Oil Plunges After IEA Says Demand is in Free Fall | Energy Department withdraws tender to fill Strategic Petroleum Reserve| The US Fracturing Market Is Sinking, But How Low Will It Go | Is This The Beginning Of The End For Texas Oil | Russia Says Oil Isnt on Agenda for G-20 Call| Chevron Hits the Brakes on Permian, Cuts $8 Billion Across Company| Oxy Adds to Cuts and Icahn Wins Board Appointments OGTW199
You're listening to the oil and gas this week podcast with Martin liqueur and decor Vizo for physio improve quickly. Want to keep their finger on the pulse. What's going on guys? Welcome back from their of Soda. They're willing gas this week. Podcasts listening to episode one ninety nine top of all the other bad news. We're talking about the day for our listeners. We have some other bad news in that Jake is his last episode is GonNa be episode two hundred one right after this. He's not mad at me. He's going on to bigger and better things. But we're GONNA miss the bejesus out of you jake yet. It's been a crazy ride. You know thinking about it now. It's been at the end of this year. It'll be would. It would have been four years. So we're at over three years. A podcast since industry thousand sixteen you and I so it's been a lot of fun. The ad does detonate. There's no bad blood. The thing is that you know as most people know. I'm an entrepreneur of a lot of stuff in the space just kind of focusing all my energy on to the the one thing that I'm kind of all in on right now so you guys go ahead on digital countersuits. We Miss Jake. Go head over its digital wildcatters DOT com. Jake Yup emceeing check us out there. We'll still be doing the willingness artist podcasts and a variety of other things shows in youtube video content stuff like that so he gets to connect me and follow me. I'm not dying. I'm not going anywhere. I'm still going to be out there. So feel free to go into bigger and bigger better stuff and honestly some really funny stuff you would call it. Y'All make me laugh sometimes so much. I choke but in the time like this is a good time to be able to laugh something I feel like the entire oilfield has seen the video now because it has been everybody that we've talked to. You said that they had sent to them like four or five times. Yeah and if you don't know what we're talking about go find it actually will put a link in the show. Just Click on. Go another thing before we get to the reviews is we just relaunched our HSE podcast. It's actually the next next episode cut next week and Jake Gateway Apple Watches on that show. How cool is that it's awesome? Yeah Ho wait once you leave. You can now register and win Seattle today. You can't once you leave. You can register to win so maybe you went to Apple. Watch nature reviews. We got always have good reviews except times when we don't have any reviews we got to. This is Joey. Non One two three nine four eight two nine four good number. Joey. I'M GONNA count manager up in the Greater Pittsburgh area. I want to do my partly review for this great podcasts market. Jake you guys do awesome. Always very informative but at the same time fun I use a lot of the content from the show speaking with customers great job. I can't wait to meet you guys in February. Unfortunately Joey by now you've realized we had to cancel our live. Events are Pittsburgh event as soon as possible and safer pick those backup and hopefully will meet you June July ish time joy but thanks for review and then this is jody safety gaffey not states of America. Hi Guys Love here in industries up-to-date information. I am currently working in the Permian and love. The continental ball drives everyday working. My way between five rigs keep up the great work also say hi page. The hosts all guests industry leaders. We go way back. Jody he's a safety guy. So jodie listener Hsen podcast. It's relaunching next week in Windows Apple Watches and we'll make sure we let page said. Hello other news stories. Let's get it done so I'm sure most of your quarantine at home and have been for weeks on end. It's been a hell of a few weeks. I'm adapting to learn to work at home as I'm sure everyone else's so I'm sure you guys have been paying very close attention to oil prices. Oil has plunged after the. Iea says demand is in freefall soil. Resume just decline. If the head of the International Energy Agency warmed at global demand. It was a free fall as CORONA VIRUS. Lockdowns retaliate consumption. While major producers pump more futures on he was four or five days ago tumbled seven point seven percent of New York as the. Iea came out with their latest projections. And then Mike Healey President of OTC future said Oils GonNA continue to be stuck in this Rut given the simultaneous supply and demand shots. Stimulus doesn't really help these issues. Just because people have more money in the pockets doesn't mean they're getting in their cars. And so last time I checked. I think demand if it's not already down twenty percent it's projected to be down twenty percents down twenty million barrels per day from the normal one hundred million barrels per day. It it's it's really interesting. I'm having a really really hard time. Get my head around all this. I've crunched the numbers on the virus. I got my head around that and crunching numbers both on the economy and also on the price of oil and for the first time in my lifetime. We have two things going on. Which makes it hard to figure out. What the future's could bring so the first is we have this glut on the market right. Well that's we've had that happen numerous times. That's a pretty easy thing to forecast. Mathematically which by the way big shout to Microsoft stumbled across their power. Bi Tool. It's so much easier. Use some other tools. I was using but to think. That's never happened for usually when you have a glut on the market in the price of crude and gas goes down downstream explode. Because now that's raw feedstock and so they're roughy stocks and cut and so that portal on gas industry explosion profitability. What's happening now? Is the demand for refined products including things like plastic and he's is also going down at the same time. The price of crude and gas is going down so downstream which Newton normally would be booming. Right now. Or would be booming. Soon is hurting just as well because the demand for their products went down because of the global lockdown for the crossovers in. It's really hard. I'm doing a bunch of big data. Analytic stuff and come out in the next week or two probably next week with some predictions about where. I think this things could go. But I've never seen this in my life and it's really hard to figure out where it's going and it's it's not good no matter how you look at it. Yeah completely nuts. You've got experts in the area who just completely threw their hands in the air saying like listen. Nobody really knows where things are going to go in. Everybody always has a predictions especially during downturns. But this is completely different. This is unchartered waters. We'd never been here before. It's hard to say what oil is going to be a week from now let alone. How are we supposed to say what's going to be six months from now? Nobody knows right. That's completely speculative. So word on the street is that Russia is actually wanting to come back to the table though and wanted to new deal which is going to be good news so we're kind of getting conflicting reports over whether they WANNA play ball or not so we'll see what happens but the I don't know if you saw the Smart Energy Department withdrew their tender to fill the strategic petroleum reserve. I didn't get to dive into this to devote dino all the details. I don't know all the details under the big details. They don't have the money they had the money within the use. That money on the stimulus bill. So now the house is GonNa have to vote again. So this first stimulus bill when that's the one that's getting a lot of press because they're busy at twelve hundred bucks plus big five fifty per child or something like that if you make seventy five thousand dollars below last year. That's getting a lot of press but that's the first one jake. They're working on the fourth one. So the second and third already been done now working on the fourth one to come after this first one you can pump money into the economy and it makes it actually makes a substantial difference but not for long period of time. And so what happened is they. Don't have the money to the strategic petroleum reserves which is really interesting because one of things that's going on now. This happens every single time. The price of crew gets cheap. Is People buy it at a discount? Right now it's less than I think. Twenty three dollars a barrel and then they store it somewhere they wait for to get up to thirty dollars a barrel thirty thirty two eligible and they sell it and they make a nice profit. The problem is everybody's doing that right now. So storage is starting to get full. Which means the cost of storage goes up like anything else that supplied man with his short supply storage. The cost goes up which Zenica hurt the margins that the people are anticipating to make when they put the crude back on the market but right now if the US government could find the money and they're working on it are could get the money approved filter Strategic Petroleum Reserve. It would be a really good deal. It would help mitigate some these luke crude prices at least here in the US at the same time it were buying oil for pennies on the dollar to go in Strategic Reserve. So let's hope that the congress can keep agreeing on stuff more less but speaking of that. Did you see some of the stuff that got snuck into the the stimulus? Bill always politics. Never let a good crisis go to waste. Oh God I mean it makes me WANNA cry. I'M NOT GONNA get into it here but there's stuff that got put in that bill so that people come to agreement has no bearing on helping Americans are already people around the world. It was just you know personal gain for those politicians which that should be illegal. This is over hope. Our country stands up votes properly to fix all that stuff. Things like term limits. You know but anyway yeah. That's what happened to structurally reserved. They want us to do it. As a great idea they use the money to put cash in people's pockets so with oil prices hovering in the mid twenties. It's been I don't know what to three weeks now. He's two weeks I completely don't know data's Having been at home for so long but with more than two dozen largest US shell producers already having announced twenty to thirty percent cut some even more than that from their capital budgets. Apache Q. E. P. as a long list pioneer parsley. A lot of these companies are laying down every single one of the rigs as a lot of them are at least laying down half. It seems that more and more as time goes on more press releases are saying that they're absolutely gonNA stop all drilling moving forward so the next articles diving into what does that really mean for the fracture market and so oh fast company's never really recovered from the last downturn thing about that and now they're getting hit again we've already seen a lot of producers go to a lot of service companies and say. Listen our contracts are off doing any more work or if we're going to do work we're GONNA ask for a twenty five percent discount on the work that we've already done I mean how do these guys expect to stay alive. I don't get it. They can't so the some of them actually a lot of were taken at twenty percent hit. This is not. This is not the first time it's happened just to keep their people working no in that the very best break even and most harbor lose money but that's not a long term strategy. That's a gasping for my last breath of air type strategies to try to keep your crews working so it's bad it's bad it's getting bad now to get bad is get worse as we move forward in time. The big question is when is it could come back and to your point Jake. Nobody knows I'm working on it but even I come out with a number is could be guess based upon the data. You'll put my hands on right now. It's not a positive to say about kind of this talking point but honestly there's not much to really come up with here. It's not just the fracking market. Jake so I used to an AI tool scrape the web to look at public companies in their statements to the press. And I bet I found sixty companies that all touch oil gas that are not only gas companies that think companies like Microsoft right that publicly stated their quarterly predictions for revenue from the second quarter of two thousand twenty. They're down great because of what's going on and so that's that ripple effect that's got hurt not just that's hurting the the upstream part of the oil and gas industry but three sooners could start hurting the pipeline the midstream part and Dan. It's already starting to hurt downstream. Now it's GonNa have a trickle effect through all the other companies that touch all. Yes or not only US companies themselves and once again the big question is how much and for how long and we don't know yet. I'm all about I mean I'm sure you've seen on the latest updates from new every expert on the current virus and how this is really having a huge on the world. How long can we really stay quarantined? How long can they? The economy really sustain this. Yeah I got my head around that part so lease here in the US. This is what I think's GonNa Happen. I have a video coming out later to go to detail. But we're almost at the peak of the Bell Curve in the biggest thing is we need the testing the five minute testing. And we need enough that spurs through the country. That's easy for everybody. Get tested Betcha to happen in the next two weeks when that happens we now contest people in the people that are not exposed. That don't have the engines. Could go back to work so now you let the rest of the country back to work. Who Don't have the virus and only Corentin the ones that you do. That should be three weeks now for weeks. That's when that should happen well. At that time we have the hospital beds. Freed up the respirators the drugs that help actually people once they've been exposed to the virus and we're working on a vaccine so I think the whole Seal v Nineteen thing. We're GONNA be okay with it. We're predicting that Jim. I will go back to business as normal and around mid April's hit the peak of the virus here in the US. Now we're always have these pockets of this fires all over the world but we think that we'll that our experts are the world's experts very tested to vaccines both promising. Other clinical trials is could take them about a year. But we're hoping is by the beginning of flu season for twenty twenty one. We'll have a CD nineteen vaccine. This things just gone. That's what we think's GonNa Happen. Now but to your point we have to do something from an economic point of view the entire. Us entirely can't stay shut down because we're we're a recession now. It's a small recession. It's a manmade recession. Because WE SHUT DOWN. We can't have it turned into is when you have that domino effect of where people freak out. They quit spending money. It makes the recession works and then eventually becomes so big that no matter how hard. Us government polls to keep it from dropping down the whole we drop in the whole recession. That's actually my biggest fear is that's going to happen. We're seeing some positive signs but not enough yet for me to tell you quits to go one way or the other suit. Everybody's keep their fingers crossed the virus thing. We'll get through relatively quickly. We think by June I will be back to business normal and I sure hope so I mean I. I've never known more unemployed people in my life on. Just you know people have people are being laid off furloughed and and just not able to go to work and so you know it's visually. It's horrible scary. Because not only do you get laid off. You can't look for work. You're supposed to be quarantined. You have to Pay Your House note in your car note. Electric Bill Feed your family. It is it is. I hope I never experienced again. This is a once in mankind. Perfect Storm Perfect Black Swan type of event that we never go through again so let's continue on the theme of Misery The Dallas Fed did their latest survey which included responses from one hundred sixty one energy firms which took place from March eleventh to March nineteenth. This is a quarterly survey and offers a window into not just economic healthy industry but also the psyche of many oil executives in Texas. So I just want to go through the list and give you some insight into where everyone's heads at so more than half of the executives of their headcount could drop this year with nearly a quarter saying pay would decrease significantly. I've already seen that firsthand from friends. And so I'm trying to get their review quotes by look on domestic oil and gas has never been bleaker and other ones say this weed out the Ponzi guys in the shell plays a lot of capital distrust occurring the service industry for fracking will implode number one said banks are squeezing the MP sector including our company in the in demanding. We quit drilling to pay down our debt. Even though we are in compliance with terms of our cut agreement we will likely shutdowns early next month. The paint early termination penalty to our re contractor in excess hedges to pay down debt. We are in survival mode now. Nice when said we're planning for a soft twenty twenty soft would be great now? We are now expected in almost total. Stop and business in the coming weeks and months. Nice Win said I'm scared in my opinion tastes. Road Commission should institute pro-russian as we had in nineteen fifty s and early nineteen sixties and. That is something that's on the table. Currently being talked about the next one said looking to be a bloodbath for most firms. Yup would agree on the next one. Said I'm shutting everything I can and cutting general administrative expenses to minimal levels to try to ride out the storm. Those who are in debt will not survive and over this last one here. I do not believe the energy industry. Ex- except with respect to the largest producers has the capital liquidity and reserved to survive a price collapse of the death in time extent that will be experienced not. It's not I will say one thing had quite a few people reach out to me. Talk to me about how this is Russian Saudi Arabia trying to put the fractures out of business. That's not what happened in two thousand fourteen. That's not what's going on here. You have to remember. You can bankrupt a company but you can't Bakr Brock. The hydrocarbons are there and if prices go back up even if you know. A lot of operators get destroyed somebody once it makes. Fiscal sense will get some capital and go do it again so this is something but just a between Russian Saudi Arabia. That we're playing casualties right now. It is interesting though. Jake that Ryan sit in the former railroad. Commissioner is going to the OPEC meeting June where they all are going to try to agree upon production numbers for the first time ever the state of Texas his equal to Russian OPEC in those discussions that that makes me feel good. I actually know Ryan's a good guy if anybody can help. Broker a deal that benefits the world. It's him so the nice article is actually outdated by now. Maybe it's still true so this one I put in here says Russia's Russia says oil is on the agenda for the g twenty call which is GonNa be. I think in the end of April early. May some time but now like I said it seems like Russia wants to come back to the table and discussing new deal yard impression cuts. So that's kind of good news for everybody Sir Stanley edge of your seat. Let's see what happens with that. And then that's when next articles Chevron hits the brakes on Permian cutting eight billion dollars and Catholics across the company and the reason that such a big deal to the companies that have the capital expertise and reach to keep the Shil market alive in the US is Chevron and Exxon and Chevron cutting eight billion dollars which of course they are. I mean you know you would expect them to do this. It is GONNA be interesting. You know they don't have any debt. They have a lot of cash. This cut eight billion dollars actually increase their cash because they were expecting to spend that money this year. So I would not be surprised if we see both Chevron Exxon multiple major acquisitions the next twelve months by all this but just the fact that they're cutting capital. Money just tells you how bad it really is and last article today. I'm sure he will appeal to this. Oxy Is adding to cut. They're cutting executive compensation they're cutting headcount down and I'm sure you know as we've talked about Carl. Icahn has been in a little bit of restraining a proxy war with oxy he had purchased it. We're just a good bit of oxy Kimber. Exactly with the number was about a while back. He sold off. Eighty percent of that their market cap is completely just tanked and things one fifth of what it used to be before they acquired a Anadarko and now he essentially got it for a fraction of the cost. And so I think he's up to nine point nine percent so he owns quite a bit of oxy and so Steven Chason was the former. Ceo of oxy. So now he is actually executive chairman of the board now and then call icon was actually put in three independent directors of his own. Andrew Lincoln Nicholas Grazziano and Margarito Palau Hernandez. I have no clue who they are. But it seems they've they've reached some kind of resolution with icon and that was also because I think they also kind of forced his hand a little bit. Hopefully he's happy with this deal here. But they taste poison pill to where if somebody was acquiring more than I think. Fifteen percent of the company at automatically sort of diluting shareholders rapidly and yet in all the details of that to be also the this turn into soap opera. You know so proper. Yeah if you're watching the soap operas have more stuff happened in thirty minutes and happens in your tire. Lifetime this is what's with Oxy Dorka. I mean this is just one story after another after another. It's interesting to see if icons now going to work with the board to try to stabilize the bleeding ship of oxy Darko. Or if this is just another step in him gaining control so you do what he wants. I don't know he has a call me an astronaut opinion. But this is this is just like a unfolding soap opera of intrigue and espionage and somebody's dead relative really wasn't dead. They Ran Cohen. They came back and all within a half hour. So we're definitely keep an eye on this because this has been an interesting story from day one. It just gets better better. I guys with the stories for this week Mark Russell during the giveaway right. Of course. Still doing a giveaway. This things become a crazy. It's actually had a semi reach out to me just two or three days ago and it touched my heart. They go mark. It's unfortunate. I just got laid off but the same day I got laid off my shirt arrive in the mail. So is a good day. And it's like damn I mean just you don't like to hear that sources so we glad they wanNA shirt and by the way if you win. The shirt has no reflection on you. Possibilities you being laid off and on it is cool shirt we give away what a week have unique serial numbers actually on Jake's last show that you're the show we're going to give away something cool basil a serial numbers because we've never done it since Shakespeare's hard next show which will also be a first Friday. Qa a believe so. If you'll have any questions for jake before he goes onto other stuff go to sweep dot com as question and go ahead type in your questions and since this is his last one if you WanNa Kinda get away from the tactical stuff and ask him stuff. You're bigger picture stuff about his future. What they're doing. How people can still make money in his downmarket. Any still go ahead and reach out lists soon get some questions for Jake and then like I said Jake give us some really cool based upon the shirt go the show notes. Click the link giveaway one a week and the most important thing is that unique serial numbers on the front shirt. If you have that number if you have that shirt picture right down at number somewhere and Jake lists skip the weekly rid count. You know. It's not pretty and then you heard a talk about our street. Teens are all volunteer group at a facebook. Search GASCO will network Odeon stretching. Join give way cool stuff we asked you help us our social media. You know what Jake. I didn't realize it's still a day so the next this is where I talked about the monthly email newsletter. We sent out for free. There's nothing for me to put in it this month. Like every guest finish shutdown of first time in ten years. Is this email newsletters. Been going on for ten years the first time. There's nothing for me to put in it. So if you're on that list you're GonNa get something I'm just not sure what it's GonNa be and then this is also a point where I talk about if you want Jake and outcomes speak Jake. Every single one of our speaking gigs were scheduled some. We're always paid for for this. Year has been cancelled yet. So we can't come speak while we're all lockdown now if you'll have something going on the third or fourth quarter this year go ahead and reach out to us and we'll talk to you about it and we'll just get some type of agreement in place and if we're in a good place and we get closer we'll do it and if not we'll just do whatever but you talk about the first Friday QNA. This'll be Jake's last first Friday. Qna Go and ask your questions. And actually I usually try not to stumping. Why don't you try to stop any kind of funny? We need some humor on this show. And while you're out there go ahead and go to the website email address. Use that to let people know about the cool stuff we're doing and by the way people. We had our two hundred episode. I must go ahead tell about what was set up. We are two episodes setup to live from technique. Fomc their grip. Campus be invitation. Only we're GONNA invite the people that had won. The shirt were invite the people had given us their email address and then if we had any extra seats were opened up to the public but once again it's been cancelled so even our two hundredth episode. Which could celebration is Jacob ended up doing virtually which is just where we are in the universe. Neither here there. It's it's where we are so you keep Chin Up. Everybody things will get better. The big thing is win and I'm working trying to figure out when that's GonNa Happen. But Jake for the almost last time you ready to get out of here. Let's do it remember. Folks do great work. Pay It forward and we will see you next time. Hey everybody Alex here. With the events on deck for the next month we have some exciting things coming up to happy hours in Pittsburgh and one in Denver so the first one will be happening on March twenty second at Bubbas Gourmet Burgers and beer. This event won't be from four to seven and will feature a live recording of oil and gas this week with Jake Corley and marker so be sure to check that out you can sign up via our social. Media's we haven't bright sign up and should be good to go from there. The next event will be a happy hour in Denver at Liberty Oilfield Services on April second once again. Check our social media's for the event bright sign up and sign up there as some of our social media followers may know we are headed to Aberdeen Scotland. The first week of March. We had a couple of days actually for Doke recon creating high impact. Sales and Energy Dokru is excited to launch. Its very first sales development conference and mark and Patrick will be hosting a panel. An recording alive podcasts. That we're really excited to be joining map. The leaders in industry luncheon is on March eleventh at the Petroleum Club of Houston. Port of the future is happening on March tenth and Eleventh in Houston your registration to the port of the future conference also allows you access to exclusive events including TSA security and terrorism research showcase and many more so be sure to view the agenda and see what they are offering the Houston energy. Breakfast will be on March twentieth at the Conference Center in Houston the API Energy Houston three gun. Chapter will be on March Twentieth. This amount is filling up very quickly so make sure to get a team in as soon as possible. The BP Energy Outlook Twenty twenty edition will be on April twenty. First it's happening online and this event is about transitions that will take place to a low carbon energy system. That's offered this month. Everybody hope you guys have a good month and check back in next month to see what's best for having thanked next week for another informative and entertaining episode of Oil guests this week. Podcast product W oil and gas global network learn more at Orland GAC this dot com.