This exclusive interview with Bernadette Johnson, Vice President, Enverus - was taped the day after Enverus released the report "The Dark Side of the Boom". A great data filled report covering the energy market in this turbulent times. Links to the report and the key take aways are listed below the interview. This is a must watch interview as we go into the OPEC + meetings today.

On the interview was Bernadette, Aaron Vanderford, President, EnerCom, Michael Tanner, Host, Digital 360 and myself. Get a crayon, and take some serious notes on this data filled market interview.

The Dark Side of the Boom report covers:

  • Crude oil price drivers and global supply demand outlook
  • Potential basin shut-ins in the lower 48 states
  • Rig count changes
  • Natural gas breakeven sensitivities
  • Anticipated production changes related to power and electricity demand
  • LNG exports
  • Rig count
  • Capex reductions
  • Hedging volumes

Key Takeaways from the report: - for the full report - click here: 

  1. Crude oil markets are under unprecedented pressure as efforts to control the spread of novel coronavirus send the global economy into reverse gear. What started out as a rout caused by a standoff between Saudi Arabia and Russia turned into a deep selloff as refiners began to see consumer demand for their products disintegrate. To keep inventories of gasoline and jet fuel from getting out of hand, refiners have opted to cut throughputs. This has placed intense downward pressure on prompt barrels and has pushed prices in the field into single digits in some locations. Still, there are more petroleum liquids sloshing around in the world than there is storage capacity to contain it. Although we can expect all tight oil operations to grind to a halt in the coming weeks, there simply isn’t enough time for the tight oil patch to go into base decline. Shut-ins are coming, and they are likely to be big.
  2. The oversupplied oil market will keep crude prices low, depressing natural gas production. Enverus expects dry gas production to decline by over 6 Bcf/d by December 2020 compared to 2019. This will cause the gas market to go from being long during the summer months to being very short by the winter 2020-21. A sharp increase in natural gas prices is needed to incentivize natural gas production growth from gas directed plays, namely Marcellus, Utica and Haynesville. Enverus forecasts prices will exceed $4/MMBtu and could reach $4.50/MMBtu as early as the coming winter. Longer term, natural gas prices are expected to average $2.80/MMBtu; this level allows gas production growth to meet expected demand gains.
  3. Natural Gas Liquids production is expected to decline in the next year as crude oil prices are expected to remain low. This will prompt a number of basins to have excess pipeline takeaway capacity to flow to fractionation hubs. Fractionation capacity has been running tight for over a year, and a number of projects are slated to hit the market in 2020 and 2021. However, as production is expected to decline as these projects come online, these fractionation projects will have trouble finding the volumes to run at capacity. Crude oil prices are expected to rebound in 2022 through 2025, helping natural gas liquids production to rebound off of the decline.
  4. Earnings season was just starting to wrap up as oil prices turned dark red. Operators likely had just finished up their late nights running their models to perfect 2020 capital plans, which consisted of not-so-meaningful reductions on the oil side while gas players were bringing spend averages down. After the crash, Parsley and Diamondback were the first to trash initial plans, followed by over half of our coverage dropping a combined $21+ billion worth of capex, with over 160 rigs and 60 crews hitting the yard. Eyes have been on hedges, capital savings, and production decline rates to gain an understanding of which E&Ps will be weathering this storm as near-term maturities and maxed out credit facilities have some operators backed against a wall.

Enverus is a real asset summary: Enverus three main business units include data, business automation, and trading and risk. They have over 1,700 employees, 6,000 customers across 50 countries. They are the oil and gas industry's leading data, and insights company. They built their base on data, and methodology with the goal to give their customers the information and knowledge to make the best decisions for all stakeholders. 

We were able to sit down with Bernadette Johnson, Vice President -Strategic Analytics, and Aaron Vanderford, President, EnerCom. Bernadette has presented at EnerCom in the EnerCom investors conference in Denver and you can see her presentation below this interview. 

Bernadette took us through a lot of information in our interview. Sit down with a pen in hand to take notes on all of the data covered in this interview.

The bottom line: "Don't make a decision with out data, and Enverus should be part of the process.". -Stu Turley

Thank you Bernadette for your time and market leadership. 

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