Discover more from Reserve Report
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 … ???
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**
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 -