Oklahoma Energy Companies Lose $2 Billion Over Past Three Months

Oklahoma energy companies have lost more than $2 Billion in the last three months, according to federal financial filings.

Continental Resources Executive Chairman Harold Hamm told investors this week, the past three months have been “one of the most volatile quarters in this industry.”

Sandridge Energy CEO Carl Giesler called it, “arguably the most challenging in the history of the oil and gas business.”

Topping the second-quarter losses in Oklahoma City, Gulfport Energy at $561.1 million, Continental Resources at $255.7, Sandridge at $215.8, and adjusted for non-cash loss items, Devon Energy at $66 million. Chesapeake Energy, which filed bankruptcy in June, has not yet filed federal disclosures for the past quarter.

Oil prices have begun to rebound since dramatic drops early in the COVID-19 pandemic, however, at around $40 per barrel, they are still 30% short of pre-pandemic prices. 

“It's really difficult for them to operate at that price point, however, $40 oil is better than $20 oil,” OCU Minders School of Business Dean Steve Agee said.

Continental Resources cut oil production by 55% when prices plummeted, deciding to leave the oil in the ground and wait for better prices, a move the company said will generate $90 Million when production returns to normal.

“It is kind of like a savings account,” Agee said. “It's not going anywhere until you produce it, so if they keep those wells shut-in until prices come back up, they can open those wells back up and if the price goes up from $40 to $50, then Continental has another $10 in their pocket.”

In an earnings call, Continental CEO Jack Stark said the strategy is paying off in other parts of the country.

“We shut-in all of our Montana production out there, and we had it shut-in for about two months,” Stark said. “We turned it back on and our production doubled what it was before we shut it in.”

Devon Energy also reduced oil production by about 6.5%.

At OCU, Agee said what comes next is largely dependent on keeping the coronavirus under control.

“Assuming things go well, and people properly mask up, wash their hands and keep social distancing, I think we have kind of turned a corner on this energy downturn,” Agee said. “I hope.”

The Oklahoma state treasurer reports oil and gas gross production tax collections were down more than 70%, causing a nearly $60 million dip to state coffers last month alone.