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Groundhog Day in Oklahoma

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Groundhog Day in Oklahoma

Matt Sterett
and
Pierre Follea
Aug 18, 2020
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Groundhog Day in Oklahoma

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“The production estimates are based on Management’s best efforts to forecast the decline curves for their existing proved developed producing wells…” - CHAP, Docket 17, p. 377


Smash Bill Murray GIF by Groundhog Day

STACK Ch.11s continue to kick-the-can down the road.

  • Reserves / forecasts are inflated

  • The RBL isn’t impaired

Groundhog Day in Oklahoma -

CHAPARRAL.

It took all of five minutes to identify that another Shale Ch.22 is punting.

Let’s walk through this:

  1. Search the case managers, find Chap’s case;

  2. Search the dockets, find the petition w/ the plan;

  3. Search the plan, find the projections & assumptions;

  4. Eyeball the Top-line. BS. Again.

Having looked at Chaparral (and their peers’ wells), we know how steep the YoY declines are -

Something like a ~75%+ decline (generous) after ~30 months is what *we’d expect*.

Even w/ an improving forward curve, that Net Revenue line immediately fails the eye test.

For investors, we see a couple takeaways:

  1. Don’t want to be in the RBL on exit (at least at par);

  2. A par scenario for Bank E&P loan portfolios assumes that an out-of-the-money call on WTI pays out -


CALI BLACKOUTS.

“We have a much more risky supply of energy now because the sun doesn’t always shine when we want & the wind doesn’t always blow when we want,” said Frank Wolak, [Stanford University econ professor] - Mercury News

The obvious happened -

  • Cali shuts down gas plants

  • Heatwave hits

  • Blackouts

Regardless of how you feel about Mike Shellenberger, this Twitter thread is a masterpiece.

He paints a picture of the political battle between the Cali ISO & the Governor’s Office…

The discussion - pretty one-sided - is reminiscent of a line shouted by Will Smith’s character in iRobot:

"Ya know, somehow 'I told you so' just doesn't quite say it” -


OTHER NEWS.

Speaking of Cali, a few celebrities - notably Joe Rogan - have announced that they are leaving the state. How that affects other regional economies… TBD.

Even though it’s early - if you’re looking for a summary of recent metro housing data trends - check out this post.

  • Chevron signs MOU w/ Iraq

  • Lilis Ch.11 goes 363

  • Kinder Morgan: rerouting Hill Country pipeline around the Blanco River


That’s it for today - Champions League finishes up this week (we’re betting on Bayern) & the NBA / NHL playoffs are in full swing - catch y’all next week -

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