Thoughts?
45 replies (most recent on top)
The current share price isn't reflective of the quality of the assets or the value that the purchase adds to NVA shareholders whatsoever!!! The initial drop in share price is simply a knee jerk reaction by some investors that either don't want to wait for the upside or don't understand the transformational value this deal adds to Nuvista. Their stock will quickly recover and then your point and comment will be moot. NVA stock could hit $20 by 2021, load up at $7.70 while you can!!!!!!
Read the press release more fully - it’s all there. Offer price $8.10 per share from underwriters and current share price $7.70. Not exactly a blockbuster acquisition for Nuvista.
5dnw
What offer price from which underwriters? Without details you are just spewing nonsense. Explain your comment.
$1.21B NPV (that’s before tax by the way). Problem there is the commodity pricing assumptions that make up that number are far too optimistic relative to industry forecasts (GLJ for example). If what you claim were reasonable then Nuvista’s share price wouldn’t be $0.50/share below the offer price from the underwriters.
4ieu
Turd indeed, who would want a play with a $1.21 Billion NPV??? But according to CVE, Pipestone had a negative IRR and negative NPV. I think one the accountants screwed up the formula in their spreadsheet! Whoops. Oh well, we didn't get paid for any upside but a drop in the bucket is a drop in the bucket.
CVE sure came out the winner on this one... sold an assest for $625M that that had a NPV (before tax) of $1.21B! Yup, what a turd assest.
Any word on when the layoffs will start? I guess not until the deal closes? At least there’s an uptick in hiring at other companies so maybe people let go will find other jobs a bit easier.
4bry
Thankfully, NVU disagrees with your evaluation to the tune of $625 MM and they will make hundreds of millions on the play...something that CVE could have done if they hadn't made so many colossally stupid decisions creating a desperate need to pay down debt.
If CVE can't make money on a premium, top-tier, overpressured Montney liquids asset then maybe they are in the wrong business!!! If CVE had done their homework before paying north of a billion for this asset, they wouldn't have had to take such a bath on it. CVE's loss is NVU's gain. Also interesting that recent land sales in this play attracted north of $3500/Ha, not bad for a c-ap play.
-4oxn Actually,the Pipestone Montney had a negative NPV9 (after tax) to the tune ~$50MM and required 3/4 of a billion $ to fully develop including new infrastructure. You seem to know very little about this property.
3ezl
If you think the Pipestone Montney is a c-ap play then you are a special kind of stupid. Low IRR is not a reflection of true NPV and the reason behind poor internal economics is because the wells are so good that there is no capacity at the plant to bring more wells on. Some investment in infrastructure will cure this and then there are 400+ more liquids rich wells to drill. If you think that is c-ap, maybe you should go build solar panels or windmills or something.
Will CVE take a loss on this sale?
You fools! People at COP named their kids after the mighty Elmworth! Obviously you're not worthy of such prize...
Pipestone Montney was a c-ap asset. Lowest IRR, negative PIR9 and highest supply costs in the Deep Basin portfolio. Cenovus did well selling this turd for a good price.
2wvx
How is it possible that you think the Elmworth asset is "the Big Kahuna" from the DB??? You must have been one of the advisors that convinced them to sell Wembley/Pipestone! God help us all!
No one is waiting to pick up Elmworth, couldn't give it away. That field is a bone dry huge liability. Might be able to give it away to a small company that later declares bankruptcy and puts the cleanup costs on the taxpayer.
Ferguson is probably getting rubbed down by his pool boy (Drew) laughing at the mess he left. Man that guy f---ed us all.
Cenovus would have been better off keeping their legacy conventional assets since they generated better cash flow than the Deep Basin junk we bought. Ferguson was too dumb to realize buying less than half utilized infrastructure would kill the economics of the play. The gas processing fees alone are brutal.
The people always seem to be forgotten about during these sales, one day you are COP, then Bendovus..haha, now a third company in as many years. If you think about it, those folks just won the lottery, now they can get out from this tortourious regime and begin with a company that might respect them and value their contributions instead of being treated like a liability. A fresh start without the annual Christmas layoff announcements
Hey 2xji.
Do you have an inferiority complex?The Conoco people didn't ask to come over to Cenovus. They all survived 6 rounds of layoffs at COP and were then offered jobs at CVE where they were constantly tasked with trying to educate the clueless CVE management on the assets. Despite the top tier quality of some of the assets, it turns out that CVE just doesn't have the cash (or too much debt due to their brilliant hedging scheme) to fund these assets. So, as witnessed on Thursday with the Wembley/Pipestone sale, they will take what they can get, pay down some debt (one drop in the bucket at a time), and move on. Not sure why you are putting down the high quality COP staff. They have done what was asked of them, and achieved some top tier results. Results that AlPo just never wanted to share or press release lest he actually create some excitement around any of the DB assets which would make his strategy seem questionable. The COP folks will be just fine, they'll go with the assets or get nice packages. They will land on their feet. They all have a bright future, which is more than can be said for CVE and their $9BB in debt.
Yes the Conoco people have been very quiet as late. They think they are so great turns out not so much.
With sale of Wembley/Pipestone, the writing is on the wall for the Conoco folks, they do not have a future at CVE. No spin doctoring or feel good talks can hide it. The sharks are circling and waiting to pick-up Elmworth (the big kahuna) for bottom dollar and then that will be it.
BOD is not doing enough for Cenovus. Time to replace people that think that Cenovus is same as TransCanada. What is wrong with these people?
Bring on the packages!!!!
Well the layoffs will be coming soon as they use it as an excuse to drop even more staff.
Lots of kool-aid drinkers here believing DB was purchased to provide some asset diversity. DB assets came as part of the package deal when CVE bought out COPs share of FCCL. BF and the BOD were totally blinded by wanting to have 100% ownership of FC and CL. COP was desperate to unload it since they lost their shirts on it. Sure there was probably some decent stuff in the box of junk but ELT has/had no idea of its real value.
The next deal CVE comes out the winner in will be the first. I can’t wait for the spin if oil prices slide just as underwater hedges roll off.
CVE has sold more quality assets at fire sale discounts in the past three years then anything I can remember.
-1weg, what is a “dollard” and how is CVE losing hundreds of billions of them per quarter?
Seriously though, the numbers don’t lie. On a go forward basis using any key internal investment metric: PIR0, PIR9, IRR% none of the Deep Basin assets can compare unless WTI prices exceed $75/bbl or AECO gas prices exceed $3/GJ for a sustained period.
With the narrow mindset of "if it's not oil sands, it's not a premium asset", it's totally clear how this company loses hundreds of billions of dollard per quarter..
One thing is clear, NVU overpayed for these so-called “premium” assets. Wait till they sell their bottom tier junk like Clearwater.
To 1msl.
It's good "riddance", not good "riddens". As for the rest of your post, I'm not even sure where to begin with trying to decipher what you were attempting to convey. Maybe you should ask your Exec Assistant to write your next post for you so we can understand it.
"Huge liability in Wembley"? The id--ts in this company is astounding. Must be the same individual that managed the CVE hedging program.
1pqf.
So, another hedging win for Cenovus then...NOT. Nothing like buying high and selling low, now THAT is something that CVE is good at!
Got rid of a huge liability in Wembley ......good riddens.....Cenovus is morning investing in Monty so get some cash and turn this ship around. More to come but oh well.......this is the patch remember
DB assets were purchased as a production hedge for NGLs for solvent assisted SAGD, not to offset low heavy oil prices. Since the acquisition propane has been deemed as the solvent of choice (rather than C4 and C5+ previously) due to its low long term price, thus negating the need for the DB assets. Solvent deployment will also no longer be done field wide on either asset but on a pad by pad basis in select areas.
Going forward DB developments are at the bottom of the list for PIR and IRR metrics so will receive minimal funding, thus making them attractive divestment targets.
1iix. You are so misinformed that I suspect you must be one of AlPo or DZ's advisors. Sure, all assets do well at above $75/bbl, however these liquids rich gas DB assets were purchased by Cenovus as a diversification strategy (and a much needed one) for when the price of oil was down, as NGL's don't fluctuate as much and are much less volatile.
NuVista down 8% on opening. Market thinks they over payed.
No, above $75WTI is where the DB assets really take off in value. At $55/bbl they break even and below $45 they are cash flow negative. With the best of the worst CVE assets sold off the remaining Deep Basin Assets will either be sold off or receive minimal investment.
Good move NuVista! The Pipestone/Wembley asset is indeed a Crown Jewel with significant future development opportunity. Drill baby drill!
There is more to come. They will continue until they get rid of DB assets then we all know what happens after that. Get those resumes updated we are going to need them.
Sure, maybe at $75 WTI the oil sands and Martin Hills have better metrics, but don't forget the reason CVE bought the Deep Basin assets in the first place. Remember? It was diversification and having the ability to leverage capital between oil, condy and gas. With the sale of probably the best DB asset you had, that ability is basically gone, and for only $625 MM which is a drop in the bucket on the debt. What happens the next time WTI is at sub $40 and FCLL or Martin Hills are the only two plays you have left?