Member Info for schlemiel

Of course the best hedge is 'all in' minimal/ low production costs per barrel of oil. This does to a degree come under company control as opposed to oil-gas prices being subjected to wider market forces

Two kinds of indirect costs are worth discussing: the opportunity cost of holding margin capital and lost upside. First, when a company enters into some financial-hedging arrangements, it often must hold additional capital on its balance sheet against potential future obligations. This requirement ties up significant capital that might have been better applied to other projects, creating an opportunity cost that managers often overlook. A natural-gas producer that hedges its entire annual production output, valued at $3 billion in sales, for example, would be required to hold or post capital of around $1 billion, since gas prices can fluctuate up to 30 to 35 percent in a given year. At a 6 percent interest rate, the cost of holding or posting margin capital translates to $60 million per year.

Another indirect cost is lost upside. When the probability that prices will move favorably (rise, for example) is higher than the probability that they’ll move unfavorably (fall, for example), hedging to lock in current prices can cost more in forgone upside than the value of the downside protection. This cost depends on an organization’s view of commodity price floors and ceilings. A large independent natural-gas producer, for example, was evaluating a hedge for its production during the coming two years. The price of natural gas in the futures markets was $5.50 per million British thermal units (BTUs). The company’s fundamental perspective was that gas prices in the next two years would stay within a range of $5.00 to $8.00 per million BTUs. By hedging production at $5.50 per million BTUs, the company protected itself from only a $0.50 decline in prices and gave up a potential upside of $2.50 if prices rose to $8.00.

Hedge only what matters

Companies should hedge only exposures that pose a material risk to their financial health or threaten their strategic plans. (in HUR's case, debt redemptions)

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https://www.mckinsey.com/business-functions/strategy-and-corporate-finance/our-insights/the-right-way-to-hedge#

“This is a very good outcome for VNE shareholders,” Joseph Spak, an analyst at RBC Capital Markets, said in a note. The deal gives Veoneer more resources to develop its suite of driver-assistance systems and it now has a big customer for its vehicle perception and software platform, Spak wrote.

Veoneer was spun off by auto-safety supplier Autoliv Inc. in 2018. The shares lost more than half their value after the split as orders slumped and the company racked up losses.

Magna investors will “struggle with the rationale” of the deal in the short term, Chris McNally, an analyst at Evercore ISI, said in a note, citing possible challenges with integrating certain technology and Veoneer’s recent cash burn. On the plus side, Veoneer’s radar, thermal and driver-monitoring system businesses are “of high-quality and truly complimentary” to Magna’s product offerings.

https://www.bloomberg.com/news/articles/2021-07-23/magna-buys-driver-assistance-supplier-veoneer-for-3-8-billion

https://www.fool.com/earnings/call-transcripts/2021/07/23/veoneer-inc-vne-q2-2021-earnings-call-transcript/

I'd ignore for now the book figure that is profit. More important is the actual cash movements in and movements out until bonds are stripped off the books.

Gb1's figures below reveal that this company is throwing off cash like a good 'un. No wonder those feckin' leeching bondholders wanted to get their grubbies on the company

I bet they could bump up Lancaster production beyond 13k bopd with further capex investment in the field

For the next 5 years or so Hurricane can become a proper cash cow and dividend payer if managed well

'Driver/Occupant Monitoring
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A leading position across technology, experience and scale'

pg 11 - DMS

https://www.magna.com/docs/default-source/investor-event-documents/2021-investor-events/management-call---final---support-material-v1.pdf?sfvrsn=e0e7073d_10

pg 6:

'Transaction Benefits Key Stakeholders :

'Combined leadership position in ADAS, together withMagna's overall scale offers exciting opportunities for Veoneer’s employees and supplier partners'

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Veoneer supplier partners is unquestionably a refence to SEE and other Veoneer suppliers. It seems we may have another customer on the horizon.

best post the day fella, by far....and a nice snippet of info that no doubt many are unaware of ie '30% of CB's'

to sell 750k..buyer's back

The Saudi Prince of Oil Prices Vows to Drill ‘Every Last Molecule’

Abdulaziz bin Salman, the most powerful man in petroleum, navigates unruly OPEC+ nations, huge swings in price and production—and the end of fossil fuels.
By 22 July 2021, 05:00 BST

https://www.bloomberg.com/news/features/2021-07-22/saudi-prince-abdulaziz-bin-salman-seeks-to-tame-oil-prices-opec-russia?srnd=premium-europe

He can see the end game for oil so I suspect OPEC will use this narrowing window of oppoprtunity to extract the max from their oil reserves and that means a more determined OPEC to maintain higher prices

Now, that's interesting. As the consolidation started int the ADAS space?

A push to development in the Shetlands it seems thought the usual anti-Democratic, lobby fascists think they can circumvent democracy by targeting politicians direct

''and an important first step towards further development of the Lancaster field, possibly in the form of a water injection scheme to improve reservoir sweep and efficiency.''

So life in Lancaster for some time to come and that means hundreds of millions of $ of FCF into HUR coffers once the creditors have been neutralised

From HUR's annual report Jan 2021 -

''Notwithstanding the above, the Company will continue its technical and commercial work to
mature potential further investment opportunities across its portfolio. In particular, the Company has developed a proposed side-track of the existing 205/21a-7z well on the Lancaster field, which would be drilled into central high of the field. While the incremental Reserves targeted by this well would be modest, it would provide production resilience through a second production well, directly addressing the significant operational risk in the NFA scenario of reliance on the 205/21a-6 well alone, and an important first step towards further development of the Lancaster field, possibly in the form of a water injection scheme to improve reservoir sweep and efficiency.''

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It looks looks like Lancaster isn't dead after all

https://www.hurricaneenergy.com/download_file/force/638/221

1.1m buy

A left field idea. I wonder if Centrica (Spirit) will buy themselves out of this JV handing HUR cash to secure their exit and relinquish their contractual obligations? Just a thought

Centrica update this morning showing they are considering all options relating to Spririt. If you look at the revised JV agreement below it does contain some positives for Hurricane :

'The two companies signed a deal in 2018 to develop GWA in two phases, with Spirit meeting all of Hurricane’s share of $180.6 million of costs in the first phase and half of Hurricane’s share of $187.5 million of costs in the second phase. Under the new deal, the pair will split equally any costs from the first phase that are in excess of $180.6 million and which relate to preparing equipment for phase two until a final investment decision on that is taken.

Surrey-based Hurricane, which has a base in Aberdeen, also gains some flexibility to develop plans for connecting the field to the West of Shetland gas pipeline system. If Hurricane chooses to go down that route then the cost is likely to be around $90 million but Hurricane would recover a chunk of that if a final investment decision is later approved on GWA phase two in line with the original 2018 deal.

Robert Trice, chief executive at Hurricane, said: “These amendments to our arrangements with Spirit give us greater optionality relating to gas export, whilst preserving the carry value of the Spirit farm-in in the event that the GWA joint venture partners proceed with a GWA tie-back in the future. In addition, the Lancaster EPS is currently producing at 20,000 barrels of oil per day and I look forward to providing an update at the capital markets day on 25 March.'

There should some company news to come in this area of HUR's activities

I wonder if the decision by Centrica to dispose of their stake in Spirit had some bearing on Spirit's decision to halt progress events at Lincoln? It is obvious it entailed capex committmens of some significance but when a well is producing 9800 bopd albeit on an ESP then one would think that at least is evidence of success. The article below does state 'Nevertheless, the 2016 and 2019 well results on Lincoln provide the basis for a commercial development' and then they go and P & A the fecker. No wonder Bernstein thought that was perverse. FFS, 9800/bpd...that takes us to around 20k bopd. Even 2/3's of that is still massive.

https://www.offshore-mag.com/production/article/14174834/hurricane-energy-updates-west-of-shetland-basement-well-analyses

'As for the wells drilled last year in the nearby offshore Greater Warwick Area (GWA), these show that GWA productivity is materially less than Lancaster, as evidenced by lower drilling mud losses, lower flow rates and lower productivity indices; the fault zone characteristics are different than those in Lancaster; the GWA basement appears to have less well-developed reservoir qualities; and the Lincoln Crestal well, although produced successfully at 9,800 b/d of oil using an ESP, had a materially lower productivity index than Lancaster.

All this suggests the GWA basement has less well-developed reservoir qualities, and achieving a better understanding of the control on these properties will require further wells and data.

Nevertheless, the 2016 and 2019 well results on Lincoln provide the basis for a commercial development. Hurricane and partner Spirit Energy are therefore seeking a field determination at Lincoln for the purpose of progressing a field development, involving a single well tieback to the Aoka Mizu of either the Lincoln Crestal well or an alternative shallower producer. '

A Clear Message

The signing of the ICSID Convention does not guarantee a free flow of investment in the country, but it does represent an important step on the Government’s path to promote investment and free trade agreements.[9]

The signing of the ICSID Convention was welcomed by the ICSID Secretary-General Meg Kinnear who said that it confirmed Ecuador’s “commitment to strengthen its investment climate.” Precisely, as noted, by signing the Convention, Ecuador is delivering the clear message that the country will provide legal certainty and, as Secretary-General Meg Kinnear mentioned, access to an impartial dispute resolution mechanism which will reduce risk and give greater confidence to investors, thereby attracting crucial investment flow and generating more development opportunities for all.[10]

According to Barclays Investment Bank, a possible return of Ecuador to ICSID could attract higher capital inflow, which in turn could generate economic growth of three percent in 2022, when previously it had estimated growth of 1.5 percent.[11]

Moreover, Ecuador is taking other measures to regain investors’ confidence. For example, the Government is also evaluating free trade agreements with countries like Mexico, which have conditioned any possible agreement on Ecuador joining ICSID.[12] Also, President Lasso seeks to incorporate the country into the trade bloc of the Pacific Alliance formed by Chile, Colombia, Mexico and Peru.[13]

All of these efforts combined with Ecuador rejoining ICSID now seem to be especially relevant within the region, since neighboring countries Peru and Colombia, as well as Chile, are currently undergoing political crises or drastic public policy shifts. Ecuador has made it abundantly clear that its market-oriented policies, coupled with building a legal structure providing certainty to investors, are central to attracting development opportunities.

https://www.shearman.com/Perspectives/2021/07/Ecuador-Rejoins-ICSID-Implications-for-Investors