Reply to thread

Message

<blockquote data-quote="Allen" data-source="post: 202495" data-attributes="member: 389">Since most oil companies operating in ND have a line of credit with the banks in order to drill a well, I don't think I'd call it a farce.&nbsp; The banks have made the companies sharpen their pencils a bit over the past couple of years.&nbsp; Hence the increased hedging of oil prices with companies like Oasis, Whiting, etc.&nbsp;&nbsp; EOG is one of the few in the state that are operating within cash flow.&nbsp; The crappy part for companies that are having to finance their wells is that 1.) new tax law is going to limit their deducting of interest on the operating loans, and 2.) companies like EOG are going to make bank if the price of oil continues to rise.&nbsp; Last I checked, the companies that are hedging their production are doing so in the mid to lower 50's for the second half of 2018.&nbsp; What the above means overall to me is that companies are convincing bankers that there's a comfortable profit to be made in the lower $50 range.&nbsp; Otherwise the banks wouldn't be giving them the cash to drill new wells.&nbsp; The crappy part though is that companies that have to excessively hedge their future production are going to miss out, big time, on $80 oil.&nbsp; I guess market experts refer to this as backwardation.</blockquote>

[QUOTE="Allen, post: 202495, member: 389"] Since most oil companies operating in ND have a line of credit with the banks in order to drill a well, I don't think I'd call it a farce. The banks have made the companies sharpen their pencils a bit over the past couple of years. Hence the increased hedging of oil prices with companies like Oasis, Whiting, etc. EOG is one of the few in the state that are operating within cash flow. The crappy part for companies that are having to finance their wells is that 1.) new tax law is going to limit their deducting of interest on the operating loans, and 2.) companies like EOG are going to make bank if the price of oil continues to rise. Last I checked, the companies that are hedging their production are doing so in the mid to lower 50's for the second half of 2018. What the above means overall to me is that companies are convincing bankers that there's a comfortable profit to be made in the lower $50 range. Otherwise the banks wouldn't be giving them the cash to drill new wells. The crappy part though is that companies that have to excessively hedge their future production are going to miss out, big time, on $80 oil. I guess market experts refer to this as backwardation. [/QUOTE]

Verification

What is the most common fish caught on this site?

Reply to thread

Recent Posts

Friends of NDA