EU beats on us about dropping out of the Paris Agreement, what we do won't amount to much as long as the rest of the world keeps using coal-fired utility plants. This COVID-19 scare may change the Chinese culture: the virus hits the lungs mainly of smokers and those exposed to environmental pollution levels that are quite high. 

At any rate, it is my solid feeling that those countries--especially India and China--are going to be switching from coal-fired utilities to LNG-fired utility plants in great numbers. LNG is increasingly available and cheap. I would imagine that Exxon will some day use that acreage in the Appalachian Basin.

The Democrats can continue to harp on, and someone obviously needs to change the world culture, but wind and solar won't cut it. And thinking that these countries can magically switch from the dirtiest hydrocarbon--coal--to renewables, without using the cleanest hydrocarbon--LNG--is just wrongheaded. 

Carbon capture is coming on pretty fast. China is going to come under tremendous world influence to a) ban those wet markets, and b) switch to a cleaner fuel. I suspect that's going to be LNG. And if the EU wants to save any face at all, it has to do it ASAP. 

[George8944 + 128]

I find it hard to fathom there will never be buyers for this asset.   Keep lowering the price and buyers will materialize.

[Boat + 1,323]

2 hours ago, Gerry Maddoux said:

Here is a list of the top 8 countries with coal-fired utility plants as of about a year ago: EU 468, Turkey 56, S. Africa 79, India 589, Philippines 19, S. Korea 58, Japan 90, China . . . . . . . . 3,363.

Oh, I forgot USA, 15. 

All of the top 8 have added in the last year. Not the USA.

The conclusion is that it matters not how much Democrats rant on about saving the planet, or how much the EU beats on us about dropping out of the Paris Agreement, what we do won't amount to much as long as the rest of the world keeps using coal-fired utility plants. This COVID-19 scare may change the Chinese culture: the virus hits the lungs mainly of smokers and those exposed to environmental pollution levels that are quite high. 

At any rate, it is my solid feeling that those countries--especially India and China--are going to be switching from coal-fired utilities to LNG-fired utility plants in great numbers. LNG is increasingly available and cheap. I would imagine that Exxon will some day use that acreage in the Appalachian Basin.

The Democrats can continue to harp on, and someone obviously needs to change the world culture, but wind and solar won't cut it. And thinking that these countries can magically switch from the dirtiest hydrocarbon--coal--to renewables, without using the cleanest hydrocarbon--LNG--is just wrongheaded. 

Carbon capture is coming on pretty fast. China is going to come under tremendous world influence to a) ban those wet markets, and b) switch to a cleaner fuel. I suspect that's going to be LNG. And if the EU wants to save any face at all, it has to do it ASAP. 

Do a google on coal plants. Since Trump took office around 50 coal plants have shut down but several hundred remain.

If you go to idiot web sites you get idiot information. Every area in the world is different . Many places have nuclear and there is maybe like 30 countries that have plans or are in some phase of acquiring nuclear. Same with hydro. Wind and solar are growing but it’s only been a couple years renewables can compete with nat gas for example and that is only in windy areas or sunny areas. You red right wingers just pull out your big red paint brush and throw out crap while the story of future energy is more nuanced and geographically influenced. 
 

https://www.eia.gov/electricity/annual/html/epa_04_01.html

Edited February 20, 2020 by Boat

[ronwagn + 6,290]

Boat, you still claim that wind and solar can be as cost effective as natural gas in some areas. You do not mention that they still need backup or non existent batteries. You do not mention that they have downsides that may be worse than natural gas leaks. They include more flared natural gas, visual blight, disposal of hazardous materials etc. You also propose nuclear. Even most nuclear proponents should be able to admit that nuclear is done in the U.S.A. where the people still have a strong voice. We have no safe way to store the radioactive materials for the same reason, it is not politically viable. The only nuclear plant being built in the U.S.A. is way behind schedule, and way over budget. The rest of the nuclear plants we have are nearing the end of their lifespan or are already on life extensions. 

[0R0 + 6,251]

3 hours ago, BLA said:

Exxon's Appalachia NG assets are 3x that of Chevron.  They bought XTO for $41 Billion .  

Yes, I was an XTO shareholder. I really liked it, but not at the price Exxon was paying. It was good, but not THAT good. Put up my shares in a jiff.

[0R0 + 6,251]

3 hours ago, Gerry Maddoux said:

Here is a list of the top 8 countries with coal-fired utility plants as of about a year ago: EU 468, Turkey 56, S. Africa 79, India 589, Philippines 19, S. Korea 58, Japan 90, China . . . . . . . . 3,363.

Oh, I forgot USA, 15. 

All of the top 8 have added in the last year. Not the USA.

The conclusion is that it matters not how much Democrats rant on about saving the planet, or how much the EU beats on us about dropping out of the Paris Agreement, what we do won't amount to much as long as the rest of the world keeps using coal-fired utility plants. This COVID-19 scare may change the Chinese culture: the virus hits the lungs mainly of smokers and those exposed to environmental pollution levels that are quite high. 

At any rate, it is my solid feeling that those countries--especially India and China--are going to be switching from coal-fired utilities to LNG-fired utility plants in great numbers. LNG is increasingly available and cheap. I would imagine that Exxon will some day use that acreage in the Appalachian Basin.

The Democrats can continue to harp on, and someone obviously needs to change the world culture, but wind and solar won't cut it. And thinking that these countries can magically switch from the dirtiest hydrocarbon--coal--to renewables, without using the cleanest hydrocarbon--LNG--is just wrongheaded. 

Carbon capture is coming on pretty fast. China is going to come under tremendous world influence to a) ban those wet markets, and b) switch to a cleaner fuel. I suspect that's going to be LNG. And if the EU wants to save any face at all, it has to do it ASAP. 

EU is going for Lignite + NG. That is what will replace baseload from disassembled nukes. NG for peakers when wind and solar don't work, which is some 47%? of the time. Considering that France is chock full of nukes, I don't see the point of Germany putting theirs away. They are just as exposed as they were before. 

[Gerry Maddoux + 3,627]

1 hour ago, George8944 said:

I find it hard to fathom there will never be buyers for this asset.   Keep lowering the price and buyers will materialize.

Well, that's the point, George, just the one you've raised. There is so much NG that the price has slipped, and there's no way to get it back up at this point because of shale oil. So the price for NG will be low for a long time. At some point, who knows when, the NG will get scarce again, and the price will go up and those assets of Exxon will go up and Exxon will drill them out, and at that point Chevron will wish they had theirs back. 

And the beat goes on . . . .

[Rasmus Jorgensen + 1,169]

21 hours ago, Anthony Okrongly said:

If Chevron tries to sell non-producing assets that it paid a lot for and no one buys them... why would they buy them if Chevron can't make money with them then why can anyone else assume they would? 

Depends on the price they get them for. 

[Gerry Maddoux + 3,627]

11 hours ago, 0R0 said:

EU is going for Lignite + NG. That is what will replace baseload from disassembled nukes. NG for peakers when wind and solar don't work, which is some 47%? of the time.

Seriously? 

Lignite is low-quality coal. 

This makes as much sense as China using electricity from its coal-fired utility plants to charge Teslas.

[Bob D + 562]

November 9, 2010 – Chevron Corporation (NYSE: CVX) and Atlas Energy, Inc. (NASDAQ: ATLS) announced today that Chevronwould acquire Atlas Energy for cash of $3.2 billion and assumed pro forma net debt of approximately $1.1 billion

YIKES!!!

I assure you, there will be bidders.

[0R0 + 6,251]

4 hours ago, Gerry Maddoux said:

Seriously? 

Lignite is low-quality coal. 

This makes as much sense as China using electricity from its coal-fired utility plants to charge Teslas.

Yes, they claim they have "clean coal" tech to reduce its carbon footprint. And there is plenty of it. 

It is environmentalism, a nihilist ideology made up of a wee bit of science and lots of fire and brimstone preaching by genocidal sociopaths.