$APA Bleeds Out $489 Million For the Quarter; Production Guided Up to Record Highs

I want to make this inexorably clear, as evidenced by my incessant reminders. No one is cutting back on producing oil. Apache saw revenues slide 35% for the quarter. They lost nearly $500 million, yet production was up and is going higher.

These companies need the cash flow. They cannot stop drilling.

Again, the narrative that is being told about wells being shut in and production levels tapering off due to the price decline is a fiction. It is a lie made up by the people wearing those big stupid hats in Dallas.

Reports Q1 (Mar) loss of $0.40 per share, excluding non-recurring items, $0.48 better than the Capital IQ Consensus of ($0.88)
Reported first-quarter production of 531,000 barrels of oil equivalent (Boe) per day and pro forma production of 479,000 Boe per day, which excludes Egypt noncontrolling interest and tax barrels
Delivered North American Onshore production of 298,000 Boe per day, above first-quarter guidance of 290,000 to 295,000 Boe per day
Continued to achieve substantial well-cost savings in key North American Onshore plays; now 45% below the 2014 average cost
Invested $466 million of capital, below guidance of $500 to $550 million

2016 outlook :
Following strong first-quarter results, the co is raising full-year 2016 North American Onshore production guidance to 268,000 to 278,000 Boe per day, up from initial guidance of 263,000 to 273,000 Boe per day set at the beginning of the year
Accordingly, Apache is also raising full-year 2016 total pro forma production guidance (excluding Egypt noncontrolling interest and tax barrels) by 5,000 Boe per day to 438,000 to 458,000 Boe per day
Total capital investment during the quarter, excluding Egypt noncontrolling interest, was $466 million, which was below the company’s guidance of $500 to $550 million. Apache is reiterating full-year 2016 capital guidance of $1.4 billion to $1.8 billion.

Good luck drilling in Egypt.

How incompetent is Yahoo to permit this small little company, SYNC, take away a deal worth $100 million to manage AT&T’s web portals? You have to be kidding me. But don’t worry, Marissa Mayer is on here way out, with her $55 million pay package, once she manages to sell this piece of shit.

The deal is a coup for Synacor, which has struggled over the past few years. “It puts the company on a trajectory to be three times its size in three years,” Chief Executive Himesh Bhise told our Journal colleagues. The company had a market cap of $42.3 million as of Wednesday close, according to FactSet.

Synacor will split the search and advertising revenue with AT&T. Mr. Bhise said the deal will bring in an additional $100 million a year for the company once it has fully ramped up its services for AT&T over the next year. The deal extends into at least 2019, and can be renewed each year thereafter.

Good for them.

This stock was $14 in 2012. AT&T might be making SYNC great again.

I realize this is a beat and the stock is ripping, higher by 10% in the pre-market. But look at these numbers. Fucking ouch.

Reports Q1 (Mar) adjusted loss of $0.10 per share, $0.01 better than the Capital IQ Consensus of ($0.11); revenues fell 39.3% year/year to $1.95 bln vs the $1.02 bln Capital IQ Consensus.

Average production expenses during 1Q16 were $3.36 per boe, a decrease of 31% from 1Q15.
Average operated rig count for 1Q16 was 8 compared to 54 in year ago period.
Average realized oil price per bbl was $37.74 vs. $65.73 in 1Q15.
Average realized natural gas price per mcf was $2.29 vs. $3.67 in 1Q15.

Asset Divestiture Update: In 2016, CHK has closed or has under signed sales agreements approximately $1.2 bln in gross proceeds from asset divestitures, or approximately $950 mln in net proceeds after certain related repurchases of Volumetric Production Payment obligations are met. Transactions signed since Feb 2016 include the sale of a portion of the company’s acreage and producing properties in its STACK play in northern Oklahoma for approximately $470 mln to Newfield Exploration (NFX). Included in the sale are approximately 42,000 net acres and 400 producing wells which are currently producing 3,800 boe per day (approximately 55% liquids), net to CH. Substantially all of the company’s announced asset divestitures are expected to close by the end of Q3. For the expected $950 mln in net proceeds currently closed or signed in 2016, the net impact to the company’s production is projected to be a reduction of approximately 35,000 boe per day (approximately 60% natural gas).

It’s amazing to me that this company is still around doing business. They did, however, put up the entire company as collateral to get a line of credit from the bank a few month’s ago. Let’s not forget that. Rigs went from 54 to 8, year over year. Wow.

The company is divesting assets, in an attempt to get control of the balance sheet. Long term, this is bad for the company. But they have to do it.

Oil production is UP over last year. Big surprise. Everyone is greedily drilling as fast as they can. This is absurd.

2016 first quarter production averaged approximately 672,400 boe per day, an increase of 1% year over year, adjusted for asset sales

“Our cash costs continue to decline, and we remain sharply focused on improving our margins through continued progress with our midstream and downstream partners. As a result, we have recognized incremental improvements in both our production expense and our total gathering, processing and transportation expenses and revised our 2016 guidance accordingly. Additionally, since January 1, 2016, we have reduced debt that matures or can be put to us in 2017 by approximately $282 million. Our recently amended revolving credit facility agreement gives us sufficient liquidity and capacity to pursue additional reductions of our near-term maturities as opportunities arise.”

All in all, this was a horrible quarter. It really was. But people expected worse, so the stock is running. This is idiot-wavelength thinking. Before you buy the stock, answer this question: would you want to own CHK as a business now, with all of its debt, having to deal with this crazy commodity environment?

No way.

In a break from the monotonous political horseshit questions levied at Trump, CNBC did a good job in an interview this morning– getting Trump to discuss business and how he’d approach managing the U.S. economy. I’ll try to get the video up later when available. In the interim, here are some of my notes.

He thinks Yellen is great, but she’s a goner. He’d probably replace her. He does, however, like low interest rates. Moreover, he feels a rise in the interest rates would have a disastrous effect on the U.S. economy. I’ve been saying this for 5 years. He noted how it would be nonsensical and deleterious to the management of our soon to be $21 trillion debt load to have it at higher rates. The lower the better. And he favors a weak dollar policy.

In regard to the debt, he fashioned himself ‘The King of Debt’. He thinks we should refinance the national debt at longer durations. In other words, buy back the short term paper and finance long term. People like Jim Cramer have been begging the treasury to do this for years. I recall when he had Tim Geithner on Mad Money a few years ago and asked him to do that. Timmy, basically, laughed at Jim and made him look stupid.

Trump wants to use some of the savings realized on debt refinancings for infrastructure spending. He cited our schools, tunnels, bridges and airports as being unsafe and disgraceful. Furthermore, he said he’d be the single best person in the history of the White House to rout out the corruption in the bidding process, since he knows all the tricks of the trade. No more 30 year highway jobs.

Obamacare is a horrible mistake, according to Trump. Both premiums and deductibles will skyrocket in 2017 and it needs to be replaced. He noted how ‘almost no one’ benefits from it.

Lastly, and without question my favorite part, Trump mentioned how in Iraq we’d build a school, only to see it blown up. We’d rebuild it and it’d get blown up again. We’d build it 4 times; meanwhile, if a school was needed in Brooklyn or Oklahoma we wouldn’t have the money for it. He described this mishandling of the treasury, this gigantic fraud, as being criminal. We’ve spent upwards of $4 trillion in the middle east since the beginning of the Iraq war, and have nothing to show for it.

In summary, Trump wants low rates, refinanced debt, big infrastructure spending, weak dollar, better trade deals (NAFTA is going away) and he will repeal Obamacare.

Update:
Here is part of it.

For those of you who are ardent followers of the site and enjoy the content provided hitherto, please accept this great gift I lay before you: free access into the halls of gentlemen.

After carousing the software and bearing witness to unparalleled greatness, of a magnanimous scale, I hope you will join. Just know, all profits garnered from the membership of the fine readers of iBankCoin go towards the development and production of the Orbital Space Cannon (OSC), both designed and designated for offensive purposes only.

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The Warren Buffett favorite is the petrol-bank of America, with total exposure to the oil and gas industry of $43.5 billion, more than double that of JP Morgan’s loan portfolio. Moreover, their ‘criticized’ loans, which are defined as being abhorrently abysmal to essentially worthless, skyrocketed to $30 billion–up from $18.5 bill.

The balance of Wells Fargo’s $290 billion loan portfolio was rated ‘pass’…for now.

Over the past few weeks, banks have redetermined the credit lines of hundreds, if not thousands, of energy companies. It’s worth noting that many of these credit lines, extended by the likes of WFC and JPM haven’t been tapped yet. The predominant part of maturities in the oil and gas space occurs after 2016, which means, essentially, the industry is rolling the dice–hoping for a better spot market to sell into.

As I’ve noted here on numerous occasions, the vast, overwhelming, majority of energy companies are producing crude oil at record rates, which is contributing to the seemingly endless glut of crude oil already in storage. It doesn’t take a rocket scientist to figure out that an industry in desperation, doing desperate things, isn’t exactly what the industry needs to balance out the supply/demand situation that was the cause of the price drop in the first place.

I am short XLE, but have been unwinding said position over the past week.

The new bond King, Boss man at Double Line, Jeff Gundlach, said negative rates are deflation. It is the very essence of deflation, a tax levied upon the people that will have an onerous effect on asset prices. Moreover, he believes mortgage REITs are a screaming buy, whereas utilities are frothy.

He believes Trump will win and people need to deal with that eventuality, whether they like it or not. He said Trump is very much like Reagan and is supremely comfortable with debt. He believes Trump will try to build the wall and enact policies that will be beneficial to infrastructure spending.

All in all, a solid interview.

David Einhorn announced during his Sohn presentation that Caterpillar isn’t being priced for trough earnings. That much is utter horseshit, at 22x. The company is exposed to a deleterious mining environment that is bound to take its toll on the world’s largest miner. Moreover, he believes the stock will bottom in 2018, following a cataclysmic share price drop of course.

On the long side, he likes GM because it’s trading 6x earnings and because Chinese people need to drive to and fro their ghost cities. He says GM is ‘financially healthy and growing.’

CAT is lower by 1.2% in the after-hours, a mortal sin upon the House of the Dow Jones Industrial Average.

GM is higher by 1.8%.

Here we go again. Production came in at the high end of guidance. Moreover, the company has upped production guidance to flat from -5%.

Indeed.

• Reports Q1 (Mar) loss of $0.05 per share, excluding non-recurring items, $0.05 worse than the Capital IQ Consensus of ($0.00); revenues fell 31.4% year/year to $283.6 mln vs the $273.92 mln Capital IQ Consensus
  • Delivered quarterly production of 12.7 million Boe, or 139.5 MBoepd, exceeding the high end of the co’s guidance.
  • Production for the first quarter of 2016 was 12.7 million barrels of oil equivalent (MMBoe), or an average of 139.5 thousand Boe per day (MBoepd), an increase of 6% from the first quarter of 2015 and above the high end of the co’s guidance
  • First-quarter 2016 production was comprised of 64% oil and 36% natural gas.
  • During the first quarter of 2016, Concho averaged 10 rigs, compared to 12 rigs in the fourth quarter of 2015. Concho started drilling or participating in a total of 40 gross wells (31 operated) and completed 50 gross wells during the first quarter of 2016.

Outlook:

• Co raises 2016 production growth guidance to 0%, up from -5% to 0%

Revenues plummeted by 27%, but production was up 12% over last year. Let that sink in.

I keep highlighting the notes emanating from these oil producers to unveil the lie that is being purported by them and the media. The current thesis to be long oil is that production is being wildly cut, across the board, because of the 60% drop in crude. This is a bald faced lie. Nothing could be further from the truth.

Over the past year, small players have washed away. But these guys, the CLR’s, CVX’s and XOM’s of the world are drilling and producing more than ever.

Via Briefing.com

• Reports Q1 (Mar) loss of $0.41 per share, $0.04 worse than the Capital IQ Consensus of ($0.37); revenues fell 27.6% year/year to $453.17 mln vs the $442.74 mln Capital IQ Consensus.
• First quarter 2016 net production totaled 21.0 million barrels of oil equivalent (Boe), or 230,800 Boe per day, up 3% from fourth quarter 2015 and 12% higher than first quarter 2015. Total net production for first quarter 2016 included 146,500 barrels of oil (Bo) per day (63% of production) and 506.0 million cubic feet (MMcf) of natural gas per day (37% of production).
• Based on strong first quarter production, the Company today increased its production guidance for 2016. The Company expects to exit the year between 190,000 and 200,000 Boe per day, which is an increase of 10,000 Boe per day. Likewise, 2016 average production is now expected to be between 205,000 and 215,000 Boe per day.
• Continental also announced it closed the sale in late April of approximately 132,000 net acres of leasehold in the Washakie Basin in Wyoming for $110 million. The leasehold was non-core, non-producing, undeveloped acreage in Sweetwater and Carbon counties and included no proved reserves. After this transaction, the Company retained non-operated production and approximately 40,000 net acres in the basin.