Posted on 12/20/2017 5:59:05 AM PST by x1stcav
In the oil and gas industry, sometimes it is hard to figure out what is real and what isn’t – what is really happening, and what really isn’t happening. I spent 38 years in the industry, and still have a hard time figuring it all out. Here are some good recent examples of stories whose headlines made bold claims that, upon reading the entire stories, turned out to be quite nuanced:
Are investors really abandoning the shale industry? Did the World Bank really cut off funding of oil and gas projects? Has the business case for building the Keystone XL pipeline really passed?
All are good questions, all of which have been the subject of multiple media reports in the past weeks, and all have more complex answers than the simplistic media headlines that are all most people actually read.
So, let’s clarify some things.
(Excerpt) Read more at dbdailyupdate.com ...
Good reading.
He's also a D-bag blogpimp.
A link to a link...but I was interested in the article. I was about to pull a “humblegunner” but then saw the last bit: “Follow me on Twitter at @GDBlackmon, and read my daily updates at DBDailyUpdate.com”.
So, what gives? A look at recent presentations by the CEOs at corporate shale producers, like this one from Encana’s Doug Suttles, shows a focus on responding to demands by investors that these companies dedicate more of their resources towards actions that will increase returns on investment capital, a pressure I wrote about in early November. One result of this investor pressure has been the announcement of a wave of stock buy-back programs since August. Investors are also pressuring companies to change executive compensation programs that have been, in their view, too focused on increasing production at the cost of profits.
Well I guess I know the answer. Worked with some investors who were only interested in IRR. To satisfy them we would settle loans for 50% quickly instead of the 90% we could have gotten if we worked them. It just brought profits in early and the knucklehead investment managers got bonuses but were fired at the end when the IRR got negative. But the knuckle head investment managers would then go get other knucklehead investors and sell them on the IRR they got for the first knuckle head investors.
Quit posting blog material in the news forum.
Why not when its news? I’m confused.
(humblegunner, you jerk)
Ahhhh. Another you are describing another chapter from a book called Ponzi.
Shale is hard to understand but I have said for many years it too is a chapter from a book called Ponzi though it does return capital and quickly it does not produce enough lasting cash flow stream to fund more drilling. It is a treadmill that pumps money in and out until you get off the treadmill.
Looks like my position taken so long ago is becoming apparent to more.
Looks like my position taken so long ago is becoming apparent to more.
The issue here is using profits to buy back stock (increasing the value) to get a quick return for investors.
Where profits are invested is the question. Some is being invested in management bonuses also so that is competition also. Interesting that management is being rewarded on production............................
No one is in it for the long haul anymore.
Thanks for posting.
There are companies that are making money in unconventional reservoirs, most notable in the Permian Basin, Eagle Ford, and Bakken (long in the tooth.) It all depends on how much money you paid for your position. As Clayton Williams was fond of saying, I want to either be early or late into a new play.
What did I do?
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