RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:RE:Nuttall....change in strategy?Txs for your comments, EIJ. Always appreciated.
I have noticed the slow decline of TOU relative to PEY that has started mid-December.
Trading both of them regularly, I tried to explained how the leader started to develop weakness relative to PEY. I found two variable that may explain this:
- PEY has a greater % of its production hedged for the next two years. Enough, any way, to protect a moderate capex program and its dividends.
- TOU has allocated a considerable part of its future production to a deal with Cheniere LNG to gain exposure with East Asia markets (JKM). Since the end of October, the JKM forward strip has been wiped out, losing half of Futures prices used by TOU to hedged its future production. It will be interesting to see what Mr Rose will have to say with the profitability of these deals.
TOU has a proven record of being ahead of the group on the sale side. Can PEY return to #1, with its efficiencies on the field and its hedge book in the current cycle?