When a Bank Operates an Asset
“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:
We understand that bank regulators are not pushing banks to strictly adhere to the normal methodology, given COVID / the circumstances; &
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):
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 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):
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**
We respect the effort, but this feels like forming a horse & buggy task force in the 1920s…
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 -