#hottakeoftheday

Hello #hottakenation! For your #hottakeover-your-commute, I just have "this":

I really can't stay (Baby it's not cold outside) My reserves got to go away (EQT it's not cold outside)This week has been (Been hoping that Laredo refi’d in) So very nice (That new Encana name is like ice) My mother will start to worry (BlackRock says what's your hurry?) My Varde will be pacing the floor (Lilis bears equity owners roar)Well maybe just a half a drink more (Natural gas records a low on while I pour)

Because baby it’s not cold outside. 

Transcript:

PLEASE NOTE SOME LEGAL STUFF:

David Ramsden-Wood owns the copyright in and to all content in and transcripts of the #hottakeoftheday podcasts, with all rights reserved, as well as his right of publicity.

Episode #7: #hottakeover your commute transcript

And what is up #hottake nation, it is DRW here coming to you live from… actually, I'm not not coming to you live; I want to always say that. But you know really we tape this and then we put out there, so it's kinda not that exciting, BUT, what I can tell you is NOT up and where we're going to start your #hottakeover-your-commute this week is natural gas falling below two dollars an MCF on Friday in what can only be described as a brutal punching to the face constantly for all natural gas producers. It is ugly, it is getting uglier, and if this doesn't get a colder winter we're going to have gas prices as I said on my what-to-expect in 2020 podcast you could see gas prices in the dollar fifty to dollar seventy five range. It was a great week for us to visit with Chris Kalnin, and I had to reconsider my natural gas bear thesis, in particular that perhaps my bear thesis is "maybe natural gas long-term is the right play". In fact, I know that it is the right play. The question is when. And what I know in the interim is that if you are a publicly traded company who produces natural gas as a primary and you're having to keep rigs up to fill your firm transport commitments, this is going to be a horrific year.

And speaking of, let's start with EQT this week. EQT came out earlier with a reserve revision. They expect a $1.4B to $1.8B dollar charge in Q4, reflecting what can only be described as a beatdown in natural gas prices. Everyone knows because we had a LOT information on it this week. I use SMOG, and not that it was a full SMOG disclosure coming out of EQT, but they did drop - if I go to my handy-dandy spreadsheet - they did drop their SMOG value from 11.6 billion dollars at the end of 2018 to $8.6 billion at the end of 2019, which impacts about half the value of that netted debt, so twenty five dollars per share in 2018 headed down to fourteen that doesn't include G&A, that doesn't include interest, that doesn't include the balance sheet, that doesn't include the fact that gas is currently two dollars an MCF. It is UGLY if you are natural gas producer. Man, I just… the punches just keep on coming.

But… let's pivot to the second topic of the week, the first real take-under that we've seen. Now, you might be wondering what is a take under. Well, if you check the news you would have seen that Lilis Energy had its primary shareholder Varde make an offer to buy the outstanding remaining shares that they don't own; they have a big pref position in that company, they have some debt that they that they own in that company, and they have some common equity that they own and they offer twenty five cents a share and at the time, Lilis was trading north of forty cents a share. Now, let's break that down: When I look at their balance sheet they have around four hundred twenty two million dollars worth of debt pref or prepaid Revenue from a...

Twitter trolls, valuation methods, and why anyone can do it

A discussion about SMOG as a valuation method for oil & gas companies. Part of the O&G Financial Accounting series

Twitter trolls, valuation methods, and why anyone can do it

A discussion about SMOG as a valuation method for oil & gas companies. Part of the O&G Financial Accounting series

I was a natural gas bear before this interview but it turns out I was just a “public company with firm transport and quarterly guidance to meet” bear. 

This week I’m joined by Chris Kalnin, CEO of Kalnin Ventures, for a wide ranging discussion on LNG, coal to gas conversions, owning the supply, gas power plants and why natural gas is the fuel of the future.

Hope you enjoy!

“We’re very bullish on gas… We think natural gas is the unsung hero of hydrocarbons and energy for the world, and what it offers the planet… its pretty amazing.” – Chris Kalnin

About Chris Kalnin

Chris Kalnin is CEO and co-founder of Kalnin Ventures LLC and and BKV Oil and Gas Capital Partners, L.P. (the “Fund”). Chris oversees all activities of the Fund, including oversight of the team, opportunity sourcing, valuation, asset management and other related activities.

Before founding Kalnin Ventures LLC, Chris worked as strategist and vice president for Level 3 Communications where he was responsible for developing long-term and global strategies for the company.

Prior to this, Chris worked as a strategy advisor to the CEO of PTTEP, Thailand’s National Oil and Gas Company’s upstream company. During his time at PTTEP Chris helped to shape the company’s international growth strategy, redesign the company’s new ventures processes and drives initiatives and operations in Australia.

Prior to working with PTTEP, Chris was a consultant with McKinsey & Company where he was responsible for developing and executing business strategies for a number of Global Fortune 1000 companies, including a strong focus on the energy sector.

Chris also spent time working as a financial analyst with Credit Suisse First Boston’s Real Estate Capital Partners private equity fund, where he was responsible for valuing and underwriting over $1 billion in transactions. Chris has an MBA from the Kellogg School of Management and an HBA from the Richard Ivey School of Business.

Episode Links

Connect with Chris: website | LinkedIn

Kalnin Ventures Signs Barnett Shale Acquisition

I was a natural gas bear before this interview but it turns out I was just a “public company with firm transport and quarterly guidance to meet” bear. 

This week I'm joined by Chris Kalnin, CEO of Kalnin Ventures, for a wide ranging discussion on LNG, coal to gas conversions, owning the supply, gas power plants and why natural gas is the fuel of the future.

Hope you enjoy!

"We're very bullish on gas... We think natural gas is the unsung hero of hydrocarbons and energy for the world, and what it offers the planet... its pretty amazing." - Chris Kalnin

About Chris Kalnin

Chris Kalnin is CEO and co-founder of Kalnin Ventures LLC and and BKV Oil and Gas Capital Partners, L.P. (the “Fund”). Chris oversees all activities of the Fund, including oversight of the team, opportunity sourcing, valuation, asset management and other related activities.

Before founding Kalnin Ventures LLC, Chris worked as strategist and vice president for Level 3 Communications where he was responsible for developing long-term and global strategies for the company.

Prior to this, Chris worked as a strategy advisor to the CEO of PTTEP, Thailand’s National Oil and Gas Company’s upstream company. During his time at PTTEP Chris helped to shape the company’s international growth strategy, redesign the company’s new ventures processes and drives initiatives and operations in Australia.

Prior to working with PTTEP, Chris was a consultant with McKinsey & Company where he was responsible for developing and executing business strategies for a number of Global Fortune 1000 companies, including a strong focus on the energy sector.

Chris also spent time working as a financial analyst with Credit Suisse First Boston’s Real Estate Capital Partners private equity fund, where he was responsible for valuing and underwriting over $1 billion in transactions. Chris has an MBA from the Kellogg School of Management and an HBA from the Richard Ivey School of Business.

Episode Links

Connect with Chris: website | LinkedIn

Kalnin Ventures Signs Barnett Shale Acquisition

#hottakeover your commute

A shout out to Range Resources for a

great press release on 2020 guidance (too bad they are Natgas producers!)

We talk debt issuance: for refinancing (Range) and M&A (WPX) and why there is a difference.

Parsley closed the deal with Jagged

January 10th and PDC closes their deal with SRC January 14th–

two more HQ loses for Denver and a continuation of the theme that only

headcount reductions can free up capital for drilling wells since the banks and

equity markets are closed.

Finally, headcount reduction announcements

out of Apache and Oxy.  What does it mean and what’s next for Apache.

#hottakeover your commute

A shout out to Range Resources for a

great press release on 2020 guidance (too bad they are Natgas producers!)

We talk debt issuance: for refinancing (Range) and M&A (WPX) and why there is a difference.

Parsley closed the deal with Jagged

January 10th and PDC closes their deal with SRC January 14th-

two more HQ loses for Denver and a continuation of the theme that only

headcount reductions can free up capital for drilling wells since the banks and

equity markets are closed.

Finally, headcount reduction announcements

out of Apache and Oxy.  What does it mean and what’s next for Apache.

Nick & Erin Williams, Down for a Cure

Today on the podcast, we travel to the home of Nick and Erin Williams who share their #EverybodyElse moment that focused their course and changed their lives.  Their non profit, Down for a Cure was inspired by their sons, Jackson and Lincoln, both of which have cystic fibrosis, and Lincoln, their youngest, who was also born with Down syndrome. 

We talk life, medicine, the village it takes, their middle

son Brock and the positive impact that the oil and gas industry and the people

in it have had on their lives.

All proceeds from my book “What the F@&K is Wrong with Everybody Else- What They Didn’t Teach You in Business School” for the month of January will go to “Down for a Cure” with a matching donation from the #hottakeoftheday.

http://www.downforacure.com/

Nick & Erin Williams, Down for a Cure

Today on the podcast, we travel to the home of Nick and Erin Williams who share their #EverybodyElse moment that focused their course and changed their lives.  Their non profit, Down for a Cure was inspired by their sons, Jackson and Lincoln, both of which have cystic fibrosis, and Lincoln, their youngest, who was also born with Down syndrome. 

We talk life, medicine, the village it takes, their middle

son Brock and the positive impact that the oil and gas industry and the people

in it have had on their lives.

All proceeds from my book “What the F@&K is Wrong with Everybody Else- What They Didn’t Teach You in Business School” for the month of January will go to “Down for a Cure” with a matching donation from the #hottakeoftheday.

http://www.downforacure.com/

Show Notes:

Major. Qassim

Suleimani was killed in an airstrike.

https://www.newyorker.com/magazine/2013/09/30/the-shadow-commander

Middle East geopolitics…. Your guess is as good as mine-

defer to people who do THAT for a living.

https://us11.campaign-archive.com/?u=de2bc41f8324e6955ef65e0c9&id=a8d843ea82

Iran:  interesting facts: Produced 2.15 MMBO per day in

October which previous to sanctions imposed by the US was 3.8 MMBO/d. Domestic

consumption for 81 million people

Iraq 4.68 mmbo/d production in September. 38 million people

Kuwait: 2.7 mmbo/d.  4.2 million people. 

Saudi Arabia, 10 mmbo/d, 33 million people.

Backwardation of the oil market: a nice piece on Twitter by

@BrynneKKelly that I retweeted Jan 4 at @DavidRamsdenWo