RE:1Q Results (Frontera and CGX)Not much here in terms of new information; or, what has been speculated by some members on this board.
If you want to look at sobering E&P news releases - I can refer you to quite a few.
Even a good solid company like BP announed on their earnings call their breakeven is more than $52/bbl! Obviously, they are focused on trying to lower that to ~$35/bbl over the next several years - but, underscores how some good companies have signficiant parts of their upstream portfolio that are simply not viable in a low oil price environment.
Or, take a look at Shell - who announced a divdend cut on their Q1-2020 earnings call (which has not been cut since WWII). More particulary, Shell selling its marcellus shale position in the US - for which it has invested over $4B - and was recently sold for less than $500M.
The point here is that no matter where you look, E&P earnings in Q1 are sobering. Next several quarters are expected to be even worse. The common takeaway is that every E&P out there (including the super-majors) are focused on doing everything they can to lower their breakevens. Some have options at their disposal - sadly, there are many (I mean many) E&P's out there who don't have anywhere to run.
For those investors of CGX - remember, we are investing in a basin that has produced some of the lowest break-even fields in the world. To underscore this point further - Total mentioned on their Q1 earnings call (a bright spot per se) they are considering fast-tracking Suriname Block 58 in the current environment...Suriname being one of the rare few projects in Total's global upstream portfolio they comfortable investing in and beleive would generate good returns in the current environment. As most of you know, CGX Northern Corentyne Area is just a few miles from Total's Maka Central discovery....
Looking Forward:
- Finalize Guyana Election Results
- agreement with government to defer work near term work committments
- agreement with Ensco to extend rig obligations (where we have +$4M cash deposit)
- Updated Resource Report (demarara and corentyne)
- Potential JV or other financial arrangement to proceed with drilling
* Not to mention ongoing exploration program by Total/Apache, Exxon/Hess/Total, Tullow/Total/Eco- Atlantic.
Speaking of Eco-Atlantic - comparative valuation still has CGX trading at a discounted multiple of at least 4x....
GLTA