uncutgems wrote: I read robert's posts, tally up the "oopsies" and correct them for posterity.
Just a week ago Robert was vociferous in his belief that OIL was going to average $80 USD WTI next year. That was central to his Forecast for Paramount Resources. he also said Natty was "too high" and headed lower. But the opposite happened. Gas is still headed higher and oil has started to head south. So there's THAT.
But I pushed back and said that before we hit $80 wti POU would begin to HEDGE their oil exposure. Because POU is a "hedger. I said they ALWAYS forward hedge to protect cash flows. Robert was Adamant that POU wouldn't forward hedge their oil because "they never do"...
So I imagine my surprise when today Robert is here "crowing" about POU's new 2022 oil hedges at $87 USD WTI. And he's very happy they could get that price. Well it is certainly surprising, but not a total shocker, that Robert would perform a "180" so quickly about the hedging, That's classic bull board behaviour after all.
But I must offer up yet another correction of one of his "facts". You see Robert doesn't fully understand that it was IMPOSSIBLE to hedge oil at $87 USD over the last few weeks when POU put the hedges on. As such it had to be impossible for POU to do it.
Below is what Robert said about POU's hedging. I want to remind you that last week he spilled many a word arguing POU doesn't forward hedge oil. And that POU was going to get $80 USD per BOE in 2020. So that's a big change in just a week for him.
"Results were neutral. Oil/condy down slightly nothing crazy. 6k boes of oil hedged at $87 Usd for next year is excellent. I can see another 6k being added before the year is out perhaps in the $70 to $75 range which would yield us an avg hedged oil price ~ $75 to $80. That would be solid."
Now let's look at what POU actually DID.
Oil – NYMEX WTI Swaps (Sale) 6,000 Bbl/d CDN$88.45/Bbl October 2021 – December 2021 Oil – NYMEX WTI Swaps (Sale) 6,000 Bbl/d CDN$85.88/Bbl January 2022 – March 2022
Notice that their hedge was in CDN and not USD. At current exchange rates their hedge is at $69 and change USD WTI.
I said POU would start hedging WELL BEFORE prices hit $80 USD. Robert was shouting at me that I was wrong.
Robert was wrong on two big things. He was wrong in predicting that POU would not hedge their oil. And when they did hedge he was wrong about the price they got for their hedge. POU seems pleased as punch to be able to hedge some oil UNDER $70 USD.
I guess the lesson here is to read what Robert has to say, when he is brief in what he writes, but be careful and circumspect when he presents data as Facts. He's a very opinionated guy, which is fine. If they are sensible and well thought out.
I guess the old adage applies here. Buyer beware. Even if what they are sellin is "free"...
Gems,
You are correct that 6k boe's is closer to $69 USD rather than $71; my basic math skills evade me...
Soo the 6,000 BOEs were hedged (so far) of oil hedged at $69 would cost POU $21mm next year in fcf if oil averaged $80USD. OK...
Based on their sporadic hedging history of late, Im curious, how are you so certain we'll see anymore hedges?
2017 - 22k BOE'S hedged @ ~$71 CAD
2018 - NIL (or very close to NIL) oil hedges
2019 - 16k BOE's of oil hedged at ~ $80 CAD
Do you have access to board meetings? JR on call? Now that oil prices have stabilized somewhat this year (last few weeks of oil prices notwithstanding) and POU's debt is better than it has been in recent years - who's to say JR is considering adding any further oil hedges this year? You certainly dont know for certain, do you?? So far its 6k BOE's of oil and if theyve already hedged almost 50% of their prod for next year with these 6k boes of oil. I can understand why you would want to cast doubt on them adding further hedges to this - being that you obviously are here as a shorter. Or perhaps some other alterior motives in regards to other O&G companies?
Oil prices: Did I have any knowledge of delta variant talk? Before this recent round of covid, oil markets had been climbing along to $75+. Im curious, how do you know what oil prices might fare next year? You have a crystal ball? A "curve graph" eh? OK...good for you - you can read a graph! You showed up right as TOU was upgrading their guidance due to the 3 month long rally in gas prices, coincidence huh? I'll stick with oil for at least next year - interest rates are zero, inflation is climbing, and rig counts are low. And I guess, we'll see what we see
Guys like you like to believe you are right 100% of the time; in reality you might be right 20 - to 50% of the time... "POU will hedge long before oil goes to $80". Reality - Theyve hedged 20% of their oil at 87% of $80 USD. Cost is mininal. Get it or nah?
Like, I'm not saying this is going to climb to anywhere near TOU value, you get that rigggght?? Like I'm only here to see if we cant get $25 or so in value from this company - maybe even high $20's if oil prices are solid enough next year. To me, that is fair value for POU. It might go higher; it might go lower, but with $75 to $80 oil, I'm confident this is a good possibility. GIven we were at ~$17.5 or so a few weeks ago, I'd say, so far the market in general agrees with me.
But hey, stick around and let's see what we see.
GLTA