“The Beatings” series has resulted in a lot of DMs and somehow- I’m now more scared about how badly E&P companies are run than I was before (ESPs to meet 2019 production targets- are you kidding me?!)

Welcome to September! Which means it’s time for the 2020 budget: the annual event where management shuts down all the really important work and instead- requires staff to iterate on 2020 scenarios. Well cost at $10 mm? No! Run it at $9 mm…I think cost deflation is coming. 4 wells in 2000’ causing interference? No! We increase type curves every year- let’s not break tradition! 20 mmboe production next year?! Sandbaggers! Let’s add a management wedge and hit 23 mmboe!

Unfortunately- we both know that righteousness doesn’t pay the mortgage so a lot of 2020 budgets will look a lot like they did in 2019. They shouldn’t.

With the China trade war and a global recession looming, companies have a chance to hide the sins of the past. PLEASE- take the opportunity to right size your inventory and start running a real business. Pay down debt. Buy back shares. Let production decline. And merge with someone better than you.

One can only kick the can down the road for so long and one way or another, 2020 will separate the “longs” from the “shorts”.