“…who knows actually where the viability of our assets will go in many cases?” - Ben van Beurden, Shell CEO [transcript link]

Noteworthy Dates:

• May 5th:  Texas RRC proration decision

• May 11th:  Oklahoma CC proration hearing

• May 20th: Trading terminates on June WTI contract

• June 10th: OPEC+ teleconference

Editor’s Note: the RRC issued an agenda for the May 5th meeting. Appendix A (pg 19), included details on how proration would work.

After that agenda was published, Commissioner Wayne Christian (viewed as the swing vote) issued an Op-ed against proration. We now expect that to be the outcome of the May 5th meeting.

EARNINGS.

• Shell cuts dividend for 1st time since WWII

• Concho reports a $9.3BN loss

• Conoco plans to accelerate output cuts

Conoco has the largest planned cuts among US producers…

• Coincidentally, its share price has performed better than peers

• We suspect… *good management*

And Shell - as dramatic as van Beurden’s statements or Shell’s actions may seem, we broadly agree with Shell’s plan.

This may have been the most overdue statement from a Major:

“…we need to ensure we strike a balance between shorter-term shareholder distributions, longevity of these returns and the potential to grow these returns in the future” - van Beurden

Concho was the eye-popper of the week:

“Included in the Company’s Q1 2020 results are $12.6BN in impairment charges related to the substantial weakness in commodity prices. As such, the Company reported a net loss of $9.3BN, or $47.49 / share” - Concho

The non-cash hit probably had something to do with downspacing, too -

THE INTERVIEW.

The (in)famous (& anonymous) @WillRayValentin did his first audio interview.

We recommend the listen - it’s ~30min.

On the other side of the mic, Jake, Collin & the live audience did a great job w/ questions.

Here’s a taste:

“I would describe it down to one detail - the bubble-point pressure of the oil, in the STACK is really, really high. And so, [if] you drill a well & bring the reservoir above bubble-point, your recovery factors go way down.”

“You’re talking almost double, say the Bakken - so, the downspace-ability of the Bakken was really high because the bubble-point was really low.”

“And the downspace-ability of the STACK was really low because the bubble-point was so high… and that’s what killed the STACK” - BRV, (DW interview)

VIRUS UPDATE.

Much of the US & Europe is set to re-open in May.

Looking out the window, Texas reported 50 COVID deaths yesterday.

The low total is great…

…but it’s the highest # so far.

Not worth a lock-down, but - still - growth is worrisome.

Looking outside of our time-zones:

• The FT on Western Europe vs Eastern Europe

• South Korea reports no new cases

• The US is considering a travel ban on Brazil - it may become the new virus epicenter

And Japan…

From governor Hideaki Ōmura, of Aichi (population 7.5MM) on why Tokyo is not providing daily COVID stats (translated):

“Medical services in Tokyo are overflowing with the inability to receive patients”

We’re hoping for an uneventful May, but we’re not betting on it -

OTHER NEWS.

And then there were two… Kieth Richards & a cockroach -

Reuters reports that Chesapeake is preparing a Ch.11 filing.

We’ll chalk it up as shale gave up on Chesapeake, and not the other way around -

• PEMEX posts a $23.6BN Q1 loss (more here)

• What happens when wells are shut-in

• Retail investors entering E&Ps

• Reuters on bailouts & US energy

• At the same time, the opposite is happening in Venezuela

• FIFA’s plan to finish the season

That’s it for this week, we’ll be back on Tuesday - for the sports gamblers, there’s 7x Belarusian footie games tomorrow - get in on the action -