Member Info for IAmNotAnAnalyst

I think this has been discussed before and HUR can't force the conversion of bonds to equity. That is down to the bondholder. Therefore buying HUR shares is only beneficial if you're sure the share price will be above the strike price around maturity. As much as we all like to think that should be a possibility it's very far from a certainty. It'd be even less certain if they spent a load of capital on holding their own shares. Much better investing in producing more oil.

Almost certainly it's a recession, just not one caused by the more conventional cycles of economies. However, maybe it just brought a pending one forward.

It would be interesting to know what PoO would be required at 10/12/15kbpd to be able to pay off the bond on maturity. I might have a crack at that later.

Either way though, if production is steady and PoO buoyant then we'd have no trouble refinancing. The bigger issue is lack of CAPEX money to expand production. This was looking bad just due to the PoO collapse, now it's much worse.

I think this was of bigger concern pre-Covid. Then we were on a fast track to 100kbpd in a few years time and because that was in everyone's minds the company felt undervalued.
Now however, weren't bobbing along at 20kbpd for the foreseeable. Until there's a decent plan to get production up, in a way that doesn't sell out shareholders, then basically we're just waiting for someone with money to buy us out. Now the main reason for the depressed price is future earnings, which now are totally dependent on PoO. They'll get love value from the assets as they have money to develop them, in time for when PoO does finally rebound.

Shale however is sold at usually less than WTI, Russia at a small discount to Brent. So they are not like for like.

Also, shale depletes much more rapidly and a lot of the CAPEX costs aren't covered in the breakeven. Of course that only applies to drilling new wells - hence the rapid drop in rigs and grace spreads.

I think it was back in Feb! And yes you are certainly a prolific poster :D

Long wait, yes I remember the article. I think it was about SARS, or at the very least it was about how people responded in Asia. It hasn't really panned out like that this far.
Once lockdown is relaxed it's unclear if the increase in personal transport vs public will outweigh the fewer journeys from people working at home or not working at all.

Thanks for checking. That's higher than I expected but does out into context the doom baked in to predicting a $30 average, which would require $25 prices for an extended period.

I haven't calculated it yet but isn't the 2020 Brent price average >$30 at the moment?
This month will tell us a lot about excess production, economic recovery and just how much has been shut in (particularly in the shale patch)...

Robone - I think you underplay the uncertainty around the medium term oil price range. In normal times professionals and industries are terrible at predicting changes. During an unprecedented time, when a huge number of shut-ins are occuring and there is temporary demand destruction due to Covid those predictions become very flaky. I'd say oil will be anywhere from 20-60$ around the end of the year, but that's just a wild guess.

Good point lucky - the most valuable thing from the CMD could be the new forward plan to develop the fields. What that looks like in terms of timeline Vs cost Vs production forecast will dictate how productive this company will become.

Performance of the current wells is important to establish there is minimal depletion, but I think the market pretty much knows this already. The same goes for water cut, pretty much everything is out there in the RNSs and what those who doubt still really want is to fast forward and see another 12 months of water cut data. Nobody can satisfy that need, it's just time.

Pharos have withdrawn from the consortium to buy the Shell assets.

Call me a stickler but 100k + 250k does not equal 400k!
Also, if the USA is cutting at all 250k is meaningless.
The interesting part is the overall commitment from the US, the price of oil is in their hands. I think OPEC played it well to decide first, then it's down to the US to cut to support its own industry.

Yep, it seems like every time I come back a bunch of messages have been deleted.

There's an interesting report available from Imperial college modelling the total number of people infected and the impact of lockdowns on death rate. Title is "estimating the number of infections and the impact of non-pharmaceutical interventions on COVID-19 in 11 European countries" and it's freely available.
In their models the infection rate in those 11 countries is much higher than measured, although there is absolutely no space for the hypothesis which includes ADUK and many others being infected in a first wave!
Also there is a reliable antibody test, they're using it in South Korea.

Unfortunately no negs I fear you're correct about us following the USA down, at least in the short term.
I think our best hope now is that low prices eliminate a lot of shale and a big chunk of other high cost production. That could cause the price story now to flip in 12-24 months, of course depending on Covid not causing serious problems in 4 months time or so and being broadly brought under control.

Here are some of the phrases I like from the Spectator article:

That puts the morbidity rate of Covid in the range associated with flu - except the huge number of people with Covid still have the disease, its not very scientific to compare a pandemic mid way through with other death rates.

We have yet to see any evidence of excess deaths - firstly, absence of evidence is not evidence of absence...that's pretty basic science. Secondly this is clearly untrue if you just take a moment to understand what's happening in hospitals and what doctors and nurses around the world are saying, geez even the Chinese state says it.

More needs to be known about the models, do they correct for age, pre-existing conditions etc - this shows how little the author understands epidemiology and the government advice. How could it possibly model the difference of isolating for 12 weeks people over 70 and those with pre-existing conditions? If that wasn't in the model nothing could have been said about the impact of those social distancing measure.

The mind boggles...

I don't believe people's behaviour is so drastically different in terms of numbers of social contacts at Christmas compared to any other time. After all Covid was spreading quite a lot in February and March.

Colds being transmitted because of people being close together in winter is not the main reason that happens. Think about your life and how much time you spend in enclosed spaces with people even in summer, it's not that different. The reason is more likely the cold and dry air supports viruses travelling further and stick around longer as well as people's immune systems not working as well because of a shortage of vitamin D.

I appreciate the response ADUK so let me set out my disagreements to your disagreements :D

CDV-19 could have been in wide, but thinly-spread circulation in Europe without the health services batting an eyelid - how can something as contagous as Covid only thinly spread itself all around the world, and not proliferate as it is doing now? Has it changed how infectious it is? If it is spread thinly then it would be much more difficult for it to spread around the globe.

Just 'seasonal flu' with a few 'at risk' patients (maybe already under care) not making it through. Here and there. Nothing statistically important - why would it not be statistically important before yet is incredibly so now? Again this suggests there has been an increase in transmissivity or in incidence of ill health requiring hospital treatment, proposing a mutation.

It took an 'epicentre' (in this instance Wuhan) for people to sit up and take notice - that's because widespread infections happened, purely down to how the virus acts. Are you saying that Wuhan was the mutation and that the previous 'round' of Covid was a weaker version, yet one from which people gained immunity?

Your earthquake analogue is only applicable if Covid drastically changed in December. Otherwise the virus could not moderate itself just to act like a small quake before then changing to be a 'big quake'...these are 2 different phenomena caused by 2 different viruses.

The other thing that would be apparent if your hypothesis is true is that there would be a significant number of people floating around with immunity. And they would be shown to have the antibody once these tests are more available. I haven't seen any evidence suggesting this is the case and that's why I think it's wishful thinking.

ADUK & robone,

For that to be true quite a few unproven guesses have to be accurate. Assuming its current form was the same in December there's no chance this could have been freely circulation without anyone noticing the demands on the healthcare system.