yeah it was expected......on the macro it will effect global oil demand slightly, demand linked to GDP growth
but recovery is holding lack of cap ex and depletion globally is on our side. Plus NGL prices are the best in 18 months and forward curve on Ng is favorable to hedge as well as oil to secure cashflow positive in 2017 in case recovery stalls until 2018
Sentiment: Strong Buy
New investor presentation breaks out Mid stream asset and value, my guess is they will monetize it in the q3....I think they could get around 100million.
Its a positive development.
So at 60 oil, 20 ngl and ng 2.75
oil rev 81 million
NGL 30 million
NG 27.5 million
total rev 138.5 million
free cashflow before cap ex= 58.5 million
They are able to be selffunding to grow production. If and when they lower debt through a transaction margins will further expand.
at 5x cashflow$6-7 a share
Here are some numbers to clarify Arex positioning
Guidance midpoint 4.5 million boe 2016
cap ex 20million + interest servicing approx 25 million, + all other cash cost equals cash flow break even for 2016 rev must = 100million or $ 22.25 per boe ( boe for those unfamiliar is not all oil, in AREX case it's oil, ngl, and NG)
Guidance for production midpoint
oil 1.35 million barrels
NGL 1.5 million boe
NG 10 million mcfe
SO what prices are needed to break even on cashflow for year including interest servicing and cap ex?
Total rev based on that price 102 million - 100 million = 2 million cashflow positive.
or 22.73 realized price per boe for AREX based on the ratio of oil, ngl, ng these produce
It show you they will be fine. Current prices and forward curve are higher then min prices need to sustain positive cashflow and they have hedges and higher prices then those above. Propane currently is 50/gallon or 21$ a boe (42 gallon in a barrel) a blend ngl barrel at conway and mt belvieu is current above $20...averaged mid $19 in april and $20.1 in may......if it stays around $20 for year add 7.5 in positive cash flow, oil at $60 adds 16 million to cashlfow etc etc margin expansion above oil 48, ngl 15, ng 2.25
AREX is worth many times its current 2.26 a share
Sentiment: Strong Buy
They have been approved by banking group to issue 150million second lien, they do that and buy back 230 million of unsecure bonds at .65cent on dollar lowering net debt by 80 million net interest savings of 6million, monetize water gathering, 80-90 million, pays down credit line and lowers debt 80-90 million and the interest savings on both these actions outweigh the cost that would be added by not owning the water gathering asset....in the end .....net debt lower by 160-170 million, cost per beo would be marginal lower because of net effect of transactions, liquidity would improve and comapny would still have it's large hbp's acreage and reserves.
The main things are AREX is one of the lest levered in space with a-class acreage in the Permian that is comprised of 2 large large blocks where extra long laterals can be drilled which are the most profitable. They have 9 ducs to be completed which means volumes can be brought on quickly and inexpensively (wells already paid for and drilled but not completed)
Reserves per well are increasing with new frac design= lower cost per beo, high irr, better margins....at 60oil irr will be in the mid 20's= higher values per acre= higher net asset value foe arex
Like kind asset sales have happened in area and whether you low ball are high ball AREX asset value you get at least a gain of 400% from here. There is no acreage available in permian, it's all held by c-corps so m&a, premium bidding is the norm because it one of a few area in the usa which you can drill and make money at $45-50 oil
as far as macro stuff since q1 oil up +40%, NGL up +65% NG up +30, production in usa declining, cap ex slashed...rig count has risen but its a non issue for now because we need about 500 rig drilling to maintain flat production in the usa...
My thought is q2 CC they will have added hedges in 2017 to secure positive cashflow, futures market is favorable to hedge 50% of prod
Q1 will be the bottom for the industry i think as pricing
Sentiment: Strong Buy
And more importantly the production is PROFITABLE at current prices and type curves with new frac design are rising meaning high IRR's and reserves per well
great point they produce 10k approx of oil and NGL 3300 oil 6700 NGL, NGL prices track with oil prices.
I wonder if a catalyst will be an acquisition for proved producing which will be financed through an expansion of credit line or swap of noncore....in the 100-200 million range with sponsor.
Sentiment: Strong Buy
All NG production hedged in 2016 2017 so the upside is leveraged to rising oil prices which effects the price of NG liquids which EVEP produces a lot of about 10000 barrels a day of oil and NGL....
The strip of 2018 Ng is much higher then current so it'll be a bumpy ride but I'n looking at 6-10$ in 2018
Not harsh factual. It not like I'm brandishing from my PC. But if you try the edit the facts or post half truths about what was said I'll call you out, and enjoy it..public service actually.. Period.
Purple is offensive?!?... is in her name, that she or he, im not convinced it's a female poster, chose, its not a racial thing. If her name was "redfromtheforest".....Id refer to her as "red" Just like I'd refer to you as Hard. Get over yourself, save your sarcasm for the weaker minded. At least I posted the truth vs the rhetoric Purple has.
Did I reference slavery? No, nor will I because it has NOTHING TO DO WITH VNR, And those who do should be removed from the board. Money cares not, creed, religion, sex, etc. So stop being childish Hard.
they did add oil hedged last week. As stated. And you did mislead trying to make the board believe they didn't add hedge for fear of declining oil production at VNR which is untrue. The fact that they are not hedging more today is positive bet on future higher prices and cashflow
Shame purple, doing the devils work. misleading others. The whole industry in the usa has cut cap ex so deep that we have lost about a 1 million barrels a day from the peak in 2014-15. Less supply + demand = high future prices and there fore the desire not to hedge 17, 18 and beyond because the curve, strip price will be considerably higher if you wait. And as far as their decline rate inherit to VNR this Q the scoop assets have high decline rates which raised the overall corp decline, once sold the corp decline rate drops drastically. Meaning less cap ex for stable or flat production. Listen Purple, if you really want to lock horns with a real old man go ahead, we can get into it all you want. Facts are facts.
I can read and i'm not confused. They did add hedges
"in the past week we took advantage of the continued strength in the natural gas curve and layered on an additional 15,000 MMbtu per day at $3 for the second half of 2017."
"Additionally, last week we also took advantage of the recent strength in the oil curve to layer in an additional 1,500 barrels per day in the form of collars for the fourth quarter of 2016 with a floor of $45 and a ceiling of $55 per barrel which had a deferred premium cost of $1 per barrel."
More misinformation from you Purple
"We continue to evaluate adding incremental hedges to take advantage of the increases in oil and natural gas prices. However, as it relates to oil hedges, we are cautious to layer into any significant amount of volume for 2017 and beyond as we share the same sentiment with many others in that due to production declines we will see higher prices starting in 2017."
MEANING: production declines globally and the strip prices will be higher in the future then if you hedge now. Not VNR's production delcine........"We share the same sentiment as others..." See that's what I mean about misinformation you edited what we actually said to mislead others Purple. Shame on you.
not what they said. why all the mis-information purple? keep it up and you'll just be blocked for wasting my time