Groundhog Day in Oklahoma
“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
STACK Ch.11s continue to kick-the-can down the road.
Reserves / forecasts are inflated
The RBL isn’t impaired
Groundhog Day in Oklahoma -
It took all of five minutes to identify that another Shale Ch.22 is punting.
Let’s walk through this:
Search the case managers, find Chap’s case;
Search the dockets, find the petition w/ the plan;
Search the plan, find the projections & assumptions;
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:
Don’t want to be in the RBL on exit (at least at par);
A par scenario for Bank E&P loan portfolios assumes that an out-of-the-money call on WTI pays out -
“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
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” -
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.
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 -