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E Al
Fortunately Edison did take all of that into account in the $42 breakeven figure.
You can calculate breakeven in various ways. From Edison:
Under our low case commodity price scenario ($42), the company would just about cover the bond repayment, post licence commitment costs. We calculate a break-even average price of $42.28/bbl from FY20 to FY22 for Hurricane to be able to cover residual EPS costs, E&A wells and the bond principal.
I know you never accept any adverse comments and seek to split hairs at every opportunity.
......hence my point that until they sort out the bond repayment (whether by restructuring or repayment).....they will struggle to commit money to development activity.
And I’m sure if you heard that the convertible bond would be restructured on this BB then it must be true. Can you run me through what that restructuring might look like or did your research not get that far?
LW
Given this is a paid for note I suspect the BOD find it credible.
What point are you trying to make with the bond repayment?
Edison report is pretty stark imho.
Feels like the BOD are rushing to get all of the bad news out on the geological side so no more pretence that ‘expectations are being exceeded’.
The COS for Lancaster FFD is surprisingly low (as pointed out by Genghis) and the low case of $40 Brent feels a bit too high for me.
The key now is the bonds. Essentially they are too low on cash to develop Further production if they need to pay back the bond principal. I’d suggest it’s urgent they sort out funding - and it’s obvious from the ‘strengthen the balance sheet’ comment in the last RNS that the BOD recognise this. Given the current uncertainty over production I would expect the lender to drive a hard bargain.
Good luck all.
Longwait/ADUK
To be clear, I think evidence of a rate dependent water cut would be bad news for the SP and that the cut would not necessarily be easily or quickly reversed by decreasing production.
Do I take it you both disagree?
Longwait
Another Couple of questions.
Do you think a rate dependent water cut is a key indicator of coning? What might that imply for the debate on acquifer vs perched water?
Are you suggesting the SP should rise if the water cut increases with increased production?
Shame to see RT depart. Probably for the best and probably inevitable as he appears (to me) to be unwilling to compromise on his geological model.
For those not day trading here then the comments on the OWC are the most significant to me. It seems likely that the Board recognise that the OWC may be at structural closure (1380m TVDSS) rather than the base case of 1597m TVDSS. The implications for this are covered on Pg 32/33 of the Lancaster CPR for those interested. It doesn't make good reading.
I did say anyone objective (ie most of the market which slashed 40%+ off the SP).
Enjoy the remainder of the BH. Stay well!
Long wait
https://www.investopedia.com/terms/f/fundamentals.asp
Have a look at a commonly accepted definition of what fundamentals are in the link. I think most objective observers would agree they have changed.
This was discussed in depth previously on TLF. If you use figures for raising water in a column of oil (rather than in air) then you get a different answer.
I’m not an engineer so I won’t comment on who is right, but have a look at the arguments made and they should help you prove or modify your thoughts.
DC
The RNS states:
........Lancaster 6 Well flowed at an average rate of approximately 12,500 barrels of oil per day from the start of individual well flow period on 20 November 2019 until the latest (eighth) lifting on 22 Jan.....
Excellent effort!
What is the point of comparing revenue to MCap? What does it show? A similar comparison is that Tesco has revenue of around £52 Bn but a MCap of circa £23 Bn.
If you want to make a comparison then perhaps try Op Cash Flow, EBITDA or operating profit.
CS. I agree they will come up with a plan. I think we agree it should be focussed on Lancaster, Reserves and production. My point was that any realistic estimate of EPS needs to have some idea of the plan!
And as I’ve said I also agree that sentiment has played a part in the SP fall!
So the plan was to have a stock of 3 horizontal producers in 2019. And then 3 more in 2020 ready for FID and a fast-track to I think 500m barrels (from memory) of reserve.
Whereas now they have been busy replanning.
Whilst I actually don't think we're that far apart on some aspects, I think your desire to see HUR succeed is clouding any objectivity.
So your estimate is currently baseless because there is no plan as yet. When a new plan is published (and let’s hope that they do it when they announce 2020 plans) we can then work out how realistic it is.
And tell me you are joking when you say the ‘GWA results were good and didn’t affects HUR’s aspiration at all’. Seriously?
So your estimate is baseless because there is no plan as yet. When a new plan is published (and let’s hope that they do it when they announce 2020 plans) we can then work out how realistic it is.
And tell me you are joking when you say the ‘GWA results were good and didn’t affects HUR’s aspiration at all’. Seriously?
Ok. Tell me the plan to get to 40k by 2022.