Yepp - it's up after hours. Must have happened after Commsec...

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tt2000

4,682 Posts.

1231

05/06/20

20:14

Post #: 45069207
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Originally posted by cmonaussie ↑

Hi TT,

I'm thinking right there you are seeing the "power" of PDP versus PUD .... and yes IMO is just the price of oil that makes those PUD's economic or not and on that basis whether a company can get the capital to develop them.

SNDE's "problem" is the %PDP ... as specifically noted in the 2L covenant. But conceptually it is the demand for capital to develop the resource so that the resource has value ... chicken and egg scenario ... oil price dictates economics dictates whether capital is available dictates whether the resource has value. OR who wants to risk their own capital - as opposed to OPM.

Don't forget that MRO pays a dividend and has much greater upside to oil price gains (something you really believe in). They are exposed to downside oil price risk which SNDE is not. The unknown (for SNDE) is the curtailments and forward development Capex ... which is better known for MRO. So in my mind the risk with MRO is lower and so the equity has greater value. I think that is also proven with PVAC in the last couple of months ... removing the unknowns. That hasn't occurred with SNDE (yet).

Now am I reading you right ... SNDE up over 40% in after hours?? trading ~$4???

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Yepp - it's up after hours. Must have happened after Commsec accepted my funds request transfer, just like the AUD decided to jump up 1% straight after....

My problem is MRO, is if the PV10 is 10.5bn based on oil price at $55.69, and MRO is already there, where's the upside coming from, unless oil prices go above $55.69...

At least with SNDE (you'd hope) if oil got to $55.69 (Which would only then support MRO's current price), SNDE would rise significantly more...

SEA Price at posting: 16.5¢ Sentiment: Buy Disclosure: Held
2 Upvote

0 Great analysis

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