Continental Resources (CLR) Update - July 7

[dan_s]

Simmons Energy Morning Notes July 7, 2020
Terrible day for companies with Bakken exposure as US District Judge Boasberg issued his decision on DAPL whereby he is requiring the 570 kb/d pipeline to shut down by August 5.

The most negatively impacted is ET since it owns DAPL (ET -11% today). OKE (Bakken-focused midstream company) is down 12%. Bakken E&P names are down as well: WPX -9%, ERF -12%, CLR -5%, OAS -6%, MRO -6% and HES -4%. As we learn more details we will pass them along, but three major takeaways thus far: 1) Big loss to midstream investor psyche given DAPL has been on line for three years and will now be shut down until the EIS is complete; 2) Bakken oil needs to find another route to market; and 3) Trench warfare between environmentalists and the midstream sector continues with the former having the upper hand recently.
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Reuters Take: https://energy.economictimes.indiatimes ... s/76826897
Energy Transfer said it was looking at legal and administrative measures to avoid a shutdown, and was considering an appeal if those efforts fail.

In a filing seeking a temporary stay to the order, the company argued that time-consuming and expensive steps are required to shut the pipeline down safely and empty it of oil, which means the process would take well more than 30 days.

If the motion for a stay pending an appeal is denied by the district court, the company said it intends to file one in the Washington, D.C., circuit court.

Preparing a thorough EIS could take about thirteen months, according to an estimate by the Army Corp.

Consultancy Rapidan Energy Group said the ruling casts long-term doubts over the future of the pipeline, which has only been operating for about three years.

"With odds of a temporary stay on appeal only 30 per cent, the court-ordered DAPL shutdown on Aug. 5 should last at least 10-12 months if Donald Trump wins re-election and permanently if not," it said in a note.