Let's keep talking the Midland basin. Although it wasn't explicitly "an exercise", I appreciate the number of DMs I got that said "hey, that white space is Pioneer!” Also, thanks to John Ferrell of WellDatabase who posted some pretty exciting maps that show the density of existing verticals (more on that tomorrow). So the answer is: yes, it is Pioneer, and yes, that white space has a lot of verticals. Let this also serve as exhibit...

At times over the course of my career, I have been at odds with the finance side of the business who like handouts with pages and pages of numbers. I love numbers too, but if you know what you are looking at, a picture says 1000 words and is far more instructive. With thanks to ShaleProfile Analytics, I thought it would be fun to walk through an informative graphic on the Midland basin. 1) ...

https://www.thecrudeaudacity.com/drw_111919

Source: The Daily Telegraph, via Volunteer Fire Fighters Association, written by Alan Jones The ABC were at it again last week, fawning over 23 former fire and emergency leaders who commented, outside their area of expertise, about an alleged relationship between bushfires and climate change. It is worth asking how the non-expert views of such people are even newsworthy. But the propaganda in relation to climate change, from the classroom to the university to politicians and to most of the media, has...

I have an outstanding bet with a peer of mine that the Dec 31 oil price will be $63/bbl. Unfortunately, that doesn’t help the 2019 SMOG price (Mr. Hottake, I was told SMOG is a bad measure!) Well, it’s time to revisit. SMOG is the standardized measure of oil and gas, found in every annual report and summarizes the third party proved reserves using the SEC price (1st D of Mo avg for 12-mo), 5 year PUD rule and 1P curves. It’s not perfect, but...

Cash (flow) is king. House rich, cash poor. Money doesn’t buy happiness but it sure keeps the kids close. F.U Money. I bet you didn’t know it, but all these phrases were originally said by an accountant (an unusually flamboyant one, mind you). As we discussed yesterday, net income is an imaginary number that is the net result of all the revenue and expenses- both cash and non cash. And these items manage the flow on the balance sheet. However, it is the cash flow...

I don't want to get in the habit of doing two posts in a day, lest I saturate the free news market with more opinions, but today was a big day in the Oil and Gas space. Let's start with OPEC+: as you know I have a bet that oil will be $63/bbl December 31st. I don't know all the mechanics of how that happens- but after my deep dive into Saudi Aramco, their RLI, and...

If I was posting for views, I would shut the accounting series down immediately. Perhaps the lack of passion is because even the best accountants on earth can’t change the rock and without good rock, you are ducked. But- without a good understanding of the financials, you can’t invest in a company. So, open your hearts and love an accountant today. The income statement!! A vibrant love affair between cash and non cash items that determines the profitability of the business and the flow between...

Ah, the Balance Sheet! The topic I’ve been waiting 11 months to really dive into. Ok. Not really. But it is extremely important to an oil and gas company. Let’s start with the most important point and work backwards. Don’t use a balance sheet to value a company as many economic assets ARE NOT accounting assets. For example, the largest single asset (most likely) on a balance sheet is the Property, Plant and Equipment. Broadly, this is the AT COST price of wells, plants and...

My speeches and writing over the past two months have focused on ‘The Crisis of Balance Sheets’ that exists in our industry today. Low commodity prices don’t help, but it’s the structural capitalization that is and will remain the core issue that dominates the landscape in 2020. Some may have been surprised by the $HK, $SN, $EPE and $AMR chapter 11 filings this year- but that just meant you weren’t looking and I want to make sure that doesn’t happen again. So this week,...