Looking at acquisition cost to replace production @ ~$3M per flowing MMcf/d and a 10% decline rate on 851 MMcf/d give you 85x$3M = ~$250M to buy back decline. This is equal to the annualized DD&A 63.3 x 4 = ~$250M. The cost to replace matches DD&A which makes slide 18 of the 3Q presentation very compelling. Structured debt pay down = predictable large equity boost. Also making the case in slide 16 with asset based securities and industries that use ABS to finance to hold larger leverage than 2.5x to further boost equity returns. Why pay down debt faster vs. deploying capital to advanced acquisitions or buybacks? Think they are digesting bolt oak tree acquisition and preparing to pick up more productions as it settles.
It looks like in their Adjusted EBITDA calculations in the Q3 interim report (https://data.fca.org.uk/artefacts/NSM/RNS/5425376.html), they adjusted out the income tax expense of $86MM. Any idea why they are paying those income taxes on what seems like a statutory loss for Q3?
If you don't know their work already, you might be interested in this: https://blog.gorozen.com/blog/us-natural-gas-production-is-plummeting?utm_campaign=Weekly%20Blog%20Notification&utm_medium=email&_hsenc=p2ANqtz-_1O8MZr-Y5A16Y3Xiu7KTPLDBih_q0H-FrqAPhL-2HU81_-PrbbDMsDPoS5bD5gFSREKBkPHMCNKvttmUimcUpyEj9_A&_hsmi=333003413&utm_content=333003413&utm_source=hs_email
Thank you James, yes I find their analysis compelling, and influential.
Shucks. It was all looking so rosy again, and bow Rusty has announced another Investor Engagement.
Looking at acquisition cost to replace production @ ~$3M per flowing MMcf/d and a 10% decline rate on 851 MMcf/d give you 85x$3M = ~$250M to buy back decline. This is equal to the annualized DD&A 63.3 x 4 = ~$250M. The cost to replace matches DD&A which makes slide 18 of the 3Q presentation very compelling. Structured debt pay down = predictable large equity boost. Also making the case in slide 16 with asset based securities and industries that use ABS to finance to hold larger leverage than 2.5x to further boost equity returns. Why pay down debt faster vs. deploying capital to advanced acquisitions or buybacks? Think they are digesting bolt oak tree acquisition and preparing to pick up more productions as it settles.
It looks like in their Adjusted EBITDA calculations in the Q3 interim report (https://data.fca.org.uk/artefacts/NSM/RNS/5425376.html), they adjusted out the income tax expense of $86MM. Any idea why they are paying those income taxes on what seems like a statutory loss for Q3?
Prior period tax adjustment would be my best guess. We will get better clarity in the full year accounts.