1Q20 LTO revenues declined in line with average pricing (-25% q-o-q), while collectively net income falls to -$28.5 billion, close to the nadir of 4Q15
But WTI reached its nadir in 2Q20, meaning it is almost certain the pandemic will lead to the worst financial results shale has ever seen
Free cash flow saw its fourth consecutive positive quarter, indicating the care with which it should be used as a measure of company health
We revise our 2020 total US LTO annual average growth forecast to -0.9 to -1.11 million b/d (-1.2 million b/d on previous at the range midpoint)
Shut-ins and curtailments, which we expect to peak at 2.3 million b/d in May, c. 30% of peak production, add dramatically to the lack of drilling and completion activity
Though there will be a short-term (2-3 month) bounce in production as shut-in wells return, the industry is unlikely to recover its previous highs in 2020
The pandemic and protests have hit President Trump’s approval rating, leaving him currently poorly placed to win the upcoming presidential election, but other factors will dominate what happens to LTO, whoever the preside...
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