oil OPEC

“PUMP” & Dump?

If there's anything I've been consistent on over the past several months, it's been the idea that Wall Street and investors probably shouldn't throw good money after bad when it comes to US shale. US operators have demonstrated an unwavering propensity to outspend, forcing them to rely on capital markets to plug funding gaps. Fortunately (for them), the central bank-inspired hunt for yield has meant that both debt and equity markets are relatively forgiving. And so, otherwise insolvent production weathered the two year downturn in prices and lived to pump another day. When the OPEC (non) cuts drove prices up some four months ago, these operators came out of hibernation and it's been off to the races in terms of US production and ramped up capex plans ever since. As a reminder, here's a bit of color out last month from Wells Fargo: Street Missing The History Lesson. With the activity ramp fully underway and the attention now on volumes growth, we wanted to revisit the topic of E&P outspend. We Model Outspend Much Greater Than Consensus. Operators seem to have short memories when it comes to capital discipline which is why it's no surprise to us that we're already starting to
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