Page 8 - NorthAmOil Week 14 2022

NorthAmOil INVESTMENT NorthAmOil

Ascent reportedly preparing for IPO

APPALACHIAN US shale driller Ascent Resources, which is IPO. They said the company could register the
BASIN focused on the Utica play in Ohio, is reported to move confidentially with the US Securities and
be preparing for an initial public offering (IPO) Exchange Commission (SEC) from April and
in which it hopes to be given a market valuation could be ready for the IPO to take place in the
of around $6bn. The move, reported by Reuters, second half of 2022.
which cited sources familiar with the matter, Meanwhile, sources speaking to Bloomberg
comes around a week after a separate report from said in late March that a tie-up between Ascent
Bloomberg said Ascent has discussed a potential and Gulfport could value the combined com-
merger with fellow Appalachian Basin shale gas pany at around $8bn. The transaction would
producer Gulfport Energy. give Gulfport more scale by combining its Ohio
If an IPO takes place, it could be the first operations with that of its neighbour, while
major stock market listing of a US shale producer giving Ascent publicly traded stock without
since the war in Ukraine and the international the need for an IPO, according to CreditSights’
response to it that drove natural gas prices to senior high yield oil and gas analyst, Charles
new highs. The period immediately after Russia Johnston.
launched its invasion of Ukraine saw considera- Various analysts have commented that a
ble stock market volatility, but this now appears merger would be welcomed by the market, but
to be subsiding. no deal is thought to be imminent and the com-
According to Reuters’ sources, the two pri- panies could opt not to proceed, according to
vate equity firms that own Ascent – the Energy Bloomberg’s sources. If reports of both merger
& Minerals Group and First Reserve – are work- talks and IPO plans are accurate, Ascent is
ing with Citigroup and Barclays to prepare for an weighing its options for how best to proceed.™

PERFORMANCE

Cenovus ends hedging programme

after $772mn loss

CANADA CANADA’S Cenovus Energy announced second quarter of the year. However, the com-
on April 4 that it was suspending its hedging pany noted that actual gains or losses resulting
programme following an estimated loss of from these positions would depend on market
CAD970mn ($772mn) in the first quarter of prices or rates at the time each such position is
2022. settled.
The practice of hedging – locking in a certain Citing its balance sheet and liquidity position,
level of prices for oil – has been popular with Cenovus said it had decided the hedging pro-
North American producers in recent years as a gramme was no longer required to support its
Cenovus is a leading oil way of mitigating against falling crude prices. “financial resilience”. According to the statement,
sands producer. However, West Texas Intermediate (WTI) is now the company is planning to close the bulk of its
close to $100 per barrel for the first time since outstanding crude price risk management posi-
2014, and those producers that had hedged a tions related to WTI over the next two months
substantial part of their output at lower prices and expects to have “no significant financial
have been missing out on a significant propor- exposure” to these positions beyond the second
tion of earnings. quarter.
Cenovus said this week that its realised It is not the only North American producer
losses on all positions in what it calls its risk to scale back its hedging programme. In March,
management programme were expected to be Hess said it had paid nearly double the cost of
CAD970mn in the first quarter. It added that its hedging programme to unwind its positions.
based on forward prices as of March 31, realised And Pioneer Natural Resources said in January
losses on all risk management positions were that it had exited almost all its hedges in a bid to
anticipated to be CAD410mn ($326mn) in the benefit from higher oil prices.™

P8 www. NEWSBASE .com Week 14 07•April•2022