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Mid-Year ETP MAP Update

General discussions of the systemic, societal and civilisational effects of depletion.

Re: Mid-Year ETP MAP Update

Unread postby SRSroccoReport » Sat 07 Sep 2019, 21:33:52

The Death Of ExxonMobil Picks Up Speed As It Ramps Up Shale:

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Numbers don't lie. ExxonMobil will continue to BLOW Billions on Shale until its Major Shareholders scream bloody murder and tell them to exit the Shale Biz.

Here are some interesting numbers for ExxonMobil... BEFORE & AFTER SHALE:

ExxonMobil U.S. Upstream Earnings & CAPEX Per Barrel

ExxonMobil 2006 U.S. Upstream Earnings per Barrel = $35.63
ExxonMobil 2006 U.S. Upstream CAPEX per Barrel = $12.31

ExxonMobil 1H 2019 U.S. Upstream Earnings per Barrel = $3.77
ExxonMobil 1H 2019 U.S. Upstream CAPEX per Barrel = $50.81

If you can't see anything WRONG HERE... you need to check into the closest clinic and get an MRI.

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Re: Mid-Year ETP MAP Update

Unread postby SRSroccoReport » Sun 08 Sep 2019, 06:58:30

Correction.... the figures should be for 2005:

ExxonMobil U.S. Upstream Earnings & CAPEX Per Barrel

ExxonMobil 2005 U.S. Upstream Earnings per Barrel = $35.63
ExxonMobil 2005 U.S. Upstream CAPEX per Barrel = $12.31

ExxonMobil 1H 2019 U.S. Upstream Earnings per Barrel = $3.77
ExxonMobil 1H 2019 U.S. Upstream CAPEX per Barrel = $50.81

It will be interesting to see what ExxonMobil reports for its Q3 2019 U.S. Upstream Earnings & CAPEX spending. U.S WTIC is about $4 less a barrel so far Q3 versus Q2.

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Re: Mid-Year ETP MAP Update

Unread postby rockdoc123 » Sun 08 Sep 2019, 11:17:46

If you can't see anything WRONG HERE... you need to check into the closest clinic and get an MRI.


for someone who supposedly writes investing reports you seem to have a woefully poor understanding of oil and gas finances, focussing on a single number without bothering to try to understand what is going on. A simple visit to the look at the filed finances of EOM tells a different story than you portray...one that has little to do with doom and gloom, just a product of the current business environment in oil and gas.

First off their oil and gas production in the US is actually increasing.

2nd qtr oil US production was 662 Kbd versus 600 Kbpd in first qtr and 543 Kbpd in same time period 2018

2nd qtr gas US production was 2803 MMcfd versus 2712 MMcfd in first qtr and 2591 Mmcfd in same time period 2018

EOM explains why revenues were down even though production was up:

Revenues for US oil upstream sector were down $431 MM from $868 MM a year ago with higher production being offset by lower liquids prices and higher growth-related expenses

Revenues for US downstream were down $149 MM from $1,014 MM a year ago due to higher downtime/maintenance and lower margins

Chemicals division were down $155 MM from $956 MM due to lower margins, higher downtime/maintenance and lower volumes

with regards to dividend payments companies such as EOM which are not recognized as growth E&P but dividend generators, the companies look at the long term view of dividend payments. The plan is that in most years free cash flow (after all reinvestment) can cover dividend payments with a large margin but when years happen when free cash flow is down as it did in the first half of 2019 companies such as EOM will borrow to pay the dividend given they believe it is a temporary issue and do not want to lower dividend payments as it will have a negative impact on share price.

Year on year for the same time period the story is:

On a consolidated basis first-half income before income taxes was $8921 MM versus $13752 MM a year previously with $613 MM additional exploration expenses. Dividend payments were $7220 MM versus $6793 MM ($1.69 per share vs $1.59 per share) with outstanding share after dilution remaining the same. It is easy to see why EOM would want to borrow to pay some of the dividend burden as it allows them to keep working capital high enough to complete their annual CAPEX program.

So production was increasing across the board but lower revenues due to lower commodity prices, lower refining and chemical margins resulted in lower net income. If you calculate the dividend payout ratio for first half 2019 vs first half 2018 it has increased which means the company is comfortable with it's plan, shareholders are doing well and if/when commodity prices recover significantly the company is in a good place. Looking at quarterly reports for oil and gas companies is very misleading as their work plans often involve higher expenditures early on and higher net revenues later on. Five-year analysis of their finacials is usually more instructive.

Should EOM shareholders be worried? In 2016 first-half earnings per share were $0.84 versus first half 2019 earnings per share of $1.28. EOM did not go out of business in 2016 and by first-half 2018 earnings had risen to $2.01/share. If there is a prolonged period of low oil and gas prices EOM has the option to lower dividend payout. EOM is in this for the long haul and are accumulating acreage and production in the US shale basins with a view to the future. That ends up costing a lot early on but will result in higher revenues in the future especially if you believe in Peak Oil (higher prices will be associated with a scarce commodity).
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Re: Mid-Year ETP MAP Update

Unread postby SRSroccoReport » Sun 08 Sep 2019, 11:32:29

RocDoc123,

For someone who knows the Oil Biz, you don't seem to understand the FIGURES presented in my graph and in my Earnings & CAPEX per barrel. It's really very simple if you try to pull yourself away from the EXXON Investor press release MUMBO-JUMBO.

So, let me repeat it once more to see if it might SINK IN A BIT BETTER:

ExxonMobil U.S. Upstream Earnings & CAPEX Per Barrel

WTIC Oil Price 2005 = $56.64
WTIC Oil Price 1H 2019 = $57.30

ExxonMobil 2005 U.S. Upstream Earnings per Barrel = $35.63
ExxonMobil 2005 U.S. Upstream CAPEX per Barrel = $12.31

ExxonMobil 1H 2019 U.S. Upstream Earnings per Barrel = $3.77
ExxonMobil 1H 2019 U.S. Upstream CAPEX per Barrel = $50.81

Exxon's U.S. Upstream Earnings 1H 2019 per barrel fell 90% versus 2005
Exxon's U.S. Upstream CAPEX 1H 2019 per barrel increased 313% versus 2005


If you can't see the difference between Exxon's U.S. Upstream Earnings & CAPEX spending between 2005 and 1H 2019, BEFORE & AFTER SHALE, when Oil prices were ABOUT THE SAME, then there is very little I can say to OPEN THAT MIND of yours.

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Re: Mid-Year ETP MAP Update

Unread postby Outcast_Searcher » Sun 08 Sep 2019, 12:51:56

rockdoc123 wrote:
If you can't see anything WRONG HERE... you need to check into the closest clinic and get an MRI.


for someone who supposedly writes investing reports you seem to have a woefully poor understanding of oil and gas finances, focussing on a single number without bothering to try to understand what is going on. A simple visit to the look at the filed finances of EOM tells a different story than you portray...one that has little to do with doom and gloom, just a product of the current business environment in oil and gas.

It's what doomers do. This clown infrequently gets on here and spews a bunch of doom. His forecasts are no better than the folks like shorty or Armageddon. His cherry picking and lack of economic acumen is reflected in his track record, over time.

Nothing new or surprising here.

(Somehow, if XOM were really doomed, the stock would reflect that more, instead of looking roughly like the oil industry overall, looked at with the perspective of decades. This bit of common sense assuming that the set of major, self-interested, investors in stocks like XOM know a hell of a low more than the always-wrong, economically clueless, doomer set, of course).
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Mid-Year ETP MAP Update

Unread postby Outcast_Searcher » Sun 08 Sep 2019, 13:04:53

rockdoc123 wrote:Should EOM shareholders be worried? In 2016 first-half earnings per share were $0.84 versus first half 2019 earnings per share of $1.28. EOM did not go out of business in 2016 and by first-half 2018 earnings had risen to $2.01/share. If there is a prolonged period of low oil and gas prices EOM has the option to lower dividend payout. EOM is in this for the long haul and are accumulating acreage and production in the US shale basins with a view to the future. That ends up costing a lot early on but will result in higher revenues in the future especially if you believe in Peak Oil (higher prices will be associated with a scarce commodity).

Yup. When things get bad enough that well run companies actually cut the dividend by a lot, THEN investors know that things have gone well wrong re the plan, and rightfully cut the price they value the stock at significantly.

Same as it ever was, decade after decade.

On thing I do, which is off the beaten path, is get VERY skeptical when the CEO insists that despite market rumors, the dividend is "safe". It seems like when this happens, the dividend gets cut in the next 18 months, VERY frequently, in my experience.

Doing a quick google search, the usual pundits producing various online investment "advice" vary on their opinions re XOM's dividend safety, but the overall consensus, reasonably, seems to be that IF there is a prolonged significant down-turn in the oil business, then XOM may choose/need to cut the dividend significantly.

AGAIN, SAME AS IT EVER WAS.

The rest of the alarmism is the usual claptrap, of the doomer variety.
Given the track record of the perma-doomer blogs, I wouldn't bet a fast crash doomer's money on their predictions.
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Re: Mid-Year ETP MAP Update

Unread postby marmico » Sun 08 Sep 2019, 15:07:08

St Angelo's chart, although interesting, is not particularly instructive. Firstly, Exxon's US upstream earnings include natural gas production which fetched $8.50* per million btu at Henry Hub in 2005 and is fetching ~$2.50 in 2019. Secondly, Exxon US upstream production is more natural gas oriented in 2019 than in 2005 - lower realized price per barrel of oil equivalent.

* https://www.eia.gov/dnav/ng/hist/rngwhhdM.htm
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Re: Mid-Year ETP MAP Update

Unread postby SRSroccoReport » Sun 08 Sep 2019, 16:05:31

marmico... indeed you bring up some valid points. Yes, natgas prices were much higher in 2005. Unfortunately, Exxon doesn't break down what it received in the U.S. versus Internationally for its natgas, but its Natgas production in 2005 was nearly 1,000 mcf/d less in 1H 2019. So, that should even the playing field a bit. I am not saying totally, but a good percentage.

ExxonMobil Natgas production 2005 = 1,739 mcf/d
ExxonMobil Natgas production 1H 2019 = 2,712 mcf/d


While it's true that ExxonMobil is producing more natgas to crude oil, and likely a great deal more NGLs 1H 2019, than in 2005, that's the BIG PROBLEM with Shale. And it will get worse. Which will likely continue to keep natgas prices low.

And then there is the issue of CAPEX per BARREL that is going in the wrong direction.

Either way, you want to SLICE IT... Shale will destroy Exxon's balance sheet just as fast as it has done to the other Small to Mid-sized shale companies.

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Re: Mid-Year ETP MAP Update

Unread postby SRSroccoReport » Sun 08 Sep 2019, 16:34:02

One last thing on ExxonMobil's U.S. Upstream figures for 2005 vs 1H 2019:

ExxonMobil 2005 Crude Oil = 477,000 bopd ( 62%)
ExxonMobil 2005 NatGas = 290,000 boepd (38%)
ExxonMobil 2005 Total = 767,000 boepd

ExxonMobil 1H 2019 Crude Oil = 631,000 bopd (58%)
ExxonMobil 1H 2019 NatGas = 460,000 boepd (42%)
ExxonMobil 1H 2019 Total = 1,091,000 boepd

ExxonMobil is producing 324,000 boepd more in 1H 2019 vs 2005, and its U.S. upstream earnings are only a pathetic $431 million??

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Re: Mid-Year ETP MAP Update

Unread postby marmico » Sun 08 Sep 2019, 16:59:50

ExxonMobil is producing 324,000 boepd more in 1H 2019 vs 2005, and its U.S. upstream earnings are only a pathetic $431 million??


Why would you expect anything different when 40% of boepd are priced 70% lower?
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Re: Mid-Year ETP MAP Update

Unread postby SRSroccoReport » Sun 08 Sep 2019, 17:09:56

marmico... okay, let's do some simple math.

ExxonMobil's $6,200 million in 2005 Earnings multiplied by 40% would be $2,480 million. If we multiply $2,840 million by 30% (using your 70% lower figure), that would equal $852 million for the reduced NatGas.

If we add the $3,720 million (60% for oil) and add the $852 million (40% for natgas using your 70% lower figure) we end up with a total of $4,572 million in U.S. Upstream Earnings... USING YOUR MATH.

So... with reducing that 2005 Earnings of $6,200 million with your 70% less on 40%, we end up with $4,572 million... TEN TIMES more than the $431 million Exxon reported for its 1H 2019 U.S. upstream Earnings.

DOES THAT CLEAR IT UP A BIT??

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Re: Mid-Year ETP MAP Update

Unread postby marmico » Sun 08 Sep 2019, 19:04:43

DOES THAT CLEAR IT UP A BIT??


Nope. Earnings = revenues minus expenses. So you can't compute a 70% decline in gas earnings and say it is equivalent to the known 70% decline in gas revenues without knowing the decline in expenses. Gas expenses certainly didn't decline by 70% per boe between 2005 and 2019. For instance, royalty and severance taxes would have declined by 70% but other expenses probably only declined ~30% based on PPI* for oil and gas extraction. Ditto for oil expenses.

* https://fred.stlouisfed.org/series/PCU21112111
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Re: Mid-Year ETP MAP Update

Unread postby rockdoc123 » Sun 08 Sep 2019, 20:35:53

If you can't see the difference between Exxon's U.S. Upstream Earnings & CAPEX spending between 2005 and 1H 2019, BEFORE & AFTER SHALE, when Oil prices were ABOUT THE SAME, then there is very little I can say to OPEN THAT MIND of yours.


The point I was making is that while you are trying to show EOM as a company falling apart the reality over the past five years coming out of the price crash is something different, from most metrics it has been fairly stable although like all the oil and gas companies it has suffered from a lack of market interest in the sector. The dividend yield is high (5%) and XOM is defending it. They did not sell any of the producing properties that they had planned to sell in 2019, that leaves them a lot of room to defend dividends in the future.

There are large errors in your analysis, some of which Marmico pointed out :

1. XOM produces both oil and gas both worldwide and in the US. In 2005 oil production was 1.5 times gas production in 2015 it was 1.25 times gas production. Given E&P spending is on both oil and gas you have to calculate any production metrics on the basis of boe. Your calculations are based on oil only which is basically a meaningless number in the context of their performance.
2. Commodity prices have changed significantly in both directions in that time period. Although you can pick a point where oil prices are similar in 2005 the average price for natural gas was $8.10/Mcf compared to $2.75/Mcf over the first half of 2019. A quick calculation based on average natural gas production in 2005 versus the first half of 2019 shows that 2005 would have seen an additional $2.5 billion in revenues from natural gas in comparison to 2019. That needs to be included in any proper analysis, which you haven't done.
3. XOM is an international fully integrated company. As a consequence, they move expenditures around annually from one sector to the other depending on the oil and gas environment. Looking only at the upstream sector and only at the upstream sector in the US ignores the fact that they purposefully increase and decrease spending in certain areas on an annual basis as compared to US only shale production companies who are essentially one trick ponies.
4. The US side of the business is completely different in 2019 than it was in 2005. In 2005 production was almost entirely from legacy fields in the lower 48 and Alaska. What that means is those fields were in the phase where Capex is greatly reduced and production is high all the necessary capital having been spent well before peak production was reached in the fields. In 2019 XOM was in the early stages of rebuilding it’s business, focusing on the unconventional side of things. They have stated to the public they are in a phase of renewal which requires a lot of capital expenditure on land and wells as well as acquisitions prior to seeing large increases in stable production.
5. Picking a comparison with 2005 is definitely cherry-picking. In 2005 annual earnings were $7,992 MM which was significantly higher than in the previous 4 years where earnings average $3,687 MM. This is in large part due to two very large pieces of net production coming on stream at Kizombo and Sakhalin, a total of about 500 kbopd. The costs associated with this production had all been capitalized in previous years (wells, facilities) so they were in the enviable position of having relatively low capital outlay and high production. Compare that to 2019 in the US where they are in the building stage requiring very large capital input for land and initial wells with production still building. You can see the capital intensive nature of their 2019 US activities versus 2005 in that in 2019 US Capex on E&P made up a little more than half of total worldwide Capex whereas in 2005 it was only 14% of worldwide capex. In short they were in a very mature phase in US conventional in 2005 and now they are in a very early phase of US unconventional.
6. XOM has stated they are now building for the future by moving to unconventionals in various places around the world. Comparisons with past performance needs to be looked at based on post pivot not by comparing the matured conventional production to the new entries into unconventional. As well the entire industry is in a different world post 2014 than it was prior to the big drop in prices. Prices dropped significantly but costs did not drop at the same rate. That is across the board and not specific to any one company.
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Re: Mid-Year ETP MAP Update

Unread postby shortonoil » Mon 09 Sep 2019, 09:41:46

ExxonMobil U.S. Upstream Earnings & CAPEX Per Barrel

ExxonMobil 2005 U.S. Upstream Earnings per Barrel = $35.63
ExxonMobil 2005 U.S. Upstream CAPEX per Barrel = $12.31

ExxonMobil 1H 2019 U.S. Upstream Earnings per Barrel = $3.77
ExxonMobil 1H 2019 U.S. Upstream CAPEX per Barrel = $50.81


Over that 14 year period Exxon's profit on a barrel fell 89%. Over the same period the energy to produce, and process a conventional barrel of black oil increased by only 44%, although the cost of the energy to produce it in dollar terms went up 260%. Exxon is stuck on the same treadmill as the rest of the world's economy; the energy delivered for the cost of delivering it is growing exponentially. It is the same phenomenon that is now driving the explosive growth of world debt, and the decline in the velocity of money. Neither Exxon, or the world can produce enough oil to pay their bills!

It looks like Exxon isn't the only one that is going to need a different strategy. The world is now having to learn to live on a lot less oil than what it needs to power its existing economy. To compensate It is ferociously consuming its existing assets, and converting them into debt. The quality of the oil it is producing is going down faster than its production is going up. That is having dire implications. When oil supplies start to get cut short there is always an oil war almost immediately afterward. Iran comes to mind.
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Re: Mid-Year ETP MAP Update

Unread postby rockdoc123 » Mon 09 Sep 2019, 11:22:50

It's what doomers do. This clown infrequently gets on here and spews a bunch of doom. His forecasts are no better than the folks like shorty or Armageddon. His cherry picking and lack of economic acumen is reflected in his track record, over time.

Nothing new or surprising here.


Taken in context he is a "goldbug" as his website has been pumping the idea of silver and gold as good investments because the oil and gas industry is set to meet disaster since it's inception a few years ago. He has been on the kick of XOM being a disaster waiting to happen for several years now. It is no different than any of the other "goldbug" sites which cherry pick data and mislead the unwary who haven't spent a lot of time understanding the terminology.
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Re: Mid-Year ETP MAP Update

Unread postby SRSroccoReport » Mon 09 Sep 2019, 17:24:17

rocdoc123,

You're a PEACH. Goldbug site... LOL. Enjoyed the laugh.

Anyhow, here is another one of those so-called "CHERRY PICKING" data points that ExxonMobil failed to publish in its news release secton. You had to go to the SEC Filings to find this GEM on August 13th:

Exxon Mobil Corporation
$750,000,000 Floating Rate Notes due 2022
$750,000,000 1.902% Notes due 2022
$1,000,000,000 2.019% Notes due 2024
$1,000,000,000 2.275% Notes due 2026
$1,250,000,000 2.440% Notes due 2029
$750,000,000 2.995% Notes due 2039
$1,500,000,000 3.095% Notes due 2049

https://www.sec.gov/Archives/edgar/data ... d424b2.htm

So, ExxonMobil adds another $7 billion of debt to its LONG TERM DEBT column. And, that doesn't include the $26 billion in debt that it holds in its SHORT TERM DEBT Column. So, with Long and Short Term debt, ExxonMobil now holds $52 billion in debt. And, that doesn't include ALL LIABILITIES.

Let's move on. Why on earth would ExxonMobil issue $7 billion in new Senior Notes in August?? Could it be that the company's Free Cash Flow was only $2.9 billion 1H 2019 (Q2 2019 negative free cash flow) and with the $7.2 billion in dividends paid, there was a $4.3 billion hole??

Well, of course, there was. Then how about the net addition of $6.5 billion of short-term commercial paper 1H 2019??

Shale is destroying EXXONMOBIL's balance sheet and at some point, the major shareholders are going to force management to totally CUT and RUN on the U.S. Shale Ponzi Biz.

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Re: Mid-Year ETP MAP Update

Unread postby rockdoc123 » Mon 09 Sep 2019, 20:49:59

Anyhow, here is another one of those so-called "CHERRY PICKING" data points that ExxonMobil failed to publish in its news release secton. You had to go to the SEC Filings to find this GEM on August 13th:


Or you could have just gone to the annual filings in any previous year as most of this is old news. :roll:

Regardless, you try to make it look like the big debt numbers are a huge problem but debt has to be taken in context with other business measures.

For the second qtr 2019 XOM annualized effective interest rate on debt was 2.01%, quite low in comparison across the industry and better than anyone would get if they were an independent seeking financing.

For 2018 where there is full years accounting we see that their interest payments on debt made up only 0.3% of net revenue and 1.1% of gross income. That means the level of debt payment is miniscule in terms of their business. Bankers tell you to worry as an individual if your mortgage debt exceeds 30% of your income....I don't think XOM has to worry on that front. :roll:

For 2018 its debt to capital ratio was 17% compared to the industry peer average of 34% putting it as the best of the bunch.

Most investment bankers worth a grain of salt look at XOM debt as not being of concern because of two popular measures …it’s net debt is only 0.97 times its EBITDA and its EBIT cover (interest cover) is 26 times.

A comment from one of these investment types was telling:

Exxon Mobil’s interest cover suggests it can handle its debt as easily as Cristiano Ronaldo could score a goal against an under 14’s goalkeeper


The projected cash flow going forward fully covers debt maturities and if in a pinch they can raise capital through an equity offering which isn’t all that desirable given the dilution but still doable. In short the debt scenario is a nothing burger.
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Re: Mid-Year ETP MAP Update

Unread postby SRSroccoReport » Mon 09 Sep 2019, 21:16:51

rocdoc123,

You continue to use OUTDATED metrics that won't work in a POST CONVENTIONAL OIL scenario. Yeah, I get that ExxonMobil and other companies add debt to fund CAPEX to pay it in the future with FREE CASH FLOW. That's Economics 101.

I GET IT.... no need to explain.

However, you fail to raise the point that the overwhelming majority of Shale Companies are not paying down debt with Free Cash Flow. Yes, there are some companies now using the CARROT of lowering debt, paying dividends and buying back shares in the investor press releases to keep the U.S. Shale Ponzi going for a bit longer.

How are these debt-ridden companies going to pay back the $137 billion of debt that comes due over the next 2 years? Do you really think they are going to find more SUCKERS to play the SENIOR NOTE PONZI SCHEME? Really?

Rocdoc123... you must be aware of the Ponzi Finance used by the Shale Industry. I will make it brief:

5 STEPS Of The U.S. Shale Oil Ponzi Scheme

STEP 1) Raise Capital and Increase Debt to increase production
STEP 2) Issue New Senior Notes to Pay Back Existing Ones, because No Positive Free Cash Flow
STEP 3) Increasingly Tap into the Revolving Credit Facility to Fund Business - borrow and then pay when revenues come in
STEP 4) Sell Royalty Agreements To raise Money because Capital Markets Tapped out - cannibalization moves into high-gear
STEP 5) Use Investor Relations To promote Buying Back Shares, Issuing Dividends & Paying Down Debt - company gets desperate

STEP 5 is the last step before the company starts to disintegrate. While the disintegration will not happen overnight, I would say a good portion of the shale industry will be in serious trouble within the next 1-2 years.

Lastly... the Majors, save Chevron, will not be able to ramp up Shale Production without severely impacting their financials. Chevron has a bit of a wiggle room because it owns a lot of Royalty-Free Acreage in the Permian. But, that won't give them too much more time.

So... we can play REGURGITATE the outdated Financial Metrics all day long until the PHAT LADY SIGNS, but it won't change the outcome of the Great U.S. Shale Oil Ponzi Scheme.

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Re: Mid-Year ETP MAP Update

Unread postby SRSroccoReport » Mon 09 Sep 2019, 21:41:20

Oh.... I forgot to include STEP 6.

STEP 6) Shale Company goes Bankrupt

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Re: Mid-Year ETP MAP Update

Unread postby rockdoc123 » Mon 09 Sep 2019, 22:47:27

How are these debt-ridden companies going to pay back the $137 billion of debt that comes due over the next 2 years? Do you really think they are going to find more SUCKERS to play the SENIOR NOTE PONZI SCHEME? Really?


So... we can play REGURGITATE the outdated Financial Metrics all day long until the PHAT LADY SIGNS, but it won't change the outcome of the Great U.S. Shale Oil Ponzi Scheme.


rather than lumping them all together (no one company has $137 billion of debt) why not take a few of them and demonstrate through your not OUTDATED metrics (what a load of BS, bankers are still using those metrics all the time, at least the ones I talk to regularly and there is a number of them) that they can't pay down debt? I had this argument with someone else here previously and they pointed to a particular company (I can't remember which one) and it was quite clear from the filed financials that the company would have zero problems paying down the debt at current price models when you took out the non-cash items that had zero impact on the bottom line. So have at it show us your financial investment guru chops, you hate XOM so please show us how it is impossible based on their financials for them to meet debt obligations. The simple fact is oil companies would not be continually investing at a loss....nobody is that stupid. I worked in the industry for well over 30 years and I can tell you the minute you stop making money that can be reinvested is the time when you start restructuring or beginning to close up shop. That isn't happening across the industry.

how long have you and Berman been singing this tune? Meanwhile the shale industry built itself from a negligible production in 2006 to 60 BCF/d and close to 7 MMb/d in a little over a decade. . Those companies took on debt to accelerate operations, continued to pay interest and whatever debt matured and in the case of a few companies they had to restructure through Chapter 11 provisions (the majority did not). Throughout that period they continued to fund operations, pay salaries, pay dividends etc. Your claim that nobody is making any money is complete BS.

Your analysis of why companies buy back shares shows a healthy ignorance of this business and pretty much every other publicly traded company. When they find that margins are lower (eg. oil prices have dropped) or they have constrained opportunities for growth (land prices too high, royalty payments too high, acquisition metrics too high) they buy back shares as that is the most efficient use of their capital. The Board serves the shareholders and in order to create value for them from time to time the best way is to buy back shares. This increases share prices and gives the company the ability to raise capital in the future through equity offerings without increasing dilution from a pre-buy back perspective. It is good business and has been for decades. Oil and gas companies have been buying back shares from time to time for several decades, well before the unconventional business ever began to accelerate.
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