RJ on Permian Basin Oil Prices - June 18
Posted: Mon Jun 18, 2018 11:45 am
Raymond put out a note this morning saying that most of the Permian Basin upstream companies are now way over-sold.
Not all Permian E&P’s are recognizing these low Permian spot prices
"Put another way, E&P company exposure to Permian spot pricing can vary substantially. There are several ways that E&P’s can be
“protected” from the low spot prices induced by Permian pipeline bottlenecks: First, there are many Permian producers that have
contracted or “firm” crude volumes that they can ship on existing pipelines to better price points like the Gulf Coast for usually less
than $5/bbl. That means Permian companies with contracted capacity to the Gulf Coast have been realizing closer to $70/bbl this
month rather than the in-basin spot oil prices in the $58/bbl range (or about $12/bbl above Permian spot)."
Not all Permian E&P’s are recognizing these low Permian spot prices
"Put another way, E&P company exposure to Permian spot pricing can vary substantially. There are several ways that E&P’s can be
“protected” from the low spot prices induced by Permian pipeline bottlenecks: First, there are many Permian producers that have
contracted or “firm” crude volumes that they can ship on existing pipelines to better price points like the Gulf Coast for usually less
than $5/bbl. That means Permian companies with contracted capacity to the Gulf Coast have been realizing closer to $70/bbl this
month rather than the in-basin spot oil prices in the $58/bbl range (or about $12/bbl above Permian spot)."