Raoul LeBlanc:
We’ve heard a lot here about falling volumes and responses. People are being prudent, pull back capital and capitals across the board in every sector, including places like oil field services and refining is down hard. It's impacting production on oil, on gas, on NGLs, and those are tugging and pulling at each other, mostly in a down direction, but sometimes in an upward direction.
The virus impact is I think expected to peak here in second quarter, and gradually get better in the third and moving into the fourth. What I'd like everybody to pine on a little bit is, more of the next month, let's say. So, what happens in the next month? And Reed, I'll start with you. What happens for shut-ins in the next month? And tell us in 30 seconds on your view on shut-ins.

Reed Olmstead:
I think we're going to start seeing it happen. We've put out a piece on opex by operator and sort of what levels of opexs on these wells start to affect production decisions. So I think that in the next month as people really start to grapple with the oversupply... at first it was, oh, okay, maybe this is really happening, maybe it's not. And now I think people are really coming to grips with, this is going to be here for awhile. If we believe that, let's go ahead and make adjustments. It's not a blip. It's a true massive global oversupply. So it's pushing price down.
So I think we're going to seeing shut-ins. We're going to... I'll say I expect another 150 or 200 rigs to come out of the field by the end of this month. We just aren't seeing an outlook that supports continued business as usual like we did in January and February this year. We're going to start to see real decisions hitting capex spend on the new activity side, and we're going to start seeing opex get cut, which means shut-ins, probably to the tune of 50-75,000 barrels a day by the end of this month.

Raoul LeBlanc:
Okay, I think it might even be faster and further. If the prices, the spot prices in the field are below 10, that's really, really pretty tough on people to sell their oil in their market, or their gas, okay, at the current gas price. Not as distressed, but it's still tough. So we've got that. Meanwhile, Karim, does anything happen to materially change the situation on the demand side in the next month, or we just kind of got to live through the virus, and on the supply side? Any kind of deal, or anything that we can think of that would materially alter the low price being with us and running the course?

Karim Fawaz:
Yeah, I mean a lot of the moving parts are already well in motion here on both of the demand sides, and a lot of the shutdowns through the end of April or early May for the most part around the world. So it's going to be difficult to see the virus moving faster than that, or everything returning to normal in terms of consumption on that prompt. I think supply could be reactive. There's shut-ins, not just in the US as you were talking about, but more generally around the world, I think. Its a bit different in this cycle than the people usually think about it in general, which is strictly on a opex cost dimension.
I think what's happening here is the scale of the surplus in the global market is such that there is going to be real logistical constraints on barrels. It's not just the price. It's the adding pressure that they're not enough tankers, not enough storage space, producers don't have enough storage, and they're close to the well head to store these barrels if there's no customers for it. I think that backing of the supply chain can have much more drastic supply impact sooner, that potentially could help tighten market potentially more so than I had talked about initially.

Raoul LeBlanc:
Yeah, and that's a really interesting, but if we get rapid shut-ins due to collapsing storage space and physical availability of ways to get it to places that do have storage, it could help prevent a stock overhang, which I think would be really important. Let's move to Hassan. Hassan, more cuts coming? I know you talked about bankruptcies. I think you said we'd see those accelerate and not M&A. Anything else you can think of in the next month, what are we likely to see? Are we likely to see shut-in announcements, more capex reductions? What?

Hassan Eltorie:
Yeah, you're going to expect some more capex reductions, right? We've got to keep in mind that companies, when they were making these announcements, oil were still 30-35. So since then we've plummeted quite a bit. I know we've come back a little bit today, but generally yes, we'd expect some more capex cuts. We expect shut-ins. Pretty much what I think investors are looking for the most is how are you going to weather the declining storm? So expect companies to fire on all cylinders, expect opex cuts, significant ones. I think we've seen a couple of headlines already to that effect. And you're going to see an acceleration of bankruptcy going forward.

Raoul LeBlanc:
All right. Matt, on the gas side, what are you thinking next month brings? So we know the extent of the downside for gas yet? Is it going to stay the same, get better, what's your thought?

Matthew Palmer:
Yeah, I mean I think over the next month, the thing to watch is going to be a couple things. One is the pace of storage injections, and that's going to really relate to how fast the supply and demand balance shifts. And so we don't think production, gas production is going to drop markedly over the next few months. So, I think it's going to come down to does industrial demand or commercial demand or power demand perhaps fall more than we are currently expecting? What happened with LNG feed gas? Does that fall off more? To the extent those things fall, you'll see more gas going into storage quicker, and that's going to put a lot more downward pressure on prices in the near term.

Raoul LeBlanc:
Okay. And Veeral, anything... if you think about the next month, next six weeks, what's happening in the immediate term that we should be looking for as our clients and listeners filter the news? What do you think?

Veeral Mehta:
Yeah, it's really volatile I think in the NGL world right now, based on because we're kind of bounded between the refined product demand and what implications that has, and plus also the crude production side. So, just kind of watching where things go. It's going to stay a little volatile for a time being. We do expect some cutbacks from the midstream sector as well in terms of the capital spending, projects getting delayed, or even getting deferred. But at the same time, there's enough capacity that has been added, at least here in the US, into the system over the last couple years, that it should suffice and not cause any price hike from an infrastructure standpoint. I think it always comes down to how low oil goes and what happens overall from a petchem demand perspective as well.

Raoul LeBlanc:
Yeah, that's last question, do we have pet-chem plants closing down temporarily, like we've seen for refineries?

Veeral Mehta:
I don't think we've heard of any shutdowns yet. We talked to our chemical colleagues a lot, but we have seen some cutbacks in overall demand from even the downstream derivative, and we're seeing some cutbacks in operating rates, and the demand for things like ethylene and propylene is being impacted. So we're seeing some slowdowns from the pet-chem side.

Raoul LeBlanc:
All right, thanks, folks.