CP Daily: Friday February 22, 2019 « Carbon Pulse | Agent In Guangzhou

Overall fourth-quarter production of the company came in at 11,627.2 thousand barrels of oil equivalent (Mboe), down 2% from the year-ago period. While volumes of natural gas fell 18% year over year to 28.1 billion cubic feet (Bcf), that of natural gas liquids jumped 4% to 1,188.9 thousand barrels (Mbbl). Notably, oil volumes, which increased 10% from the prior-year quarter to 5,749.9 Mbbl (49.5% of total output), partially offset total production decline. The fall in fourth-quarter output was caused by a decline in oil production from the Williston Basin and decreased gas production due to lack of activities in the Haynesville/Cotton Valley. Moreover, the divested assets of Uinta Basin negatively affected total output.   

Back to this quarter's results, our average debt-to-equity ratio during Q4 was 0.71 times compared to 0.91 times in the prior quarter and point 0.84 times for the full year 2018. And our leverage at December 31 was 0.59 times, given the high level of repayments we experienced during the quarter.

The second consideration relates to approximately $20 million in spend for planned plant turnarounds. Now this increase has been driven by the scope of the 2019 turnaround as well as the timing of the 2020 turnaround scheduled before the spring, requiring CAPEX spend in 2019, which I'll explain in a moment. Spend in 2018 and '19 includes the two high-return projects we've initiated focused on debottlenecking specific areas of our operations, optimizing quality and improving our mix and cost position overall that will drive future earnings and cash flow. As a reminder, we'll begin to see the benefits from these projects in the back half of 2019 with the full-year benefits starting in 2020.

One marker of the pace of change currently under way in China was highlighted at the FT’s annual Pharma and Biotech Conference in London in November. To the polling question, “When will China be a significant influencer of innovation?” half the audience answered 2025. This prediction might be surprising to those who have taken their eye off the ball, but the country’s intensive commitment in the last few years to a program of regulatory advancement is swiftly changing the Chinese pharma and healthcare market. So much so, one of the FT conference speakers, Christian Hogg, CEO of Hong Kong-headquartered biopharma company Chi-Med, proclaimed that 2025 is a “conservative” estimate for China’s breakthrough as the world’s pharma powerhouse. 

Given the supply demand imbalance there have been instances of what we believe to be irrational behavior or market participants were willing to lend at prices inconsistent with underlying deal dynamics, the need for a liquidly premium compared to the broadly syndicated loan market and associated spreads required for today's latent cycle environment.

As we look ahead to full year 2019, based on our expectations over the intermediate term the net asset level yields, cost of funds and financial leverage of 0.7 times to 0.75 times that may be slightly below our new target range. We continue to expect to target a return on equity of 11% to 11.5%.

"Another point you might be interested in. I have planned a three week car trip with my husband around central Italy in April. Instead of booking hotels, we have booked houses in the countryside for the same price, (and sometimes cheaper), as a hotel room. I was amazed at what is available if you are prepared to travel a short distance from the main cities and towns."

However, meeting the climate objectives of the Paris Agreement would require renewable energy to have an 85% share of total electricity generation by 2050, IRENA estimates. Furthermore, the share of electricity consumed in the total energy demand of end-use sectors — industry, transport and buildings — would need to double from around 20% in 2015 to 40% by 2050.

The firm also recently disclosed a quarterly dividend, which was paid on Tuesday, February 5th. Shareholders of record on Thursday, January 17th were issued a $0.95 dividend. The ex-dividend date was Wednesday, January 16th. This represents a $3.80 dividend on an annualized basis and a yield of 3.06%. PNC Financial Services Group’s payout ratio is 35.48%.

Ahead of last week's rescheduled elections, enthusiasm had been high among the citizenry. The election had also drawn the attention of the international community given the position and prospects of Nigeria in the global arena.

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Thanks, Josh. 2018 was our second highest year of origination since inception at $2.2 billion, primarily due to the larger financings completed during the first half of the year. During Q4, we generated gross originations of $373 million across four new investments and outside of the six existing portfolio companies.