Posted on 02/02/2016 5:28:04 AM PST by thackney
...Hamm announced that Continental would slash its 2016 capital spending to $920 million -- a 66% cut from last year's level. His objective is for Continental to live within its cash flow for the first time in years. Assuming an average oil price of $40 a barrel, Continental expects its new plan to generate excess cash flow of $100 million in 2016.
"Some people didn't pull back as fast as they should have," says Hamm. "They are pulling back now." Hamm's move represents capitulation of a sort. In late 2014 he decided to sell off all of Continental's oil price hedges for $400 million, betting that prices would soon recover. They didn't, and Continental missed out on about $700 million in proceeds that those hedges would have generated. No surprise, he's even more bullish now. Prices are "unsustainable," he says. "People aren't making any money."
These bad days won't last. America's oil output has already turned down from 9.6 million barrels per day to 9.2 million bpd. Hamm, backed up by analysis from his resident team of data eggheads, expects the declines to accelerate as drillers capitulate. Each passing month will shave another 125,000 bpd off U.S. output -- adding up to about 1.5 million bpd this year. As it happens, that's almost precisely the same amount of oversupply currently sloshing around world markets, according to Energy Aspects, a consultancy.
(Excerpt) Read more at forbes.com ...
Please elaborate. As I watch spending being cut to the bone, I wonder how that is possible.
The Saudi family are universally hated for their unislamic, hedonistic ways; most people in that kingdom are not even Saudis, but foreigners who have no love or allegiance to them.
There is a succession conflict brewing also.
They are almost out of oil also.
They also recently lost (badly) the proxy war they fought in Yemen against Iran.
If their rule is threatened, oil will rise in price.
If they are toppled, oil will rise in price a lot.
Oh, wait: You were referring to HAL?
When the HAL - BHI merger goes through, at least 35,000 people will be laid off almost immediately from the 2 companies.
I sit in meetings all day where it is a topic of conversation.
They have something like 90 years of oil at current production rates.
Yes, was referring to HAL specifically. Where is the work going to come from with E&P companies cutting back spending as they are? Did you see earnings reports from BP and Shell??
Harold Hamm and Kevin Bacon drive the Arab oil producing countries crazy.
insignificant next to the effect of cheap fuel for trucks, planes, trains and cars.
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