Crisis. Of. Balance. Sheets. I get tired of saying it and I am quite sure you are tired of hearing it.

Coronavirus might be a blessing to get everyone’s head out of the collective clouds but this is where we are at as an industry and the reason every time I read a 2020 announcement I ask…are you kidding me?? Do you know nothing, Jon Snow?

Yes. When production declines in a flat price environment, your debt: EBITDA goes up. But!! Guys and gals, for goodness sakes!  ‘They’ don’t want you to lose money and it’s not a flat price environment!

In gas, at $1.84/mcf, every dollar spent on new wells is losing money.  Do you have hedges above current production levels?  No?  STOP DOING EVERYTHING!  Pay the FT fees. You are lighting money on fire to complete wells. Tell your midstream guys to renegotiate your contracts or you will reject all contracts in Chapter 11. C’mon man! This sh*t is not that hard.

And as for oil. $53 doesn’t work. Anywhere. Shut down your rigs. Complete your DUCs.  Tell banks to give you a year relief while you merge and use all the capital you would have spent drilling to pay down debt.

It is a drill your returns world. But at these prices, equity is worth ~0.  It’s not business as usual. Please. Stop.

#hottakeoftheday