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Don't think it would be revenue that would go towards paying for the asset. Earnings yes.
Even at current oil prices I calculated that the earnings from this asset purchase would pay for it and decommissioning in about 2 years. This time scale gets exponentially less with rising oil prices
You might right about higher future prices, but as we know there is also high economic risk on the horizon. Let's come back to this in a couple of years and see how it panned out!
I agree . However the contango is changing weekly. I believe the average prices for 2021 will be $50 to 55+ and for 2022 it will be $60 to 65+
They can, but it would depend on the future price curve as to whether anyone would buy a hedge now at those prices.
Looking at this:
https://www.cmegroup.com/trading/energy/crude-oil/brent-crude-oil-last-day.html
Would seem that the futures price at end 2022 is trading at only $48.
Unlikely someone would opt to pay up to the price you suggested originally.
I believe they can use Forward Hedging.
Yes, I guess I haven't looked at the futures prices to see if that makes sense...
$43 is today's spot price. Hedging is for futur POO.
"PMO could also hedge 17,000 boepd @ price $50/55 for 2 years."
Eh?
Who is going to pay up to $55 per barrel when the Brent price is currently only $43?
PMO could also hedge 17,000 boepd @ price $50/55 for 2 years.
thats what i mean, if the revenue goes as part payment that is:
17,000 boepd x $45 (average estimate since Jan 1st- could be higher) x 548 days = $418,837,500
Revenue depends on oil price, but in normal market condition you have turnover of almost current Mcap in a one year. And that is only from BP's 17kbpd.
The revenue from oil since Jan will go to BP as part payment towards the deal. PMO won't get revenue until September I believe.
If i have understood the purchase of these assets, its back dated to Jan 1st 2019, its worth 17,000 boepd. i calculated a revenue figure which is very big.
Anyone know if this is what is due