Oily Stuff Issues 'Buy' Alert!
We are not investment advisers at oilystuffblog.com (OSB) but we think its important that our readers consider an immediate buy on Revlon stock, NYSE: REV, currently trading at $21.40 per share.
Analysts at OSB foresee significant growth in lipstick sales for REV throughout 2019 and 2020 as more and more of the stuff needs to be smeared on the US shale oil industry. US LTO is still outspending revenue, prices remain volatile, debt maturities are approaching and lenders have shut off the money spigot. This will all require lots of cosmetics and offers a unique opportunity to make some bucks from the makeup and beauty aids sector.
ConocoPhillip Profit Beats As U.S. Shale Bet Pays Off
(Reuters)- ConocoPhillips beat quarterly profit estimates on Tuesday, benefiting from higher output from its U.S. shale assets, in a vote of confidence in the oil producer’s strategy to refocus its investments in the lucrative Permian, Eagle Ford and Bakken areas.
OSB: Conoco hit a lick 1Q19 with $1.8 billion in profit. This included $384MM of revenue from Alaska and $1.25 billion of "international" revenue, including a $700MM payment from Venezuela on its IOU. COP reported $191MM in revenue from US lower 48 operations, including GOM and a bunch of asset sales, so US shale oil did not have all that much to do with anything good that happened first quarter 2019. Reuters is wasting lipstick reporting that hooey.
Anadarko Looses $15MM 1Q19
(Houston Chronicle)- In the midst of a bidding war, Anadarko Petroleum reported a $15 million loss for the first quarter of the year, down from a $121 million profit during the same time frame last year.
OSB: Whoever ends up buying APC, bless their shaley hearts. In the mean time, the SEC has filed charges against Anadarko employees for insider trading and its CEO gave himself some awesome platinum parachutes the day before Chevron announced its offer that will let him walk with over $70MM in compensation. Before the announcement, APC stock value was down 35% year on year so this feller sure deserves it. Oxy and Chevron are fighting over this pig like its 400K BO per well acreage in the Delaware Basin is Fort Knox. Tons of lipstick is being used to describe this Anadarko acquisition. More M&A's will require even more lipstick.
Oil Wells To Be Drilled To The Moon And Back
(Rystad)- Rystad Energy forecasts that more than 1 million kilometers of new oil and gas wells will be drilled over the next five years. The collective depth of these wells is the equivalent of 25 times around the equator – or 2.5 times the distance to the moon.
OSB: This is so dumb we don't have much to say about it. We estimate it will take 200,000 shale oil laterals to achieve this "mileage" over the next 4 years! America has drilled about 80,000 shale oil wells in the past 10 years, so those shale boys are going to have to hump it. These 200,000 wells we estimate will cost $1.6 trillion. No word yet where the money will come from to get this miracle done. A lot of trees will have to be cut down to print all that money; standby for another potential OSB buy alert on International Paper (NYSE: IP). This could be a winner! In the mean time, if only half these wells actually get drilled lipstick sales will skyrocket.
Exxon, Chevron Leading The Permian Oil And Natural Gas Surge
(Forbes)- Oil and gas extraction in the play has more than doubled since 2016. Although the U.S. shale revolution that took flight in 2008 was ignited by the smaller independent oil and gas companies, the industry's giants have increasingly taken over.
OSB: Forbes is the biggest shale oil cheerleader in the world. Exxon's 1Q19 earnings sucked and disappointed even the mothers of all members on the Board of Directors. XOM's onshore, American upstream assets generated only $96MM of revenue. You can't possible put enough lipstick on that. Exxon's wells on the $6.3B Bass acquisition in New Mexico really suck. Chevron disappointed folks as well, though not as much. Chevron itself is quoted as saying it won't make any money in the Permian until 2021. Exxon and Chevron are not leading anybody yet in the Permian. If the great state of New Mexico says that's all she wrote on use of aquifers as frac source water, Exxon is going to be "leading" the pack racing across the State line back to Texas.
Apache Cuts Back Production of Permian Gas Because Of Pricing
(Houston Chronicle)- Houston's Apache Corp. said Tuesday it will dramatically cut back on its natural gas production in the Permian Basin for an extended period of time because of steep pricing discounts caused by pipeline shortages in the region.
OSB: Associated gas in the Permian is not worth spit anymore; WAHA Hub postings is zero, zilch, nada. The E in BOE is therefore not applicable in well economics and how the shale oil industry is going to come up with $1.7 trillion to drill 200,000 more wells. Lipstick is being used on BOE economics in the Permian Basin, big time, at a 6:1 ratio. Multiple coats of lipstick are being painted on more pipelines and LNG terminals at every Texas port. That will solve the industry's problems, so they say. We're always just another year away from turning this shale thing around and 2020 is the year. Hopefully. Apache, by the way, lost its ass 1Q19.
Oil Falls On Soaring U.S. Crude Inventories
(Oilprice.com)- Crude oil traded lower today after the Energy Information Administration reported a substantial build in crude oil inventories, at 9.9 million barrels for the last week of April.
OSB: Imagine that! When you overproduce, prices go down. You'd think those shale guys could sort that out by now but I guess not; LTO production is continuing to increase rapidly. Personally, I think its ADD. Oil prices are down 10.8% the past week. Our fearless presidential leader keeps pleading with OPEC for more production and lower prices, and would probably put a export sanction on the entire rest of the world if he could. As one might expect in these sorts of situations, breakeven prices keep going down, down, down. In the low $20's now in some places. Exxon says $15.
We all need a desperate break from the breakeven horse shit. It never shows up in free cash flow and/or corporate earnings. Nevertheless, lower prices will require lots more LTO lipstick in the future.
Bloomberg Is the 2nd Biggest Shale Oil Cheerleader In the World
OSB: Mr. Blas is a big time oil analyst from Bloomberg. In this Tweet he ignores 1Q19 loses by Concho and Devon completely and is using copious amounts of lipstick to make these losses "look" better. This is actually very common in the main stream media and a good reason to be looking for growth in the cosmetics sector.
Trump's Steel Tariffs Stand In Way Of Next US Shale Revolution
(Fox Business News)- The 25 percent tariff on steel has raised the cost of pumping all this oil. Over the last year, the price of steel tubes used to line wells in the Permian Basin, a gargantuan oil field in west Texas and New Mexico, spiked over 30 percent. Tariffs have also raised the cost of transporting this oil from wellheads to refineries and shipping terminals. Companies depend on a sprawling, and ever-expanding, network of pipelines to transport this fuel. Almost 80 percent of steel used in oil pipelines is imported.
OSB: We did not know there was another shale revolution in the works. What happened to the first one? In any case, steel tariffs, and $30 oil, hinder the shale oil thing and the worse that economics get, the more lipstick is required to make it all look good. Mr. Trump believes lipstick resources in America are "limitless" and that we can "dominate" the rest of the world with lipstick exports. Indeed. OSB, by the way, agrees with the President about America needing new energy policy leaders:
EIA: U.S. Shale Output To Keep Rising Until Peak After 2030
(UPI)- "EIA projects further U.S. tight oil production growth as the industry continues to improve drilling efficiencies and reduce costs, which makes developing tight oil resources less sensitive to oil prices than in the past," according to the EIA's Annual Energy Outlook 2019.
OSB: Whatever. The Energy Inaccuracy Agency apparently is getting more inaccurate (see below). Its hard to figure out where the money is going to come from to make this growth actually occur and the EIA makes our oily future as transparent as 9.7 lb./gal. drilling mud.
Seventy five percent of all the shale oil wells drilled in the United States now do nothing more than replace last years annualized decline. Productivity is much higher per new well but decline rates are much steeper. "Terminal" decline rates on mature wells in some basins are staggering. The EIA and a segment of our industry that wears too much makeup are now synonymous with each other.
OPEC, Russia Oil Market Role ‘Diminishing’: IEA’s Birol
(Hellinic Shipping News)- Birol predicts the US will make up 70% of the rise in global oil production over the next five years, suggesting a futility in OPEC’s actions.
OSB: Birol, we believe, must be on the Board of Directors of Revlon and gets shipping containers full of lipstick to hand out each month in little gift bags when he gives press conferences. He has no idea where all the money is going to come from to make his agencies growth predictions come true. That's America's problem, not his. His "job" is to make wild ass predictions. Even Hellinic believes the IEA "overplays" the US shale oil revolution idea, here.
All cosmetic stocks are going to be boomin' in the future; OSB recommends you not be left out of this segment's tremendous growth potential.