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Mike Walker  

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  • Diamond Offshore Fleet Status After Pemex, Petrobras And Dana Decision [View article]
    Usually there will be a cancellation clause in the contract with corresponding demobilization fee.

    The operators are making a bet that they can demobilize the rig and pay the cancellation fees and then re-mobilize at a lower rate when oil prices improve.
    Feb 24, 2015. 07:21 PM | 1 Like Like |Link to Comment
  • Diamond Offshore Fleet Status After Pemex, Petrobras And Dana Decision [View article]
    The oil companies are taking advantage of the dip to renegotiate contracts and the rig contract always is first in line for discount discussions. Most of these cancellations are the result of earlier negotiations, in which the drilling contractor failed to 'voluntarily' reduce rates and now the operator is moving to stage two of talks and actively threatening or carrying out releasing the rig.

    its funny that Saudi targeted shale oil and Russia with the price crash, but shale oil and Russia look to be minimally impacted thus far. Most of the pain is being felt by conventional producers in North Sea, Africa, SE Asia and S America - including most of the Non Gulf OPEC members.
    Feb 24, 2015. 06:19 PM | Likes Like |Link to Comment
  • Examination Of The Halliburton, Baker Hughes Merger: Part 3 [View article]
    I am long BHI, and short HAL 1.12 shares for every long BHI. I got in early when the spread was $8 - now it is $14 so given a potential gain of $19 for each long share of BHI (provided the deal goes through) - this arbitrage play is not as attractive as it once was.
    Feb 16, 2015. 09:36 AM | 2 Likes Like |Link to Comment
  • Oil And Gas Stocks - Did We Just Pass The Inflection Point? [View article]
    Although I have long positions in APC, CLR, CXO and PXD that are hedged with covered ATM call options - I still have a gut feel - and for whatever's that worth - that we still have a major downdraft in WTI sometime during this spring.

    That would be the time to push all your chips to the center.
    Feb 3, 2015. 02:52 PM | 2 Likes Like |Link to Comment
  • How iPhone Demand Could Impact Apple's Q2 Guidance [View article]
    Q2 will also likely encompass the initial iWatch launch. 3MM iWatch x $500 ASP is $1.5BB incremental Q2 revenue not yet recognized by analysts.
    Jan 7, 2015. 04:08 PM | 3 Likes Like |Link to Comment
  • At What Oil Price Do U.S. Shales No Longer 'Work?' [View article]
    On the front line (West Africa) what we are seeing is 25% drilling budget CAPEX reduction as the initial reaction with further reduction / expansion in wait and see mode.
    Dec 31, 2014. 09:51 AM | 1 Like Like |Link to Comment
  • At What Oil Price Do U.S. Shales No Longer 'Work?' [View article]
    I would watch what happens in the Bakken closely as the economics on a basin wide basis seem to be the most marginal there vs. the Eagle Ford and the Permian. Sure operators can move into the sweet spots - but for how many wells and for how long will the sweet spots yield drillable locations ?

    So Richard - do you think now that the marginal oil that will be most impacted are the mega projects in the international market ?
    Dec 31, 2014. 09:01 AM | 2 Likes Like |Link to Comment
  • Making The Difficult Decision To Part Ways With BP [View article]
    Russia sanctions on western oil amd oil service companies participating in Russia are misunderstood.

    They apply to the following projects

    Offshore drilling north of the Arctic Circle
    Deepwater drilling in water depths greater than 150m
    Horizontal drilling and fracturing operations in shales (ala Bakken, Eagle Ford, et al).

    Of Russia's 850 drilling rigs, less than 5 (my estimate) are impacted by the current EU / US sanction regime.
    Dec 30, 2014. 01:20 PM | 3 Likes Like |Link to Comment
  • Is The 'Oil Glut' A Myth? [View article]
    Great article as usual Mr. Zeits

    My observation thus far is that the decline was so pronounced that it cannot be discounted that Saudi was active in the futures and derivatives market in order to achieve 'shock and awe' and disrupt capital allocations in the United States and Russia.

    That the anticipated 'supply response' will accelerate through Q1 and the first major basin to experience a re- adjustment of rig activity will be the Bakken. Operators that are hedged are much better off monetizing their hedges versus physical delivery. Also you are likely to see many operators suspend completion operations on existing drilled inventory and hold off on fracking operations until prices recover.
    Dec 19, 2014. 02:13 AM | 2 Likes Like |Link to Comment
  • How Long Does A 'Typical' Oil Downcycle Last? [View article]
    Much of the response is based that capital exports of dollars / euros will soon be regulated and limited.

    The same happened in Venezuela some years ago.
    Dec 17, 2014. 05:35 AM | 2 Likes Like |Link to Comment
  • How Long Does A 'Typical' Oil Downcycle Last? [View article]
    Actually the majority of the service contracts in Russia are in rubles. So the providers with dollar costs are bearing the losses, at least temporarily. Anecdotally, many of the providers are just apologizing that they are now 'out of stock'. Doubtlessly this will translate into lower drilling activity going forward.
    Dec 17, 2014. 05:33 AM | 1 Like Like |Link to Comment
  • Take Profits In Apple, Reallocate Into Energy [View article]
    This hits home as I am overweight both AAPL and the energy names. Of course have been put up against the wall and shot on the later.

    I really, really, really want to try and call the bottom in the energy space - but I've tried to do so 3 times in the last three months and have been wrong every time.

    Maybe the timing is better after year end tax loss selling ends ?

    Favorite energy names at these price levels - Anadarko, EOG, Pioneer, Concho, Continental, Chevron
    Dec 14, 2014. 03:43 AM | 2 Likes Like |Link to Comment
  • OPEC says 2015 demand for its crude will be weakest in 12 years [View news story]
    Who knows what total arsenal the Saudis have brought to their campaign of slowing non OPEC production growth. It is likely they are selling futures and other derivatives at the same time they are talking down the market - just to sow havoc and to offset any downward movement in their physical sales.
    Dec 10, 2014. 08:44 AM | 3 Likes Like |Link to Comment
  • Bonanza Energy Projected Income In 2015 [View article]
    BCEI - perfect bolt on acquisition for Anadarko with the Anadarko's massive infrastructure investment.
    Dec 8, 2014. 04:56 AM | Likes Like |Link to Comment
  • Pioneer Natural Resources: A Reasonable Choice For An Energy Play [View article]
    The short put positions are going to bite if oil stays sub $70.

    For example, take the simplified case where WTI = $60 and not taking into consideration any basis differences between wellhead price and WTI.

    Realized sales price = $60 + (put price - short put price)
    = $60 + ($87.98- $73.54)
    = $74.34

    Which is better than $60 -- but worse than $87.98

    The other take away is that it makes little sense to drill for excess oil above the 2015 hedged production volume of 100,000 BOPD unless there is a requirement to hold leases. PXD expects to average 88,000 BOPD in Q4 2014 --- no need to add rigs until prices improve.
    Dec 8, 2014. 04:48 AM | 4 Likes Like |Link to Comment