“In my interview with David Ignatius, I explained that price stability & climate change are closely related. Consequently, we must take climate-related risks into account in our central banking activities”- Christine Lagarde … ???

**We’re also running a poll - if you haven’t voted, vote here (LinkedIn) or here (Twitter)**

THREATS OF FORECLOSURE.

We thought about writing more on the topic of banks & their RBL exposures (the subject of the above poll), but we’re not - at least today - for a couple reasons:

1. We understand that bank regulators are not pushing banks to strictly adhere to the normal methodology, given COVID / the circumstances; &

2. Someone else did a great job of describing a nuance that we were interested in (there are 7 total Tweets there, worth the quick read):

Cautiously Pessimistic @CP2Close

@ReserveReport 1/2 - Could be worth a lot, in my experience - A bank’s threat of foreclosure is only as real as its ability to operate, particularly if you have a syndicate where the voting majority can’t (or is unwilling to) foreclose. I’ve seen a company go through Ch 11 once in ~2016 and

7:26 PM ∙ Jul 23, 2020

If / when we come back to this topic, it’ll probably require going through the RBL CAs of public E&Ps & ID’ing the banks involved in each…

And that does not sound like an August activity -

CONOCO.

Conoco announced that they are buying assets from Kelt Exploration (Canada).

Once again, the commentary from social media (@yyc_sem, in this case) does it better justice (than we could):

Sem @yyc_sem

The ConocoPhillips transaction has some read-throughs to CDN E&P’s. Remember that when COP sold almost all of its CDN E&P assets to CVE in 2017 they only kept an early stage Montney property in NE BC called Blueberry and Surmont (oil sands). At that point they had drilled cont.

9:45 PM ∙ Jul 22, 2020

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46Likes6Retweets

Among the points (we recommend reading the ~7ish Tweets), one point made stands out as a global valuation consideration:

“There has been limited REAL price discovery in Canada because so few transactions lately but this does serve to support underlying value for the Montney…” - Sem

With the M&A / A&D markets so quiet, the potential acquisition value of an asset - often the highest valuation metric - will, broadly, not be useful for some time.

A probabilistic NAV approach is the only way we see valuing public E&Ps…

…at least until 2021.

**Unless politics are involved**

OTHER NEWS.

We respect the effort, but this feels like forming a horse & buggy task force in the 1920s…

• Mike’s blog has couple new posts - always an enjoyable read

• Oxy hits one out of the park

• This one made us laugh

We were assuming Rosehill would file for Ch.11 last night.

As of writing, they have not…

Should they file, we’ll publish on the topic -

Last night was baseball’s opening night - there’s 14 MLB games on tonight, we’ll be binge-watching - catch y’all Tuesday -