Re: UPL hedges and price deck impact on EBITDA
That's a great way to look at it but as has been the case for the last 10 years the problem is there is no evidence that the current price spike is driven by fundamentals. If futures were 3.50 give or take than hooray. Watford used to have slides showing what UPL was worth at 6, 7 and 8 dollar long after those days were history. He finally stopped using them after the Marcellus started killing the sector. I would love to see gas holding at 3.50 but right now there is no reason to believe that it is possible and judging by futures no one does. Everyone in the world remains confident that producers will crank up the rigs and kill prices by spring of 2019. Rigs will probably exceed 200 next week. That is a recipe for yet another disaster.
There are two chances UPL will win the make whole appeal; fat and slim. However if they do and by some miracle their finances improve to a point where they can use that cash to buy back debt and shares the stock may actually rise... I don't see how any E&P stocks are going to do well in this hyper-competitive environment. The bigger picture is so overwhelming it trumps anything an individual company can do. I see people talking about lower costs but that is a sign of an industry in a death spiral. There is no growth in terms of profits, and any extra pocket change just leads to more production. It will take a demand side event as powerful as fracking to fix this mess.