Monday Morning – PLUG, BCEI



Market Sentiment Watch:

  • Pfizer says Coid vaccine is over 90% effective ... wowzer,
  • Busy week in energy as we get the EIA STEO and the OPEC and IEA Monthlies

In today's post please find:

  • The Week That Was,
  • The Five Things,
  • PLUG announced a massive 3Q20 Beat,
  • BCEI is acquiring the restructured HighPoint,
  • and some other odds and ends.

In case you missed The Wrap please click here.

Ecodata Watch:

  • No economic data release scheduled  

The Week Ahead: 

  • Tuesday - NFIB small-business index, job openings, EIA STEO
  • Wednesday - Veterans' Day (equity market open), OPEC Monthly, 
  • Thursday - Jobless claims, CPI, Federal Budget, EIA Oil Inventory (delayed a day by Veterans'), IEA Monthly
  • Friday - PPI, consumer sentiment, EIA Natural Gas Inventory (delayed a day by Veterans').

In Today’s Post:

  1. Holdings Watch
  2. Commodity Watch
  3. The Week That Was
  4. Stuff We Care About Today – The Five Things, PLUG, PLUG vs BLDP, BCEI, VWDRY, MGY
  5. Odds & Ends

Click the link directly below this to ...


Holdings Watch:

ZLT (Zman Long Term portfolio)

  • Last Week’s Trades: We added to FLMN (@ $2.00), GDP (@ $10.80), and BCEI twice (@$17.60 and @$16.20) last week. 
  • The ZLT was up 10.7% last week.
  • The Blotter is updated.

Commodity Watch:

Crude oil edged up ~4% to close at $37.14 with the strip up 3.5% to $39.04 last week.

  • A strong equity market and a decent report from EIA helped.
  • We continue to hold the same, now many months long held view of prices range bound between $36 and $44.
  • This morning crude is trading up $3.35.

Natural gas dropped ~14% to close at $2.89 front month while the strip sank ~8% to $2.91 on mild weather and despite a bigger than expected first pull from storage of the season.

  • We expect an in line with to slighter smaller than last week's withdrawal this week.
  • LNG and R&C and Industrial demand ran strong last week but the current weather pattern has been too warm for sentiment to lift. 
  • We have expected the strip to hold $3.00 and revised our thinking from hold $2.75 a week ago (apparently prematurely). We still very much expect it to regain $3 soonish.
  • This morning gas is trading up $0.02, restrained by the mildness noted below.

Weather Watch:  Really Mild. 

  • Last week:  Cooling Degree Days (CDDs) came in at 6 vs 5 normal and 8 in the prior week.
  • This week's forecast:  This week, CPC predicts CDDs will rise to 12 vs 4 normal.
  • Last week:  Heating Degree Days (HDDs) came in at 78 vs 110 normal and 116 in the prior week.
  • This week's forecast:  This week, CPC predicts HDDs will hold at 77 vs 127 normal.

The Week That Was

Stuff We Care About Today

PLUG Reports Big 3Q20 Beat On Record Deliveries; Raises 2020 Guidance 


  • 2020 guidance: Increased from $310 mm to $325 to $330 MM.
  • Long term guidance: Reaffirmed at $1.2 B annual revenue and $250 mm annual EBITDA.


  • 4,100 fuel cell systems delivered (quarterly record), up 130% YOY,
    • up from 2,800 last quarter,
  • 13 hydrogen fueling systems deployed,
    • up from 3 last quarter.
    • on track to get to 100 fueling sites by YE20.

Balance sheet:

  • They have $448 mm in non restricted cash and LT debt of $120 mm.

Nutshell:  Huge quarter. There was greater dilution due to warrants previously provided to pedestal customers due to the rapid rise in the share price but this is likely to be off passing note. The LT outlook was unlikely to be changed today given it was recently lifted but this was a very strong quarter and the likelihood of them lifting that outlook sometime next year is high. Recall that the progression looks like $300 mm (now $325 to $330 mm in 2020 E, $600 mm revenue in 2022 E and $1.2 B revenue in 2024 E).  PLUG is our largest holding in the ZLT.

For comparison with BLDP (where we currently own 1/10th as much vs our PLUG position. 

BCEI to Acquire Highpoint Resources; Nearly Doubles Production

  • BCEI to acquire HPR (unowned) for $376 mm,
  • BCEI to issue 9.8 mm shares, (implied exchange ratio of 0.114 shares of BCEI for each HPR share)
  • BCEI to issues up to $100 mm in senior debt (recall they only had $10 mm in debt last week),
  • HPR was next door and as they say this deal "is expected to create the leading unconventional oil producer in rural Weld County and to significantly increase free cash flow and economic resilience. With its enhanced operating scale and significant increase in free cash flow, the Company plans to pursue a business model focused on strong capital returns to its shareholders.
  • Volumes: 4Q20 pro forma of 50 MBOEpd (53% oil);
    • BCEI's 3Q announced last week was 26.2 MBOEpd (53% oil)
    • So no material change in mix
  • Footprint:  206,000 net pro forma acres, all in rural Weld county (we have liked HPR for their ruralness and owned them previously before selling on their two high leverage).

  • Free Cash Flow: 
    • Pro forma company guidance of $130 mm in 2021.
    • In the presentation management speaks to debt pay down AND return of capital to shareholders
  • Pro forma balance sheet:
    • Cash: $50 mm (BCEI cash was $3.8 mm as of 3Q)
    • Debt: $100 mm in senior unsecured plus $150 mm in revolver debt.
    • Net debt to TTM PF EBITDA expected to be < 0.7x at deal close.
  • Favorite Quote Watch: "The transaction is expected to be immediately accretive in the first year to all relevant per-share-metrics, including cash flow, free cash flow, and net asset value. The transaction is also expected to be accretive to general and administrative expenses per Boe and lease operating expenses per Boe."
  • Favorite Quote Watch: "Preliminary Pro Forma 2021 Outlook - Bonanza Creek’s long-term strategy is to be a low-cost operator focused on generating free cash flow and returning cash to shareholders. In 2021, the Company is expected to generate approximately $130 million of free cash flow assuming NYMEX strip pricing. Full year production is expected to average between 45,000 and 50,000 Boe/d. Bonanza Creek expects its combined cash costs to be between $9.00 and $10.00 per Boe."
  • Approval and Timing
    • Both board unanimous approval.
    • 1Q21 expected close.
  • Nutshell:  This is not hugely surprising and is likely behind the recent pressure on the name, along with fear of regulations potentially popping out of COGCC.  In a nutshell, it's the only deal we would have wanted BCEI to conduct given the nature of other producers' more urban nature. It gives them scale which they sought and materially accelerates free cash flow growth.  We had previously been surprised by some portions of the HPR development program in terms of productivity and oiliness (again, we used to own it for a variety of positive attributes) and now that rock and methodology is part of BCEI.
  • Conference Call: Today, 8:30 am EST.


The Five Things (Changes in Red)

  1. Election 2020:
    1. Biden won (not yet official);
    2. Senate may stay R. 
    3. Expected impacts: 
      1. We see Green/Renewable space names doing well either way.
      2. We see oil moving sideways with Biden victory (so far (first few days) so good),
      3. Executive Orders
        1. US to re-enter Paris climate accord,
        2. We do not see a federal lease frac or permit ban day one. Many are suggesting this. We say unlikely. 
        3. We do see a study of 6 to 12 months in duration on health impacts relative to setbacks. 
        4. We expect year 1 to contain some form of reserve liability component if the Senate does not maintain R control. 
        5. We expect near term air and water quality regulations. 
        6. We expect moves via executive order and legislation for renewable supportive policies.
      4. natural gas is likely boosted on completions fear, and potential permitting delays or suspensions in the next year (NM, WY, GOM). 
    4. In the event of a Trump victory
      1. We do not expect lawsuits and recounts to stop Biden at this time. 
  2. Coronavirus:
    1. New cases - Rising, especially in the U.S. and Europe.
      1. Biden Covid task force formation this week. 
    2. Re-lockdowns across Europe.
    3. Asia not showing signs of second wave.
    4. Vaccine news has gone from October hope to November maaayyybeeeee. Some experts see small amounts available by year end or January now.
    5. Re-openings of schools are generally not being tied to Covid increases. Sports doing pretty well so far.  Small gatherings in homes noted as the new spreading events. Worry from this over the coming holiday's and a tie to higher cases.
  3. Oil Production / Sentiment:
    1. U.S. Production - Headed gradually lower.  Prices are not high enough to warrant activity that can more than slow declines or maintenance levels depending on the operator.
    2. Rigs - Rising a little faster now. This is year end positioning for 2021 and we expect it to slow very soon.
    3. Frac Spreads:  Down 12 last week to 115 (still up 26 in last 6 weeks).   This is not close to enough to hold U.S. production flat at the 4Q20 level in 2021. Not. Close.
      1. LBRT thinks:
        1. frac spreads will be at 100 by YE2020 (so we're way above that now and the LBRT call should reflect that w  but we may see some slippage around Thanksgiving).
        2. 165 spreads needed to hold U.S. oil flat in 2021.
        3. additional 80 spreads to grow U.S. oil production by 1 mm bopd in 2021.
        4. and we need 25 to 30 spreads to maintain natural gas production.
      2. Therefore, to maintain oil and gas production in 2021 at the then current end of 2020 levels we need 190 to 200 spreads.
    4. Storage levels in the U.S. are elevated but normalizing. 
    5. Sentiment - Cautious due to Covid, election.
    6. M&A expectations are likely still increasing. Next deals likely Permian, Eagle Ford.
    7. Libya - production/exports rising rapidly as peace breaks out.
  4. Natural Gas Sentiment: Improved but weather driven. The 2021 Strip has generally firmed since July (fell back under $3 last week, we expect that to be short lived).
    1. Exports are no longer down YoY.  LNG has rebounded sharply, Mexico is near record highs, and Canadian imports to the US are weaker.
      1. Lower LNG prices are prompting some Asian countries to switch from coal to LNG faster than expected.
      2. LNG exports are rebounding now after Covid induced lows this summer.
      3. AR sees LNG exports back to the 7 to 8 range on better international demand and pricing in late 2020.  RRC sees much higher LNG exports into year end.  So ... mission accomplished.    Last week was at 9.0 Bcfgpd and we saw reports it broke over 10 Bcfgpd over the weekend. 
    2. Non heating demand remains solid to near record (there have been some weeks where we expected a record and didn't get one recently; this could be due to low coal pricing relative to natural gas' recent price increase).
    3. Temperatures have shifted to a more fall like pattern - this will make for a good test of heating demand from the Commercial segment.   Last week saw a nice pop in combined R&C demand for heat.
    4. Dry Gas Production
      1. Production is down from year ago levels and is ebbing.
      2. Production has fallen almost weekly over the last several months.
      3. Supply (production plus net imports) had been ranging from up 2 to down nearly 5 Bcfgpd vs the year ago level due to exports and easing production. With the rebound in LNG exports "Net Supply" was down > 10 Bcfgpd YoY last week.
      4. Production should fall further in 4Q20/1Q21 as less ethane rejection occurs due to higher prices and demand for ethane.
    5. The large net short position we started the year with has evaporated.
    6. We expect better sentiment from gassy upstream names than we have seen so far in 2020.  We expect it but so far it's been spotty. This may be due to trapped longs selling into bounces.
    7. Thoughts of consolidation within the gassy space have increased. 
  5. Renewables:  Sentiment continues to improve and we are > 60% renewables/green via 8 names (PLUG, TPIC, VWDRY, JKS, BWEN, KCAC, BLDP, and HCAC.

Other Stuff

  • VWDRY - announced they have a conditional order that exceeds their normal order threshold in Latin America (> 500 MW).  Expect a press release soon.
  • MGY - we'd be surprised if the CEO doesn't post a market buy via SEC Form 4 in the next few days.
  • We have calls set up with BWEN and MGY this week. More to come. 

Odds & Ends

Analyst Watch:

  • TBA in comments

74 Responses to “Monday Morning – PLUG, BCEI”

  1. 1
    zman Says:

    DJIA fut up 1,470

  2. 2
    zman Says:

    “BCEI twice (@$17.60 and @$16.20) last week. ”

    Bouncing on the deal news, call in 15 minutes, near $18 now. heh.

  3. 3
    zman Says:

    re 2 – not often the acquiring name is rallying into the deal. Of course, not often you announce and the market is up 1,500 and oil up $3+ on your deal day.

  4. 4
    zman Says:



  5. 5
    zman Says:

    BCEI – added the combo map and a note showing they are now speaking to return of cash to shareholders.

  6. 6
    zman Says:

    BCEI – call not yet started, should be 4 minutes ago, still queuing callers as a guess.

  7. 7
    zman Says:

    New line in the merger presentation:

    “Meeting/exceeding Colorado air emission standards and groundwater monitoring regulations”

    Suspect that got added given the recent regulation proposals on flaring.

  8. 8
    zman Says:

    Call starting now, notes in a bit.

  9. 9
    zman Says:

    BCEI acquires HPr

    Accretive on all metrics while retaining 68% of the equity and a balance sheet < 1x.

    Maintain strong balance sheet as focus.

    Will only grow opportunistically in a disciplined manner. (no surprise there)

    Slides 6 and 7 – over view of transaction.

    This gives value to HPR bond holders, really whacks the HPR (unowned) shareholder

    IF HPR does a pre pack deal the merger happens right after the pre pack.

    HPR bond holders are getting stock and up to $100 mm in new senior debt.

    Close in 1Q21 – if all works as planned
    Close in 2Q21 – if they toggle to the pre pack.

    Brant Demuth – CFO BCEI – great guy.

    Eric Greagor to run it – also like this guy.

    Focused on ability to return cash to shareholder.

    320% improvement in free cash flow vs standalone.

    Levered free cash flow 2021 to 2023:

    $340 mm – slide 11

    Will complete DUCs as shown on slide

    Will require a rig late in 2021 to maintain production profile shown on slide 12.

    – assets fit together like puzzle pieces
    – overlapping gas lines’
    – $4 mm per year in opex eliminated
    – $4 mm first year in capex synergies.
    – oppy to go from 1 mile laterals next to each other to 2 mile laterals from one pad.

    infrastructure scale – slide 16

  10. 10
    zman Says:

    BCEI / HPR – Q&A

    Q) PF at 50 MBOEpd – how to get there, you were 26.2 and HPR was 31

    A) We may exceed the 50.
    They will be separate companies at that time.
    We have a plan to merge so we gave a little wiggle room to manage the 2 separate companies while preserving the balance sheet.
    This is conservative #.

    Q) DUCs – how many each
    A) BCEI has 30. HPR has 27.
    When running as combined will be a creming function.

    Q) paying debt + now returning of capital, is that stock buyback or something else.
    A) see slide 11 – the capital reinvestment is well short of cash flow in those first 3 years and well behind.

    Our target is 0.5x net debt to EBITDA. Will get their quick.

    Premature to get ahead of the board so …

    So we are looking at a quick move on the debt (revolver) before getting to “return of capital in whatever form that takes” – sounds like buyback.

    Q) $100 mm or something less of new bonds.
    A) Voluntary debt for equity exchange. – Minimum threshhold is 92.5%.
    If we get that committment – so 7.5%
    If HPR goes to the prepakc debt exchange is not successful) then it will be all of the $100 mm.

    Q) program
    A) program solves for flat to slightly declining production over the next 4 to 5 years. This maximizing free cash flow.

    BCEI is our largest upstream holding at the moment. We added here twice last week.

  11. 11
    zman Says:

    BCEI for HPr Q&A 2

    Right now we are looking to maintain the base, not grow, solving for free cash flow.

    Q) Franklin large note holder
    A) Franklin has been very involved and is in support of this deal.

    All of the analysts like this deal so far.

    Good quote: It was clear to a lot of people that Bonanza and Highpoint should have been one company for a long time. Difficult item to clear was Highpoint’s balance sheet.

    Q) Service providers
    A) we use many of the same ones, they have service centers all across the acreage. Notes they have less experience on Hereford (this was the intriguingly high oil mix area back when we owned HPR).

    They use, among others, LBRT – this is good for LBRT as they just got a bigger, stronger client vs one strong and one week mid sized companies.

  12. 12
    zman Says:

    BCEI for HPR Q&A 3

    Q) Reserves question – things that have fallen out of the 5 year on PUDs
    A) early to say, will take some time merger the reserves, protocols, … but would expect in a year or so you could see some of that back on.

    5 year period visions is flat at 50,000 to 45,000 BOEpd type deal – so flat to slightly down production – flattish cash flow on LT strip.

    Q) rig add in late 2021 – is that still your half of the French Lake rig (with Oxy operating).
    A) Still expecting it to come on. If it gets delay we would just pull forward our operated program. We hope it does and anticipate it will but we are prepared to pull forward our.

    Q) Hereford – (this is the hot property we liked at HPR, interesting)
    A) We think they are high quality, there is a lof information, good scientific basis over the last 4 to 6 quarters there, it’s not in our immediate development plan but maybe in 3 to 4 – very impressed by the resource quality.

    2021 –
    – half rig in French Lake – late 2021
    – also half a rig operated program to balance production to maintain the flattish program.

    Q) other combo deals down the road
    A) bolt ons, bias for cash flowing assets, a bias for PDP, while maintaining strong balance sheet <1x. That strong balance sheet sets up for ability to strike on these quickly.

    Very good analyst tone, we will have a pro forma view out soon (probably tomorrow).

  13. 13
    zman Says:

    PLUG call is at 10 am EST.

    That was the best M&A call of this current batch of M&As I’ve been on.

  14. 14
    zman Says:

    MGY – our other OXY tied name, rallying with oil, up 13% pre market. We’ve been added there too.

    And if you missed it above, this merger and other mergers of late play into LBRT hands. They look to work for stronger players who can tie up a spread for months, not weaker players who have a DUC to pop here, and a DUC to pop there. This is good for them. Some have written bigger names will put the screws to the pressure pumpers but that’s not what I am hearing from the bigger names. They want a low price, sure, but they want reliable quality service more.

  15. 15
    zman Says:

    WTI up 10+%, up $3.88, to $41.02


  16. 16
    zman Says:

    CPE (unowned) – on the tape with a debt exchange.

  17. 17
    BirdsofpreyRcool Says:

    This should be good news (on the margin) for the CPE 8.25s of ’25… from Briefing:

    CPE: Callon Petroleum announces upsized debt exchange; expects the borrowing base under its credit facility to remain unchanged (5.39)
    Under the terms of the upsized transaction, the Company will now exchange a total of $389 million of principal of the Company’s existing unsecured senior notes (the “Senior Notes”) for $217 million aggregate principal of new 9.00% Second Lien Notes due 2025, payable semi-annually (the “Second Lien Notes”), to be issued by Callon at a weighted average exchange ratio of approximately $557 per $1,000 of principal exchanged. Participants in the exchange will receive a total of 1.76 million warrants with a strike price of $5.60. Over 63% of the existing Senior Notes to be exchanged are due 2023 and 2024.
    Callon currently expects the borrowing base under its credit facility to remain unchanged at $1.6 billion, and its next scheduled redetermination will take place in May 2021.

  18. 18
    BirdsofpreyRcool Says:

    Adding to #17, while the ’25 bonds are now subordinated to the exchanged bonds, they have greater “optionality” now. With less overall debt (albeit secured, above their heads), the company’s current capital structure is more likely to stay in tact. Also, the bank redetermination did not lower the borrowing base. The bonds should move up a bit on this news, I would think.

  19. 19
    zman Says:

    TPIC all time new high, if you know someone who would be interested in the name here is a free piece link:


  20. 20
    zman Says:

    BCEI starting the day up 12%.

  21. 21
    zman Says:

    PLUG call in 30 minutes, notes to follow, massive beat.

  22. 22
    zman Says:

    Thanks BOP

  23. 23
    zman Says:

    VWDRY – down on the day as Societe General cut stake apparently to 3.21% vs 6.26% prior. They have been trading the stock … they went from 4 to over 5% to 6.26% all in the last 2 weeks. Nutty moves for such a size holding and for a name like Societe in general.

  24. 24
    zman Says:

    BCEI up 27%.

  25. 25
    zman Says:

    PLUG pop and drop in progress, best thought is that’s the warrants noted in the post.

  26. 26
    zman Says:

    MGY up 23%, been doing some good amount of adding there recently.

  27. 27
    zman Says:

    COP up $5 … Pfizer news.

  28. 28
    zman Says:


  29. 29
    zman Says:

    MGY – gotta be a target now.

    Permian, Marcellus, Wattenberg deals done.

    No EFS yet. Penn Virginia could use the balance sheet improvement.

  30. 30
    zman Says:

    PLUG 3Q20

    • record fuel cell systems
    • record fueling stations

    19% EBITDA margin

    • 4th OEM in Europe they are testing with now.
    • data center customers and logistics customers – will deploy high power units in 2Q20 for backup power.

    California telling customers they must have 97 hours of backup power AND you can’t use diesel generators

    • demand for green hydrogen is closely tied to customers sustainability goals.
    • Giga factory is progressing.

      • Announcement location soon.
      • expect first production late 2Q20.

    Going to Q&A 8 minutes in …

  31. 31
    nrgyman Says:

    VLO +23%

  32. 32
    zman Says:

    PLUG 3Q20 Q&A

    Q) financial partners for green hydrogen production.
    A) 30% of financing being equity … some will come from industrial players and not just financial institutions.

    Q) 2Q21 deployments – how to get H2 to them
    A) datacenter and logistics space customers. Issues in California accelerated these discussions. Won’t be significant revenue until 2022. Looking at making some of these hydrogen depots.

    Notes they have 500 small scale H2 backup systems for Southern Co (think in Gulf Coast) that is serviced by 1 or 2 hydrogen sites.

    Sounds like they don’t see this CA rollout of back up (largely CA) as problematic in getting H2 to them.

    “congrats on a really solid quarter, EBITDA was a really impressive results … you tend to give conservative guidance, can you help us understand this ..”

    A) We need to deliver on the 4Q guidance.

    Notes they have more pedestal customers – 2 in Europe, 2 in NAM – could see.

    Then notes watch backup power.

    Then watch breaking ground on two H2 generation site,

    Said to watch all that next 90 to 450 days.

    Q) usually stock is more responsive to big beats, more tepid today, is there something brought forward into 3Q from 4Q, what’s going on there with the progression on the 4Q
    A) I’ve learned to be conservative. I think you make a valid point. My major customers are logistics and their big season is the holiday season and during that season they don’t want to be changing things … this happens every year. You see less in logistics in 4Q and more in the auto space.

    See 4Q20 up big year over year
    Sees 1Q21 “up dramatically” vs 1Q20.


  33. 33
    zman Says:

    PLUG Q&A 2

    Q) can you give color on the UHG plant – is this green given you are using waste hydrogen there.
    A) consider it a “blue” hydrogen plan. It would be burned off if we didn’t use it. Doing a deep dive on the clean score there CI score.

    Q) goals to get to major customers
    A) remains 6
    working with 4 pedestal customers
    – thinks one of those becomes a customer by YE20.

    Q) backup power opportunity – do you see this progressing similarly to materials handling
    A) there are some differences
    1) the initial ramp will be more associated with large owners of data centers.
    – this really screams Amazon to me.
    – They are a big customer now in mats handling.
    – they have AWS (Amazon Web Services) which is massive.

    Q) Fuel margins – sales up, margins down in Q, how look ahead.
    A) – missed response (TRANSCRIPT)

    Q) you sound more bullish and optimistic on back up power than in the past on Backup Power. Is the optimism more market dynamics unfolding or does it relate to your 2 acquistions (UHG and Giner)?
    A) Your read of me is correct. 18 months ago you would NOT have seen me as so positive on back up power.
    -I am hearing it from customers.

    National Hydrogen Day – I was on panel with MSFT, MSFT explained by H2 was the right solution for data centers in the future and they said it would be cost comptetive with ICE by 2024.

    Our ability to provide a full system solutions (both electrolyzers and distribution) have made me more bullish on BACKUP.

    Q) In CA they are shutting off SOLAR in the middle of the day to prevent blowing up substations … those electrons could otherwise be used. That energy is going into the sky.
    A) A couple of points on STORAGE:
    – from an energy density point of view and cost point of view, that after 11 hours Hydrogen is the best type of storage (according to DOE data).
    – short term storage – the value of it as a fuel is more than going back into the grid or being sent down a natural gas line.

    So H2 long term storage is best, short term its better to use as a fuel and not to re-convert into electricity for the grid.

    Q) 2024 targets – were largely based on fuel cell systems – are you rethinking that now with more production of H2 in the mix?

    A) we don’t want to have bad earnings calls, so conservative.
    – but that being said we are just touching on the potential of hydrogen.

    To be clear on their revenues.

    They call it gross billings.
    That’s revenues.
    That directly ties to activity.

  34. 34
    zman Says:

    re 31 – yeah, it’s depressed on weak weak weak demand. Anything that says “we’re going back to normal” is monster for them.

  35. 35
    zman Says:

    PLUG Q&A #3

    • 2 plants breaking ground.
    • production in 2022, fully utilized by 2024.
    • would expect 30 to 35% gross margin once fully utilized.

    Q) Europe as part of guidance
    A) 10% of revenue guide next year, 15 to 20% by 2024.

    Q) 2021 EBITDA margin or target
    A) We have not given that guidance.

    • it will be “higher”
    • sales and margins will be higher given the pipeline.

  36. 36
    zman Says:

    Call closed with thanks everybody, it’s going to be a great fourth quarter.

    Very good analyst tone on this call. A little confusion on the warrants but otherwise everything is from a revenues and overall margins perspective better than expected. Fuel margins were off and I did not catch why but end of that bit sounded like on the improvement already.

    Estimates headed higher, both 2020 and 2021 almost for sure. Per share won’t give the dilition from the warrants but Revenue and EBITDA will very likely move up on the beat.
    4Q20 looks conservative on guide now.

    Stock is up 7% at end of call.

    No plans by me to sell it down a bit yet.

  37. 37
    zman Says:

    OT – grabbing coffee, shout if you need something.

  38. 38
    zman Says:

    FYI – there is some “buy American” aspect that is getting attention with regard to Green Energy Space names, may be part of what triggered PT in JKS Friday. I am likely to look hard at a domestic add in the “greater solar space”.

  39. 39
    zman Says:

    “China joins Russia, Brazil and Mexico in declining to recognise Joe Biden’s victory in the US presidential election” – Al Jazeera

  40. 40
    nrgyman Says:

    RE 38: Curious who you might be considering. CSIQ is not ‘American’ but it is HQ’d in Canada and is a global player. SPWR and FSLR are American but have been getting plenty of attention by the market. ENPH is American.

    Then there is TSLA 🙂

  41. 41
    zman Says:

    re 40 – ENPH (unowned) – could be panels to installers.

    H2 is going to go nicely with solar projects, for that I have PLUG.

    PLUG by the way have never been this bullish on back up power. Watch out BE (unowned).

    Wife owns TSLA, not in ZLT.

  42. 42
    nrgyman Says:

    RE 39: They don’t want to PO Trump while he still retains power. Probably smart on their part.

  43. 43
    zman Says:

    re 42 – probably so although not that Netanyahu congratulated Biden.

  44. 44
    zman Says:

    Here, working on BCEI + HPR stuff, will be quiet for a bit, shout if you need something.

  45. 45
    nrgyman Says:

    RE 43: Doubt Israel is worried about Trump repercussions. They may have concerns about some on the left side of the Dem party so supporting Biden is probably smart on their part.

  46. 46
    zman Says:

    re 45 – fair point.

  47. 47
    nrgyman Says:

    Natgas names still getting hit (mostly weather) except the big NGL producers, which benefit from higher oil prices today: AR +4.4% and RRC +2.5%.

  48. 48
    nrgyman Says:

    Biden Task Force member physician on CNBC atm saying the next 3-4 months will be the darkest period for the Covid pandemic. Pleased with the 90% efficacy for the PFE vaccine but not clear what that means and challenges remain on distribution.

  49. 49
    zman Says:

    re 48 – sounds fair. Also under promise.

  50. 50
    zman Says:

    PLUG plowing further into 12 year high territory. Up 15% now.

  51. 51
    snuhart Says:

    Re 18: thank you BOP for the update. FYI I am trying to add some bonds at 30 , so far unable. Last price was a bit lower.

  52. 52
    BirdsofpreyRcool Says:

    #51 – interesting that no bonds have traded hands yet. With the balance sheet maneuvers, CPE bought time. And with time comes an 8.25% coupon. Which at $30 is 27.5% simple interest income. Just need 2.6 years of interest income at that level to completely cover the price of the bonds at $30.

  53. 53
    snuhart Says:

    Re 52: I was thinking 3.6year; 30 divided by 8.25 = 3.6 .
    Am I right or wrong (again) ?


  54. 54
    zman Says:

    OII up 30% on day. Oh my.

  55. 55
    zman Says:

    LBRT up 22%.

  56. 56
    zman Says:

    MGY up 21%

    Someone shut this week down already.

  57. 57
    BirdsofpreyRcool Says:

    #53 – snu, you are correct as an absolute. I was using the “Rule of 72,” which assumes you can reinvest the coupon payments at the same return expectations. Probably not applicable in the CPE 8.25s situation. Thanks for the call-out!


  58. 58
    BirdsofpreyRcool Says:

    Adding to #57… but if you take your semi-annual coupon payments and reinvest in some other interest-bearing instrument, then the “time to double your money” is something less than 3.6 years (but something more than 2.6 years… unless you can find another 25%-interest-paying vehicle).

  59. 59
    snuhart Says:

    Thanks for being here

  60. 60
    nrgyman Says:

    FANG +30%
    VLO now +32.8%

    Two names Z made positive comments on recently.

  61. 61
    zman Says:

    OII rapidly approaching the rapidly descending 200 day sma.

  62. 62
    zman Says:

    Zorg on OII

    “High volume monster move to far resistance……strong buyers after the morning gap…”

    My response

    Buried today, yeah, rapidly approaching the rapidly descending 200 day sma at $5.90. We added by 50% the other day with earnings at $3.73.

  63. 63
    zman Says:

    Now I get to own HPR assets again via the buy under today, NICE!

    HPR (unowned) down 31%
    BCEI up 24%

    Preliminary 2021 TEV/EBITDA at $20 is about 3x. So it’s very cheap, it will have a little more debt but way less than HPR and it will be generating way more free cash than standalone BCEI.

  64. 64
    zman Says:

    OT – grabbing lunch, back in a bit.

  65. 65
    zman Says:

    Zorg on LBRT

    “Regaining the primary uptrend from the April lows…..Defined support now at 7.50. Expecting test of major acceptance at 8.61…supply dwindles above that level with far resistance at 10.25.”

  66. 66
    zman Says:

    Just got the HPR hedges into the model, it’s more like 2.5x or a bit less now on TEV / 2021E EBITDA pro forma.

  67. 67
    zman Says:

    Lots of sanctions coming.

    US just sanctioned a Syrian refiner

    Weekly new sanctions on Iran said to be on the way.

  68. 68
    zman Says:

    Tudor Pickering saying the rally in the refiners is “way overdone”

  69. 69
    zman Says:

    Early Read on Oil Inventories:

    Crude: Down 1.3 mm barrels
    Gasoline: Down 0.9 mm barrels
    Distillates: Down 2.2 mm barrels

  70. 70
    zman Says:

    Early read on natural gas is – 9 Bcf.

    Last week’s number was too high for us, this week’s a bit too low. Meeting in the middle.

  71. 71
    crysball Says:

    Trump fires Sec’y of Defense, Mark Esper.

  72. 72
    zman Says:


  73. 73
    zman Says:


  74. 74
    zman Says:

    Nice day, back in 1 hour.

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