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More boring and mundane news. Continental Resources, the largest private Bakken shale driller with approx 200 kbopd production in 2019 (plus a sh**te load of useless gas) now needs to spend $3 billion capex just to sustain production at 200 kbopd in 2020.
http://investors.clr.com/2020-02-26-Continental-Resources-Announces-Full-Year-2019-And-4Q19-Results-2020-Capital-Budget-And-Guidance
And at $55 WTI/2.50 NatGas, they will have an amazing FCF in 2020 of a grand $300 million. That's less FCF than we generated in 2019 with less than a tenth of their capex and as much as we can generate in 2020 at between $55 - $60 Brent. Is it a wonder that shale SPs are getting hammered when production is only just about sustainable even after throwing Sh**te load of capex at the treadmill problem? CLR is down 20% after market today to a new all-time low of $17. A $20 billion market cap company in April last year will be worth about $6 billion tomorrow. Mind-boggling. Why do they even bother? Complete numpties, just like their president...
If oil drops into the 30s then 50% off again
My predictions in the next 2 weeks ??
Enquest 18p
Premier 72p
Tullow 26p
Hur 11p
Gkp £1.42p
Genl £1.39p
Cairn £1.31p
Basically everything on yearly lows are worse ..
And if oil drops into the 30s well then God knows where oilys will end up ??
When will oil stop dropping 3/4% a day ??
Relentless now brent $49 next week and 18p here is surely a given now guy's!!
I suppose if you didn't sell you haven't lost but happy I sold at 25p ..
Looks like Xmas might come early than I thought ..
Hopefully there will be some serious and real blood on the streets in the shale Patch. Poor Dumb Texans - not only are they destroying their ground water and environment they are also flushing good money down the toilet. Not even the majors are stupid enough to buy that toxic rubbish. Its a ponzi!
WTi weaker after the close.. thought it would stabilise at $50, but it's approaching $49.22
In many ways the market doesn't think Opec+ are able to take any meaningful action to support the price.. Net long positions might as well keep selling , but we have now dropped the price to US Shale break even or slightly below.. This should slow down production growth until such time demand picks up again in 2H.
Guessing more shares will be available tomorrow in the 21p range, unless China releases much lower death numbers tonight.
HItman - I've been buying today as well. The shale SP drops in the past 3 to 4 weeks have been horrendous. Even strong companies like DVN that are FCF generating are off circa 40% and that tells a tale - FCF is suspect with WTI at these levels. Shale's cutting budgets, but just not enough, IMO. The reality is that at the current pace of Capex, many shalers I track are forecasting low to high single digit growth. Pioneer is actually increasing Capex to $3.5 bill from circa $3 bill last year and calling a 15% increase in production. I know all of us wish for peak shale in 2020, and praying for it, but IMO this is not going to happen. WTI below $50 for a few weeks may turn the tide and force real capex cuts, but that's not what is happening. That's sheer idiocy for you.
Below is a good read on why management comp should be tied to SP performance and that's never the case, either in shale land or anywhere really. At least AB is buying a hell of lot shares and putting his money where his mouth is.
https://www.bloomberg.com/news/articles/2020-02-26/shale-activist-hunts-for-new-target-in-uninvestable-sector
There's too much fear right now and the tide will eventually turn and oil will come back. I hope it's done enough damage to the shalers to convince them to focus on FCF over production increase - I can dream of course...
GL
I think this illustrates the speed compared to other viruses.
https://twitter.com/WelshGasDoc/status/1232208118899257344
Hitman & I thought 3 years of Brexit driven news was enough to drive me mad, now we have this flu thing.... aargh
I'd like to see the China daily death rate fall to single figures and then zero within 2 weeks.
Take out the age factor , and it appears to be a lottery as to whether someone had mild (82%) or serious case.
Given the age range of 0 to 9 yrs has the best survival stats,, perhaps there is an ingredient in Aptamil or Cow&Gate Milk Powder that gives protection. Breast milk might be worth a try too.
I have colleagues who have stayed in China all through this, albeit in the Gungdong region.
They are saying that after the spring festival everywhere was deathly quiet with hardly any workers returning.
Now though things are returning to normal. The regional government is encouraging workers to return and companies to start back up, but like I said this is in the south where virus hasn't really taken hold.
Typo, last week actual worker return rate was 25-50%.
Chilting, i agree but many workers returned to their families more inland for Chinese NewYear. And could not return to industrial zones after New Year.
Last year the factories I work with had return rate of 25-50%. Normal is 50% after New Year so it’s not too bad.
Production will need to run on full steam to catch up with demand and also airfreight will increase for most urgent goods.
The main thing to consider going forward is that virus cases are falling in China so hopefully they will start to get back to normal soon. Also the virus hasn't been so bad in the industrial south of the country.
We all know how industrious the Chinese are, so I guess they will be going full out to make up for lost production.
So that should mean that we see a big spike in demand for oil from China.
I can't believe AB would leave any 21p range shares on the table , so the volatility today from 21p to 21.85p, and then down again to 21.30 and back up again , would imv indicate an RNS is on the way..
Just for the Charity mind you..
Impressive. Does your knowledge and being in the business of pharmaceuticals have anything to do with your confidence?
Bought another 25,000 batch at 21.58
And another 100,000 batch . quoted 21.70 but got them at 21.50 ish. via Barclays price improver.
Great time to organise a Share buy back to fix the SP.
max $50m /year .. albeit I have been told many times it's not possible without Bank consent and other caveats..
That's what I would do with the Q1 2020 earnings. .. rather than repaying the 2021 RCF early.
Quick fix and more of the same next year.. best $100m you'll ever spend.
Most oilys doing ok today but enquest hammered day after day after day is 18p back on ??
Romaron, That's a little stupid to say we'll survive as we are only 10 years old and no we are not in a heathy position if oil doesn't return to $60, we wont be able to service the debt at $50
The market is acting like this is the end of civilisation. The virus attacks the old, weak and feeble so oil is a good target as that has been the narrative of fossil fuels. We're only 10 years old and very healthy. We'll survive.
Hi Romaron
I've been buying extra all week so the 21p range helps out average the ones bought in the 26p/25p/23p range.
Not sure why I buy extra on the way down.. I should be selling, …. but we are very close to the OPEC+ meeting..
As Kraken is now fixed and we are ahead of the debt repayment plan.. I see the SP climbing as the Accounts are released, with regular Ops updates and the AGM to look forward to. I can only see US shale drilling budgets for Q3 and Q4 vanishing which brings forward the inflection point Mark Gordon spoke about.. peak US production and then a decline.
Well that accounts for 2.15% of trades today. We know as much as anybody else and for those who are prepared to wait it seems a very good price to me. That timely prayer by Therapist suggests that the price resurrection could be around the 12th April this year.
Didn't have any issues buying 50,000 at 21.40p.
Hi hitman, I bought some today. I bought £10k but got it done immediately and paid a tad over (21.868 @12.14.58). What is interesting is that these 2 modest amounts make up 1.25% of the total trades so far today.
*a month after 9/11 the stock market was higher.