Shorting Oil, Hedging Tesla

[jhm]

Fossil Fuel Companies Are Beginning to Fall Behind on Their Loans

The oilpocalypse continues. The industry has been in a tailspin since the coronavirus lockdowns drove demand into the ground. Fossil fuel companies have scrambled to figure out what to do, and it seems the latest tactic is not paying loans.

The whole idea of borrowing money to pay dividends looks very bad. I'm guessing that a lot of this delinquent debt is from smaller companies that don't pay dividends. But the oil majors could be in trouble too. Banks may need to write down oil and gas debt. This can send more financial distress signals across the industry.

Conclusion, financing for oil and gas is going to get more expensive. This will slow the flow of capital until fuel prices recover. It may even become too expensive for oil majors to keep paying out dividends.

 

[TheTalkingMule]

Chevron bought Noble Energy for some reason. All stock, 7.5% above current SP. US exploration is gonna be HOT in 2021/22!

Chevron picks Noble in biggest U.S. energy deal since oil crash

 

[mblakele]

Here's a look at how corporations are coping:

Oil giants want to own only the cheapest, cleanest hydrocarbons
What to do with the cruddiest crude

[...]

The oil industry faces a basic problem. If the price of Brent crude, the global benchmark, surpassed $100 a barrel, about 90% of the world’s oil could be extracted with a return on capital of at least 10%, according to Rystad Energy, an energy-research firm. Today Brent fetches just over $40 a barrel, making about half the world’s oil reserves too costly to produce (see chart 1). Oil prices are expected to rebound as post-pandemic demand picks up, but by how much is fiercely debated.

[...]

As firms seek winning projects, many are struggling to offload mediocre ones. BP is the sole supermajor to meet its divestment target, of $15bn—in part thanks to the decision in June to sell its petrochemicals unit, a business that rivals view as having brighter prospects than drilling. Rystad reckons reserves equivalent to 12.5bn barrels of oil were for sale in June, excluding shale and oil sands. Of that, the majors accounted for over two-thirds of liquids like oil and propane, and half the gas.

[...]

[...] Chevron is trying to sell its stake in offshore blocks in Nigeria, which it first attempted to sell five years ago. Sellers are sweetening deals. In May Total announced a loan similar to the one BP extended to Hilcorp, to help close the sale of its North Sea fields to a PE-backed company called NEO Energy. In May Shell said it would sell its gas assets and pipelines in Pennsylvania to National Fuel Gas Company, a regional business. Wood Mackenzie reckons that the $541m transaction implied a fair value for Shell’s producing gasfields but valued the company’s undeveloped gas acreage at close to nothing.

Some acquirers will emerge for the same reasons others stay away: the transition to cleaner energy is uncertain and markets will remain volatile for a while. Opportunistic buyers may purchase resources as they would an option, which could pay out if demand picks up and prices rise. It is a credible strategy, but a risky one. In recent months Saudi Arabia has shown it can unleash millions of barrels of crude to win market share. “Companies will be able to find buyers for difficult resources,” says Per Magnus Nysveen of Rystad. “It’s all a question of the price.” Right now, buyers drive a hard bargain.




​

 

[Oil4AsphaultOnly]

It appears that the window for petrochemicals as a growth market for crude oil might get closed in the not too distant future: New method converts carbon dioxide to methane at low temperatures

Being able to produce methane directly, at ~100C, without first producing hydrogen, would be a pretty huge step forward for net negative CO2 production.

 

[mblakele]

It appears that the window for petrochemicals as a growth market for crude oil might get closed in the not too distant future: New method converts carbon dioxide to methane at low temperatures

Being able to produce methane directly, at ~100C, without first producing hydrogen, would be a pretty huge step forward for net negative CO2 production.

Replied here: Power to Methane

 

[RobStark]

Briggs & Stratton files for Chapter 11 bankruptcy as pandemic weighs on business

Briggs & Stratton Corp. said Monday it has filed for chapter 11 bankruptcy protection and reached an agreement to sell most of its assets to KPS Capital Partners. The Milwaukee-based company, which makes gasoline engines for outdoor power equipment, said it has secured debtor-in-possession financing of $677.5 million from KPS and its existing lenders to allow it to continue normal operations ahead of the closing of the deal.

 

[jhm]

It appears that the window for petrochemicals as a growth market for crude oil might get closed in the not too distant future: New method converts carbon dioxide to methane at low temperatures

Being able to produce methane directly, at ~100C, without first producing hydrogen, would be a pretty huge step forward for net negative CO2 production.

Hmm, it would be nice to know the energy efficiency and cost. Direct Air Capture is a Holy Grail.

 

[jhm]

Briggs & Stratton files for Chapter 11 bankruptcy as pandemic weighs on business

Briggs & Stratton Corp. said Monday it has filed for chapter 11 bankruptcy protection and reached an agreement to sell most of its assets to KPS Capital Partners. The Milwaukee-based company, which makes gasoline engines for outdoor power equipment, said it has secured debtor-in-possession financing of $677.5 million from KPS and its existing lenders to allow it to continue normal operations ahead of the closing of the deal.

A lot of outdoor equipment is shifting to li-ion battery power. Perhaps this is one of the first ICE makers to be killed by batteries.

 

[gavine]

A lot of outdoor equipment is shifting to li-ion battery power. Perhaps this is one of the first ICE makers to be killed by batteries.

Bankruptcy doesn’t mean out of business. GM went bankrupt and they are still around. That said, I agree that Briggs and Stratton will be doomed eventually, unless they pivot to electric solutions.

 

[TheTalkingMule]

Look at Generac, they pivoted from purely methane burning generators to offering battery packs. It can be done!

 

[TheTalkingMule]

ArcLight-Backed Shale Driller Bruin Seeks Chapter 11 Protection

 

[RobStark]

A lot of outdoor equipment is shifting to li-ion battery power. Perhaps this is one of the first ICE makers to be killed by batteries.

A remember this outdoor equipment doesn't have catalytic converters and mitigating pollution controls.

ICE leaf blower can have as much emissions as a compact ICE sedan.

 

[jhm]

A remember this outdoor equipment doesn't have catalytic converters and mitigating pollution controls.

ICE leaf blower can have as much emissions as a compact ICE sedan.

As a teenager, I worked in landscaping. We used professional grade equipment, but the equipment was constantly breaking down. So in addition to being noisy and smelly, these small engines required alot of maintenance. I think the upshot of li-ion for commercial landscaping is mostly around maintenance cost.

 

[adiggs]

As a teenager, I worked in landscaping. We used professional grade equipment, but the equipment was constantly breaking down. So in addition to being noisy and smelly, these small engines required alot of maintenance. I think the upshot of li-ion for commercial landscaping is mostly around maintenance cost.

I know I love my cordless yard equipment. I've begun using Ego equipment for handling about an acre worth of lawn and related stuff; I think it's on the upper end of what can be done through personal effort (maybe 2 acres). The next big advance I'm looking forward to are good enough / cheap enough li-ion batteries for a riding mower (first) and then a small tractor. That'd get you into bigger lawns.

And the maintenance so far is plugging the batteries into the charger when I'm done, so it's all ready to go the next week when it's time to mow the lawn. I've been corded and cordless electric for >10 years; the gas engine stuff has no chance at a foothold in my household

Even that riding lawn mower that I kind of need!

 

[Off Shore]

then a small tractor

That's the Tesla ATV.

 

[gavine]

As a teenager, I worked in landscaping. We used professional grade equipment, but the equipment was constantly breaking down. So in addition to being noisy and smelly, these small engines required alot of maintenance. I think the upshot of li-ion for commercial landscaping is mostly around maintenance cost.

I'm sure filling gas cans every day at the station was a PITA as well.

 

[adiggs]

That's the Tesla ATV.

As long as it has a Power take-off - Wikipedia, then I'm good to go! Actually, then I'm so far over geared for the needs I can identify today, it's ridiculous. But heck, it sounds like a good thing to have if you're going for something less than an island but more than nothing, that will also help advance the larger cause of electrification of the whole economy.

 

[Off Shore]

As long as it has a Power take-off - Wikipedia, then I'm good to go! Actually, then I'm so far over geared for the needs I can identify today, it's ridiculous. But heck, it sounds like a good thing to have if you're going for something less than an island but more than nothing, that will also help advance the larger cause of electrification of the whole economy.

I'm really hoping they look at the ATV with the usual Tesla eyes--how can this be recreated to make it many-x more useful? It could be an amazing vehicle on the farm.

 

[TheTalkingMule]

I've had an Aug20 Chevron put order sitting for weeks and it just filled. $90 strike for $3.55. Delightful.

Perhaps we don't dip way back down in the next month, but I think we will. Might be a good time to shop around for Jan 2021 puts too! Looking at these options premiums relative to TSLA is hilarious!

 

[TheTalkingMule]

The effects of this will be quite destabilizing.

UAE's migrant workers fret over future in coronavirus economy

No official statistics of how many people have left the UAE are available. But at least 200,000 workers, mostly from India but also from Pakistan, the Philippines and Nepal, have left, according to their diplomatic missions.

Sectors like construction and retail were struggling even before the crisis, which exacerbated hardship for workers already exposed to payment delays.