SSN 0.00% 1.5¢ samson oil & gas limited

Yes things will turn Rob - only questions are how long for that...

  1. 10,693 Posts.
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    Yes things will turn Rob - only questions are how long for that to happen, how steep will the curve be and what is the "new normal" range.

    I'm reading quite opposite views from some operators. The increases in DUCs is likely going to be a long term impediment to price - as these wells can be brought onto production quickly. COP doesn't like to do this, being of the philosophy that if you're not going to complete the well don't commit the capital to drill it. Possibly there is some HBP going on but theoretically everyone is drilling into sweet spots and they have already been HBP'ed.

    From North Dakota .... "that have been drilled but not fracked surpassed 1,000 for the first time in September, as producers wait for prices to recover before turning them on. As a result, more than 8% of oil wells in North Dakota are now sitting idle, harming the industry's ability to grow production; daily output in the state fell 2% in September to about 1.16M bbl/day. The backlog is "sending a definite signal to the market that oil and gas operators are not willing to do a lot of drilling or hydraulic fracturing or production at these low prices," said Lynn Helms, director of the state's Department of Mineral Resources

    If number of DUCs in ND has surpassed 1,000 for first time, then operators are still drilling and that capital has been invested into the ground. Might be a "value trap" - as in if prices remain low for longer than the well will remain DUC'ed (and maybe become some other entities DUC for less than what it cost to drill.....)

    LOE always interesting. With lower production the #barrels available as denominator makes SSN LOE rise on per BOE basis. Offset this with lower actual operating dollar costs AND lower oil/gas ratio of production changes in both +ve and -ve directions. Will be interesting if any LOEs are permanent reductions or just current deflation from service companies in a more competitive environment.

    Other thing to watch might be the differential to WTI - is it contracting or expanding. I would think contracting as less Bbls competing for takeaway capacity. How this affects SSN I don't know as their incremental production is very small compared to the regions total at about 0.07% of daily production.

    Nothing yet on 10-Q release.
 
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