With only 2 days left in 2019 (and the last merger Monday of the year), it’s worth looking back on the year that was, starting with a post from February live from the Four Seasons bar at NAPE where all the action happens.

“The model will shift to drill your returns.” Absolutely. All the rock in the U.S. worth owning is now owned and all there is left to do is turn it to cashflow. The lack of cash acquisitions and PE exits with a focus on drilling demonstrates this pretty clearly.

“Water is the new oil.”  With no land left to buy, and oil/gas systems pretty aggressively built out, water was the last of the Mohicans for PE investment- and a ton was made and subsequently drove costs down so far as to have made it a much tougher business only 10 mos later- such is the efficiency of capital in this industry.

“Acquisitions will be with equity”. Check. There is no cash available. I’ll admit it wasn’t at the pace I expected but there is always 2020.

“DUCs and Rig Count”. Rigs fell to my 700 target (though it took 5 months longer because of ‘The Crisis of Balance Sheets’ I had missed in December. DUCs will be very interesting to watch in 2020. They have started to fall but economics suggest they should fall faster.

Tomorrow. 2020. What to expect when you’re expecting.

#hottakeoftheday