Oracle of Oil

I have a competition in me. I want no one else to succeed.

[Oracle of Oil @Oracle_of_Oil]

@earlnghaz @NextWaveEFT @nimblephatty https://t.co/FKMPXlqdHH

[Oracle of Oil @Oracle_of_Oil]

@LandmanLando Check out Luling, TX

[Oracle of Oil @Oracle_of_Oil]

@WilliamMcMulle9 Providing broad brushstroke views is not helpful when capital allocation is highly nuanced. Championing for across-the-board CapEx decreases is not a healthy market reaction.

[Oracle of Oil @Oracle_of_Oil]

@joshyoung Probably helpful to keep in mind there is a difference in being the marginal supplier of existing volumes (App) versus new volumes (Haynesville). One should shut-in volumes, the other cut activity.

I’d argue what we are seeing in the market is rationality

[Oracle of Oil @Oracle_of_Oil]

@joshyoung @AnteroResources @EQTCorp Help me with your +4 math…they ran 2 HZ rigs last year, and guided to 2-3 HZ rigs in 2024. Considering they added Tug Hill (2 rigs), isn’t that a net drop of 1 rig?

Maybe you are counting top hole rigs?

[Oracle of Oil @Oracle_of_Oil]

@JamieHeard5 RE: Shouldn't those who proved they could allocate the most back to shareholders in a cycle high trade at the highest premium in the low part of a cycle?

Does it depend on how the capital was returned? I’m not sure Buybacks at cyclically high stock prices is optimal allocation

[Oracle of Oil @Oracle_of_Oil]

@aaronmchow @radbazza @JamieHeard5 Serious question, is the calc favoring wet gas or is wet gas generally more favorable?

Taking things to the extreme, Permian gas is without question the lowest cost of supply gas, and that would screen super low here (as it should)

[Oracle of Oil @Oracle_of_Oil]

@mcdocatano @JamieHeard5 How does organic growth lower the corporate breakeven? More productive capacity requires incremental capital to invest to maintain. Most of the operating leverage in E&Ps come from G&A, which is immaterial compared to capex

[Oracle of Oil @Oracle_of_Oil]

@mailboxmoney6 With a $50 Bn buyback, it is essentially the same thing as paying cash, but it allows them to better control the time of cash deployment rather than lump sum at close. It’s a smart way to hedge sign to close commodity risk imo, particularly with the op leverage in EOR assets.

[Oracle of Oil @Oracle_of_Oil]

@eftjustice So from my perspective, the transaction says less about their existing assets, and more about management incentives. Reminds me of Pascal (via Munger): “all of humanity’s problems stem from man’s inability to sit quietly in a room alone”

[Oracle of Oil @Oracle_of_Oil]

@eftjustice Management are owners, but their primary incentive in a “no-growth” industry is to retain their seat and keep clipping compensation coupons (and variable divy)

Kimmeridge has a decent track record, although IMO they tend to focus on trading narrative and not fundamental value

[Oracle of Oil @Oracle_of_Oil]

@pickeringenergy Don’t know about you, but I see

🚩 “Transformational”

🚩 “Scale” (read as mgmt preservation)

🚩Outbidding well capitalized, offsetting Large & Mega Caps

🚩Questionable capital allocation (material leveraging + cutting share repo)

🚩Splashy new basin entry (two basins!)

[Oracle of Oil @Oracle_of_Oil]

@NextWaveEFT Is SWN outcompeting CNX for most misleading IR materials?