Energy Prospectus

President Donald Trump’s push to refill the country’s oil reserves is intended to reassure domestic producers at a time when collapsed prices are straining the industry and a substantive rebound appears to be months away at the earliest, the nation’s top energy official said in an interview Tuesday. Trump last week directed the Department of Energy to purchase upwards of 77 million barrels of domestic oil to top off the Strategic Petroleum Reserve. Energy Secretary Dan Brouillette said by phone that the reserve, or SPR, exists specifically “to mitigate these types of disruptions, if you will, wherever they come from.” The current price collapse started gradually in early February as traders reacted to lower demand forecasts from China due primarily to the country’s response to COVID-19, which amounted to a major and ongoing slowdown of the country’s massive economy. The price fall picked up speed earlier this month when Saudi and Russian officials could not agree on curbing production rates to stabilize oil markets in the face of less demand due to the virus curtailing economic activity worldwide.

Read more: https://www.adn.com/business-economy/en ... -industry/

At today's oil price there are oilfields that will be shut-in because cash expenses to operate them is higher than the oil price.

Note on 3/18/2020 from Stifel;

Energy & Power - Stifel's Crude But Refined Thoughts: Takeaways from "The Perfect Storm" conference call with Rystad Energy - Derrick Whitfield

On March 16th, the Stifel Energy team hosted a call with Rystad Energy to discuss the impact of Covid-19 and the OPEC+ price war on global oil markets. Based on our call and proprietary assessments, we updated our macro models, conducted sub-sector sensitivity analyses, and outlined the most defensive stocks by sub-sector. We expect crude to trade ~$25-30/bbl WTI for the next few quarters assuming 2.9 mmbpd of Covid-19 demand impacts, OPEC+ restores production to pre-cut levels in Q220, and Saudi further increases supply by ~1.7 mmbpd in Q220. While crude could trade sub $25/bbl, we believe the duration will be short-lived as U.S. E&Ps decisively cut activity and the U.S. fills its SPR. While not assumed, we believe cooler heads will prevail between Saudi/Russia by mid-year following the re-set of U.S. activity. Assuming this backdrop, we believe the most defensive stocks to own are BKR, INSW, KMI and TPL.

Stifel: Core Laboratories N.V. (CLB, $7.99, Hold; Target $14.00)

CLB Takes Actions to Navigate Stiff Macro Headwinds; Maintain Hold - Stephen Gengaro -

CLB announced that it was withdrawing its 1Q20 guidance, cutting its 2020 capital spending program, actively enacting cost control plans, and reducing its quarterly dividend to $0.01 per share from $0.25 starting in 2Q20. We believe these are prudent moves to support the balance sheet, help generate cash and navigate through significant macro headwinds caused by COVID-19 demand destruction and the Saudi/Russia oil price war. Last week, we sharply reduced estimates for each company in our coverage universe in a report titled (In Times of Turmoil, Balance Sheets and FCF are Critical; Revising Estimates in Wake of Oil Price War). We are making additional adjustments to our forecasts for CLB, maintaining our Hold rating and lowering our target price to $14 from $17.