Analysis of VNR, hedges and fortunes
Re: Analysis of VNR, hedges and fortunes
I put a table of each company's hedges at the bottom of forecast models. Most companies have their hedges listed on a slide in their most recent presentation. Go to their website and click on the Investor tab to get to their most recent presentation. Of course, you can always find a table of hedges in the most recent quarterly SEC filing, but it is often very confusing.
VNR has been assigned to our top MBA Student Intern from SMU, Steven Lightbody for an updated profile. I hope to publish it next week.
VNR has been assigned to our top MBA Student Intern from SMU, Steven Lightbody for an updated profile. I hope to publish it next week.
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Analysis of VNR, hedges and fortunes
Looking Forward to VNR report.Thanks
Re: Analysis of VNR, hedges and fortunes
Curious whether I missed the VNR update.
Re: Analysis of VNR, hedges and fortunes
I will have it updated Monday morning (5/16).
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group
Re: Analysis of VNR, hedges and fortunes
Recent Activities
Divestiture
On March 29, 2016, we entered into a definitive agreement to sell our natural gas, oil and natural gas liquids assets in the SCOOP/STACK area in Oklahoma to entities managed by Titanium Exploration Partners, LLC for $280.0 million, subject to customary purchase price adjustments at closing (the “SCOOP/STACK Divestiture”). This transaction has an effective date of January 1, 2016 and is expected to close on or before May 18, 2016. [This is very important for VNR's future as they must remain "friends" with the bankers. - Dan]
Capital Expenditures
Total capital expenditures for the drilling, capital workover and recompletion of oil and natural gas properties were approximately $20.3 million in the first quarter of 2016 compared to $25.1 million for the comparable quarter of 2015 and $32.4 million for the fourth quarter of 2015.
We have significantly reduced our capital expenditures budget for 2016. We currently anticipate a total capital expenditures budget for the remainder of 2016 to range between $54.0 million and $58.0 million or a range between $74.0 million and $78.0 million for the full year of 2016.
[This capex budget compares to my cash flow from operations forecast of $300 to $325 million. YES, VNR is generating plenty of free cash flow. - Dan]
This increase from our original 2016 capital expenditures budget is primarily attributable to increased spending in the Green River Basin where we expect to spend approximately 45% of the remaining 2016 capital expenditures budget participating as a non-operating partner in the drilling and completion of directional natural gas wells in the Pinedale Field. Additionally, not including the impact of the SCOOP/STACK Divestiture, which is anticipated to close on or before May 18, 2016, we expect to spend approximately 21% of the remaining 2016 capital expenditures budget in the Anadarko Basin on the SCOOP and STACK assets, participating as a non-operated partner drilling standard length and extended length liquid rich horizontal gas and oil wells targeting the Woodford Shale and various stacked pay Mississippian reservoirs. We anticipate that after the closing of the SCOOP/STACK Divestiture, any remaining capital that was allocated to these properties may be spent on other projects in our portfolio that offer acceptable rates of return in the current commodity price environment. The balance of the remaining 2016 capital expenditures budget is related to recompletion and maintenance activities in our other operating areas.
"As of April 29, 2016, we had indebtedness under our Reserve-Based Credit facility totaling $1.69 billion with a borrowing base of $1.78 billion which provided for approximately $113.0 million of available liquidity, after consideration of a $4.5 million reduction in availability for letters of credit and a $25.0 million increase for available cash. We are currently in the process of our semi-annual borrowing base redetermination and anticipate the SCOOP/STACK Divestiture will be consummated at the same time in May 2016, allowing us to significantly reduce borrowings under our Reserve-Based Credit facility. However, based on market conditions, continued declines in oil and natural gas prices and recent conversations with our administrative agent, we expect that our borrowing base will be redetermined to a level below our outstanding borrowings in our May 2016 redetermination causing a small deficiency. Our internal forecasts show that we will generate a substantial amount of excess cash flow over the course of 2016 which we expect will be sufficient to repay the borrowing base deficiency. In the case of a borrowing base deficiency, our Reserve-Based Credit facility requires us to repay the deficiency in equal monthly installments over a six month period."
Divestiture
On March 29, 2016, we entered into a definitive agreement to sell our natural gas, oil and natural gas liquids assets in the SCOOP/STACK area in Oklahoma to entities managed by Titanium Exploration Partners, LLC for $280.0 million, subject to customary purchase price adjustments at closing (the “SCOOP/STACK Divestiture”). This transaction has an effective date of January 1, 2016 and is expected to close on or before May 18, 2016. [This is very important for VNR's future as they must remain "friends" with the bankers. - Dan]
Capital Expenditures
Total capital expenditures for the drilling, capital workover and recompletion of oil and natural gas properties were approximately $20.3 million in the first quarter of 2016 compared to $25.1 million for the comparable quarter of 2015 and $32.4 million for the fourth quarter of 2015.
We have significantly reduced our capital expenditures budget for 2016. We currently anticipate a total capital expenditures budget for the remainder of 2016 to range between $54.0 million and $58.0 million or a range between $74.0 million and $78.0 million for the full year of 2016.
[This capex budget compares to my cash flow from operations forecast of $300 to $325 million. YES, VNR is generating plenty of free cash flow. - Dan]
This increase from our original 2016 capital expenditures budget is primarily attributable to increased spending in the Green River Basin where we expect to spend approximately 45% of the remaining 2016 capital expenditures budget participating as a non-operating partner in the drilling and completion of directional natural gas wells in the Pinedale Field. Additionally, not including the impact of the SCOOP/STACK Divestiture, which is anticipated to close on or before May 18, 2016, we expect to spend approximately 21% of the remaining 2016 capital expenditures budget in the Anadarko Basin on the SCOOP and STACK assets, participating as a non-operated partner drilling standard length and extended length liquid rich horizontal gas and oil wells targeting the Woodford Shale and various stacked pay Mississippian reservoirs. We anticipate that after the closing of the SCOOP/STACK Divestiture, any remaining capital that was allocated to these properties may be spent on other projects in our portfolio that offer acceptable rates of return in the current commodity price environment. The balance of the remaining 2016 capital expenditures budget is related to recompletion and maintenance activities in our other operating areas.
"As of April 29, 2016, we had indebtedness under our Reserve-Based Credit facility totaling $1.69 billion with a borrowing base of $1.78 billion which provided for approximately $113.0 million of available liquidity, after consideration of a $4.5 million reduction in availability for letters of credit and a $25.0 million increase for available cash. We are currently in the process of our semi-annual borrowing base redetermination and anticipate the SCOOP/STACK Divestiture will be consummated at the same time in May 2016, allowing us to significantly reduce borrowings under our Reserve-Based Credit facility. However, based on market conditions, continued declines in oil and natural gas prices and recent conversations with our administrative agent, we expect that our borrowing base will be redetermined to a level below our outstanding borrowings in our May 2016 redetermination causing a small deficiency. Our internal forecasts show that we will generate a substantial amount of excess cash flow over the course of 2016 which we expect will be sufficient to repay the borrowing base deficiency. In the case of a borrowing base deficiency, our Reserve-Based Credit facility requires us to repay the deficiency in equal monthly installments over a six month period."
Dan Steffens
Energy Prospectus Group
Energy Prospectus Group