Member Info for Krono5

It's the 3rd Friday in March, aka Triple witching. It'll be the MM's repricing before options expiry later today and institutions rebalancing.

@TrojanHorse That seems like a very big deal. Something like 3.4% of global LNG offline for 3-5 years is the first confirmed structural damage in energy markets from this conflict, not just short term. It changes HBR's NAV as it increases the "floor" of gas prices from $11 mcsf to some number I'm not smart enough to work out for 3-5 years.

I'd also like to add to Sekforde's point that the forward curves are conservative as the backwardation is still in favour of a fairly quick resolution. It appears to me that the market is still underestimating the costs for the remainder of this year due to supply disruption, infrastructure damage and shut-ins. If I were to make the ultra-bullish case it'd be oil going to $150 in the next few weeks and staying there for the next 6 months, with 20% of global gas off the market that could easily nearly double to $38. Using HBR's own numbers that would be an FCF of $7.5bn.

Now I'm not saying that is going to happen but HBR is incredibly sensitive to the upside of energy costs and it is an outside possibility that puts it into perspective. Circa ~$3bn FCF seems a good indication of where we stand at present.

That can only be temporary. I was looking to get into oil when this Iran situation kicked off and this was the standout company. At current prices (not that they will necessarily hold) of $118 Brent and $23 TTF gas, HBR is looking at an FCF above it's market cap meaning a massive earnings beat in May print, most likely < 1.0x leverage meaning the higher range of 45-75% dividend and analyst reratings based on those earnings.

There's also FTSE 100 inclusion on the cards if it maintains this market cap for June which would mean forced institutional buying. Historically oil stocks take about 3 months to fully reflect price rises in oil after earnings so 20% would imho be an underestimastion. 440p by June and possibly higher when September dividends are announced is the most probable scenario unless something unexpected happens.

The only thing I'm unsure of is how HBR will adjust their hedged positions now?