Executive Summary
In the first quarter of 2020 oil benchmarks ended arguably their worst quarter in history with a thud. The concurrent overlapping impact of (i) discord created by the OPEC / Russian rift and resulting supply surge; and (ii) the drop in demand due to COVID-19 related issues was historic.
Brent crude prices began the quarter around $67 per barrel and dropped to $50 per barrel by early March before plummeting to $19 per barrel by the end of March. WTI pricing behaved similarly although it continues to trail Brent pricing by a narrowing margin (about $5 per barrel) at the end of the quarter. Natural gas has trended downward but has been more stable in the U.S. as its pricing has become increasingly more regionally tied and relatively less dependent on world oil price drivers.
The first quarter of 2020 provided a lack of positive news for investors in the Eagle Ford and, frankly, other basins as well. The coronavirus impact, along with the Saudi-Russian price war, hindered M&A activity while causing uncertainty in the energy markets. Aside from the global pandemic and OPEC+ conflict, the Eagle Ford is facing challenges relative to the other basins in the U.S. The beneficial infrastructure marketing position that the Eagle Ford has relied on historically has becomes less advantageous, as pipelines from the Permian to the Gulf Coast are ramping up.
If there is any good news to report, it is that no companies of significant size have filed for bankruptcy, but that may not last for much longer.
