I updated the forecast/valuation models today for CPE, CLR, ESTE, EOG, LPI, MGY and the models have been posted to the EPG website.
Only minor adjustments to current valuation because lower oil price used in the models are mostly offset by increased natural gas prices. Note that I have not changed the NGL prices that are likely to move higher with natural gas in Q4.
I will update MTDR, NOG, OVV, PDCE and SM tomorrow.
Sweet 16 Valuation Updates - Aug 24
Sweet 16 Valuation Updates - Aug 24
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Sweet 16 Valuation Updates - Aug 24
This true for all five of our gassers (AR, CRK, EQT, RRC and SBOW) and for most of the others. At current strip prices they are all generating so much free cash flow that they could soon be debt free. However, they will uses lots of the FCF to pay dividends and for stock buybacks.
US shale could erase debt by 2024, freeing up cash for gas pivot. Bloomberg.
US shale producers are on course to make nearly $200 billion this year, enough to make the industry debt-free by 2024 and potentially fund a pivot toward more natural gas production, according to Deloitte LLP. High oil prices and disciplined capital spending mean American frackers are on course for their most profitable year on record, part of a global trend that will see the oil and gas industry generate a record $1.4 trillion of free cash flow, Deloitte said in a report. After paying down debt and rewarding shareholders, US producers will likely focus more on natural gas production due to high demand and prices around the world. “We see a shift in upstream activity toward natural gas,” Amy Chronis, Deloitte’s US oil, gas and chemicals leader, said in an interview. Shale operators “will double down on US natural gas basins” and may have enough money left over to increase investments in low-carbon fuels.
I am bullish on oil and VERY BULLISH on natural gas.
Deloitte: Oil & gas industry could have highest-ever cash flows and become debt-free, primed to accelerate the energy transition. PR Newswire.
After pausing reinvestments due to economic uncertainty, the oil and gas industry is exhibiting exceptional financial health and industry-leading returns at 20% leverage and 4% to 6% of dividend yield. Even amid ongoing price volatility and supply chain disruption, many companies are strongly positioned for the future, though defining the road ahead will take time. Significant investments could be required to strike a careful energy balance. According to the study, $3.6 trillion is the projected hydrocarbon capex at base price to maintain operations and generate significant cash flows from 2022 to 2030 globally. However, the study also suggests that these investments will compete with growing priorities on cash that includes shareholder payouts, buybacks and debt repayment. Even after meeting both core hydrocarbon investment and shareholder priorities, the global upstream industry is likely to generate $1.5 trillion in cash surplus between 2022-2030.
There is a place for natural gas on a zero-carbon grid: EPRI. Utility Dive.
The North American Electric Reliability Corp. has warned that gas generation will be necessary to balance the transition to more variable renewables and storage. EPRI’s new research concludes there is a role for natural gas capacity and generation “during the transition to zero [emissions] and at the destination.” “Utilities are pledging net-zero targets that can include plans to build gas-fired capacity, which raises questions about levels of natural gas that are consistent with electric sector decarbonization goals,” the paper states. Researchers modeled scenarios where wind and solar generation shares ranged from 52% to 66% in most regions, compared with 0% to 19% gas generation. Nuclear, batteries and other resources were also included in the analysis. Natural gas capacity “can be compatible with net-zero emissions goals if a net-zero policy framing allows units with CO2 removal offset,” EPRI researchers concluded in the paper.
US shale could erase debt by 2024, freeing up cash for gas pivot. Bloomberg.
US shale producers are on course to make nearly $200 billion this year, enough to make the industry debt-free by 2024 and potentially fund a pivot toward more natural gas production, according to Deloitte LLP. High oil prices and disciplined capital spending mean American frackers are on course for their most profitable year on record, part of a global trend that will see the oil and gas industry generate a record $1.4 trillion of free cash flow, Deloitte said in a report. After paying down debt and rewarding shareholders, US producers will likely focus more on natural gas production due to high demand and prices around the world. “We see a shift in upstream activity toward natural gas,” Amy Chronis, Deloitte’s US oil, gas and chemicals leader, said in an interview. Shale operators “will double down on US natural gas basins” and may have enough money left over to increase investments in low-carbon fuels.
I am bullish on oil and VERY BULLISH on natural gas.
Deloitte: Oil & gas industry could have highest-ever cash flows and become debt-free, primed to accelerate the energy transition. PR Newswire.
After pausing reinvestments due to economic uncertainty, the oil and gas industry is exhibiting exceptional financial health and industry-leading returns at 20% leverage and 4% to 6% of dividend yield. Even amid ongoing price volatility and supply chain disruption, many companies are strongly positioned for the future, though defining the road ahead will take time. Significant investments could be required to strike a careful energy balance. According to the study, $3.6 trillion is the projected hydrocarbon capex at base price to maintain operations and generate significant cash flows from 2022 to 2030 globally. However, the study also suggests that these investments will compete with growing priorities on cash that includes shareholder payouts, buybacks and debt repayment. Even after meeting both core hydrocarbon investment and shareholder priorities, the global upstream industry is likely to generate $1.5 trillion in cash surplus between 2022-2030.
There is a place for natural gas on a zero-carbon grid: EPRI. Utility Dive.
The North American Electric Reliability Corp. has warned that gas generation will be necessary to balance the transition to more variable renewables and storage. EPRI’s new research concludes there is a role for natural gas capacity and generation “during the transition to zero [emissions] and at the destination.” “Utilities are pledging net-zero targets that can include plans to build gas-fired capacity, which raises questions about levels of natural gas that are consistent with electric sector decarbonization goals,” the paper states. Researchers modeled scenarios where wind and solar generation shares ranged from 52% to 66% in most regions, compared with 0% to 19% gas generation. Nuclear, batteries and other resources were also included in the analysis. Natural gas capacity “can be compatible with net-zero emissions goals if a net-zero policy framing allows units with CO2 removal offset,” EPRI researchers concluded in the paper.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group