Looks like someone made enough money from high gas prices over a few days during the Texas energy crisis to reduce debt and increase dividends.
https://twitter.com/Reuters/status/1387956150386282496
BTW, buried in this story is that Chevron raised its dividend and Continental Resources reinstated its dividend. It's heartwarming to know that Texans freezing to death is good for business.
I'm reading through the filings for Continental Resources. They swung from a Q1 2020 loss of $200M to a Q1 2021 profit of $400M DESPITE producing 15% less energy. Keep in mind that Q1 2020 was barely touched by COVID. This shows how profitable the Texas Energy Crisis was.
The TX Energy Crisis was a money-printing machine for gas cos, who were rewarded handsomely (obscenely?) for unreliable production.
Continental sales:
Q1 2020: $774M (oil) + $89M (gas)
Q1 2021: $729M (oil) + $469M (gas)
Continental sales:
Q1 2020: $774M (oil) + $89M (gas)
Q1 2021: $729M (oil) + $469M (gas)
Do you see how ridiculous this is?
Gas sales went up $380M for the entire quarter for Continental b/c of high prices over a 5-day period.
Keep in mind that gas companies were declaring Force Majeure & cutting off FIRM supply contracts BUT MADE HUGE PROFITS ANYWAY.
Gas sales went up $380M for the entire quarter for Continental b/c of high prices over a 5-day period.
Keep in mind that gas companies were declaring Force Majeure & cutting off FIRM supply contracts BUT MADE HUGE PROFITS ANYWAY.
Why would natural gas producers winterize their system when they can instead sit back and let their wells freeze up & make a huge profit anyway?
The power sector has an independent market monitor to investigate for fraud and market manipulation. The natural gas market doesn't.
The power sector has an independent market monitor to investigate for fraud and market manipulation. The natural gas market doesn't.
The result: natgas producers have incredible moral hazard.
Namely unreliable supplies create scarcity which creates high prices. There's a price incentive to allow some production to freeze. There's a price disincentive to winterize. They will only winterize if it's mandated.
Namely unreliable supplies create scarcity which creates high prices. There's a price incentive to allow some production to freeze. There's a price disincentive to winterize. They will only winterize if it's mandated.
My conclusion? Let's save natural gas for direct use for heating our homes and buildings and let's get our power sector off gas as fast as possible. There are too many other ways to generate electricity so we shouldn't rely on a fuel that won't be there when we need it.
Another conclusion: it's absolutely unconscionable to me that the markets for something as critical as gas are so murky and do not have an independent monitor. The whole system is just inviting abuse and manipulation.
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