Dear Operators,

I know you are opening your financial app and seeing that oil is $41/bbl and feeling giddy and I agree, that’s wonderful (although the nat gas players aren’t loving the implications). Can we take a moment to reflect?

As we sit, there is roughly 15 mmbbl/d of oil NOT producing from Russia, Saudi, Kuwait, Iraq.  Your primary concern was, and is, the balance sheet.  That’s why 2019 was called “a crisis of balance sheets” before we went all 2020.

So. Bring your wells back online. Hedge H2 2020 and 2021 bbls in the $40s.  Complete your highest quality DUCs to bolster cash flow, mitigate decline and make sure all the service companies don’t get belly up. Manage your G&A and find a dance partner.

But, please, please, please, don’t pick up rigs. There are 7500 DUCs that should be completed first. There are about 30 mergers that should be done first.  And there are balance sheets to restore so that when OPEC+ reverses the cuts in August, you aren’t caught with your pants down… again.

Love and hugs,
#hottakeoftheday