Dan, How long does the Oil Price hedge on Callon last? Do you know if they have an option to renew at the same price?
I think it would be helpful to rank the Sweet 16 in order by their financial stability and ability to avoid bankruptcy.
You posted that EOG and PXD were the strongest and there for they should be ranked as 1 and 2. It would be good if you could rank
the remainder in order, of which you think they can best survive bankruptcy.
Ranking of the Sweet 16 and Callon Oil Price Hedge
Re: Ranking of the Sweet 16 and Callon Oil Price Hedge
Hedges are never renewable at the same price. Hedges are just like Call and Put options on stocks; they change minute by minute as the commodity prices move up and down.
I will never force rank companies based on "chance of going bankrupt". All forecasts are only as good as the assumptions used to build them. What you should do is download some of my forecast models to Excel and go over them line by line. It should not take you more than 30 minutes to understand them.
They are really quite simple once you take the time.
> Revenue - Expenses = Net Income
> Net Income +/- non-cash items = Cash Flow from Operations.
Each company's hedges are shown at the bottom of the forecast models.
All of the Sweet 16 are generating positive cash flow from operations. As long as they are able to pay their vendor invoices and stay current on interest payments to the banks they should be able to survive 2020. Banks and other debt holder don't benefit from forcing companies into bankruptcy, only the lawyers come out ahead.
I will never force rank companies based on "chance of going bankrupt". All forecasts are only as good as the assumptions used to build them. What you should do is download some of my forecast models to Excel and go over them line by line. It should not take you more than 30 minutes to understand them.
They are really quite simple once you take the time.
> Revenue - Expenses = Net Income
> Net Income +/- non-cash items = Cash Flow from Operations.
Each company's hedges are shown at the bottom of the forecast models.
All of the Sweet 16 are generating positive cash flow from operations. As long as they are able to pay their vendor invoices and stay current on interest payments to the banks they should be able to survive 2020. Banks and other debt holder don't benefit from forcing companies into bankruptcy, only the lawyers come out ahead.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group