In theory: Energy producers owned first and foremost a physical call option on futures. So it's logical that as this option moves deeper into the money, that the extrinsic value premium in the p/pv 10 ratio should go down.
Now I agree with your argument in practice in terms of magnitude of the delta :)
In theory: Energy producers owned first and foremost a physical call option on futures. So it's logical that as this option moves deeper into the money, that the extrinsic value premium in the p/pv 10 ratio should go down.
Now I agree with your argument in practice in terms of magnitude of the delta :)
On the other hand... They haven't made biz plans yet to develop contingent resources that are not in the pv10 :)
Think about the magnitude of this discrepancy with OLD field life producers (ABEX timing, fcf op leverage, lifetime going up... Dcf upupup). Not to mention in-place physical infra to get nearby developments on stream with low costs and low lead time (to increase remaining lifetime of existing field even further). Useful in a shortage
Let's get in touch to exchange most interesting names here
In theory: Energy producers owned first and foremost a physical call option on futures. So it's logical that as this option moves deeper into the money, that the extrinsic value premium in the p/pv 10 ratio should go down.
Now I agree with your argument in practice in terms of magnitude of the delta :)
On the other hand... They haven't made biz plans yet to develop contingent resources that are not in the pv10 :)
Think about the magnitude of this discrepancy with OLD field life producers (ABEX timing, fcf op leverage, lifetime going up... Dcf upupup). Not to mention in-place physical infra to get nearby developments on stream with low costs and low lead time (to increase remaining lifetime of existing field even further). Useful in a shortage
Let's get in touch to exchange most interesting names here