Oil & Gas Consolidation is Upon Us

Sandridge Energy ($SD) announced that it will acquire Bonanza Creek Energy ($BCEI) in a cash and stock deal worth $746mm. Shares in the company shot down HARD on news of the deal but recovered somewhat by week's end. But is oil"on the road to obsolescene"?

News for the Week of 11/13/16

• Disruption - people throw this term around a lot. But Hertz's earnings report shows disruption, i.e., the Uber-effect, in quantifiable numbers. Query to what degree hotel earnings are affected by decreased (exorbitant) parking fees lost from decreased rental car bookings. 
• Retail - Add retail outlets from the likes of Kenneth Cole, Kate Spade and Coach to the list of struggling retail businesses, Nordstrom takes a staggering $197mm write-down on start-up, Trunk Club, and J.C. Penney's total and comp store sales dropped meaningfully. On the flip side, Macy's provides strong guidance (despite an otherwise horrible earnings report) and Nordstrom, Ralph Lauren and Kohl's reported stronger than expected earnings.
• Takata - the future remains subject to debate as precedent of GM looms large (includes input from Pepper Hamilton's Henry Jaffe, Goodwin Proctor's Bill Weintraub, and Brown Rudnick's Ed Weisfelner).  
• This was pre-election results:

• Fast Forward: Bonanza Creek, Forbes Energy and Nuverra Environmental all face expirations of grace/forbearance periods this week. 
• Fast Forward II: Dynergy and Illinois Power Generating Co. (Genco) launched an exchange offer for Genco with a prepackaged bankruptcy backstop; FirstEnergy bonds plummeted after acknowledging bankruptcy as an option for subsidiary, FirstEnergy Solutions.
• Rewind I: Saudi Arabia. Feeling the pain.
• Rewind II: Oklahoma. Two weeks ago we highlighted the effects of the oil and gas downturn on the educational system in Oklahoma. We acknowledged the environmental issues there too. Well, that story keeps evolving as a 5.0 earthquake roiled through Oklahoma this past week.  And this chart is interesting:

• Chart of the Week: US field production of crude oil increased in 2015 for the 7th consecutive year to 9.42mm barrels/day, the highest crude oil production level since 1972. (Source: U.S. Energy Information Administration).