In going over the 3rd quarter reports from the US E+P’s, the report from Continental Resources (CLR) was the most interesting to me. Harold Hamm, CEO of Continental, was virtually alone in cutting 2015 capex and production guidance, a move obviously designed to help weather what I’m calling an $80-oil winter of sustained low oil prices. In contrast, virtually every other CEO has “whistled through the graveyard” in refusing to adjust spend and production targets as part of their 3rd quarter conference calls. Considering that Continental is by far the best positioned Bakken E+P and Harold Hamm perhaps the smartest oilman ever, I tend to think his lone honest assessment to be far more on target than everyone else.
We are going to see some major production and spend declines caused by $80 oil, and they will be financially forced upon some players who don’t have the resilience of a Continental Resources.
Let’s look at some of the possible problem players in the Bakken to continue on with our series on shale production winners and losers.
In part one, we isolated some of the attributes of producers likely to show strain from sustained low oil: rickety balance sheets, high yield debt, holdings outside the core of the Nesson Anticline and behind the curve technology and efficiencies being a few. With this in mind, a couple of companies working in the Williston Basin appear in likely trouble over the next six months. Again, my thanks…