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Yep, centrica might say we can sell our gas at £1.50pthm but on a 10 year fixed basis. Gives them a good income for a while but obvious not maximising profit in year 1 or 2
Superb comment. If only we could.
Way too many variables. This company could make or lose a fortune. If prices in q4 stay high and customers consume less then cna can sell it back to market at a profit. Plus if rough opens they can make £2.5 a therm on gas injected. On the downside is bad debt from customers, plus if q4 is cold they rill hsce to buy extra gas at well above the tariff csp and therefore will take a hammering. This applies to all suppliers ( except Rough)
How about amazon and apple et Al pay some tax first before punitive tax rate on an essential industry.
High volatility is not the only factor. High gas prices and high volatility means gas traders can't trade anywhere near as much volume as their VaR limits will prevent it. I'm sure it's the same with oil and cryto. Cheers. Volume should pick up when volatility reduces a little.
No new hedges since July 21. The CFO needs to be held to account. I've seen this before. When prices are low, hedge, when they increase do nohing. This is even more idiotic when addition volumes have come on stream. The explanation of high market volatility is just management BS.
Anyone know how much they need on spend on the Wells? I think that is holding this back.
Just looking at unhedged gas. From 1st July day ahead prices were 90p Jul, 108 Aug, 151 Sept. Assuming roughly 18 to 20 million therms a month after hedge and BP share that gives roughly £60m in Q3. For Oct with higher flows say 25 million therms a month making £2.00. Is £50m profit. In q1 it gets interesting say 45 mtherms a month at £2 profit is £90m a month! This share is priced for gas prices to fall. It prices stay where they are it's cheap.
Agreed, and there is the possibility of 400pth in q1 if gas storage is used in a cold q4. I know option prices are high but surely a 150 put in q1 would be good hedge.
Next years gas prices are about 220 for q1 and 110 for rest of year. So your view of next year's revenue is overcooked at current prices. That's not to say they don't move up from here.
Yes they will have hedged at much lower than current market rates, but the price cap means they can charge customers at much lower than market rates. I sell you gas, buy it for 20 sell to you at 25. Or I buy gas at 125 and sell to you at 130. Margin is the same. EMT don't make decisions for the British Gas retail customers, they only execute BGs hedging strategy.
BG have 3.2 million customers on variable tariffs
£139 * 3.2M = £444M extra margin (in absolute scenario - total impact will depend on hedging)
The statement above is misleading. Prices have gone up to buy gas and therefore centrica is passing those on. There is no increase in margin.
One of the reasons small energy providers go bust is that they fail to understand the risk and cost of balancing retail energy customers. Its easy to give up all the small profit on each customer to balancing costs. With current high prices and high volatility balancing costs are a huge risk. More so than the remaining benefit from unhedged upstream production.
Why will rising gas prices boost centrica profits?