Joe689 Posted April 18, 2018 Share Posted April 18, 2018 Yes, > 150M is really needed to execute buyback, debt reduction, and Cardium growth. This pipelineyou referring to, is it the Gibson line?, as that is not online till Q1 '19. I know we have a lot of infrastructure there, so is it our pipeline? Link to comment Share on other sites More sharing options...
SharperDingaan Posted April 18, 2018 Share Posted April 18, 2018 We would prefer to just reference their most recent April 2008 Presentation Deck, p20. "Infrastructure advantage with key owned and operated gas plants and minimal incremental facility spend" SD Link to comment Share on other sites More sharing options...
StevieV Posted April 19, 2018 Share Posted April 19, 2018 The dumb hedging strategy is holding OBE back. But, the hedges won't last forever, and the WCS differential is rapidly improving. If we are entering a new phase of $60-$80 WTI (I tend to think we are), and WCS differentials will average something like $14-15 (I think the will, or better if there is good pipeline news or worsening heavy oil supply situation), then OBE is worth significantly more than its current share price. I am hoping that they will soon announce a new plan with the new board. More aggressive drilling in the Cardium, higher growth projections, and curtailment of the hedging program. The sooner the better. Link to comment Share on other sites More sharing options...
Joe689 Posted May 11, 2018 Share Posted May 11, 2018 Well uneventful quarter. Was pretty much known that this quarter would be bad with the hedge losses and heavy diffs. Only real takeaways: Stopping to hedge Viking sale on track Approximately $50 million in Cardium drill ready inventory on standby (continued impressive drilling results and efficiencies) A poor Mannville well. 2H 18, and 19 will have much more growth. We continue to wait. AGM at noon with activist board members coming on. Will everybody get along? Link to comment Share on other sites More sharing options...
StevieV Posted May 11, 2018 Share Posted May 11, 2018 Stopping to hedge This is pretty eventful. Link to comment Share on other sites More sharing options...
FFHWatcher Posted May 11, 2018 Share Posted May 11, 2018 That sounds about right. Hedge fully at the bottom, unhedge after the price of oil increases 50%. Perfect. Link to comment Share on other sites More sharing options...
StevieV Posted May 11, 2018 Share Posted May 11, 2018 That sounds about right. Hedge fully at the bottom, unhedge after the price of oil increases 50%. Perfect. There may be a time to add hedges, but I don't think this is it. We are still seeing significant backwardation, and I expect 2019 spot pricing to be above the current curve. Link to comment Share on other sites More sharing options...
SharperDingaan Posted May 11, 2018 Share Posted May 11, 2018 That sounds about right. Hedge fully at the bottom, unhedge after the price of oil increases 50%. Perfect. There may be a time to add hedges, but I don't think this is it. We are still seeing significant backwardation, and I expect 2019 spot pricing to be above the current curve. The smartest thing they can do is no new hedging until Viking and PR are sold. 1) Proceeds, and the short payback periods of Cardium can easily cover their financial risk. 2) The less production hedged the easier it bocomes to acquire them. SD Link to comment Share on other sites More sharing options...
Liberty Posted May 11, 2018 Share Posted May 11, 2018 Once in a while I check this one, just for general learning, and every time I'm reminded that this must be an incredibly tough business. In the period that oil went from $29 to $71 (since around early 2016), the stock has basically been more or less flat, with negative gross margins, operating margins, and FCF. Not what you'd expect from a high-fixed-asset business with supposedly high leverage to commodity prices. Can't imagine what they'd have done with flat oil prices, or declining ones (which could happen in the coming years from current level). Too hard for me. Link to comment Share on other sites More sharing options...
Viking Posted May 11, 2018 Share Posted May 11, 2018 Liberty, I am with you. I am sure there is lots of money to be made by some in oil and oil stocks; just not by me. I KNOW I have no competitive advantage when it comes to this sector. And there are too many variables at play for me to want to try and figure it out... hence I fish in another part of the pond :-) Link to comment Share on other sites More sharing options...
yzstevie Posted May 23, 2018 Share Posted May 23, 2018 Very curious why Frontfour was content with just getting two board seats, given management has provided no update on 1) sale of Viking and 2) buyback of shares...Looks like the current management may not follow up on share buyback at all given no mentioning of such during 1Q call... Link to comment Share on other sites More sharing options...
Joe689 Posted May 23, 2018 Share Posted May 23, 2018 My two cents is risk management on FF behalf. After the company appeared to copy their plan, pushed ahead meeting date and record date, and headed into a AGM that formerly had very poor turnout, the risk of them loosing the vote and loosing money was too high. Plus, they have spoken with several directors by now, and I think they knew they have few directors on their side. So they I think they are at least 50% of directors aligned with FF. With strong oil prices, I expect the short cycle Viking asset to sell for a good buck. They have a lot of neighbors around them, and they also use OBE gas plants. Would be a win-win for the neighbors. I'd like to see 150M and split it between Cardium and Buyback. Link to comment Share on other sites More sharing options...
StevieV Posted May 23, 2018 Share Posted May 23, 2018 I largely agree with Joe re FrontFour. There was no guarantee that they were going to win the proxy vote. They got two seats, the board largely appeared to adopt/co-opt their suggestions, and it avoided the proxy vote (and further spending on it). Plus, I think there are some advantages to a settlement - probably a little more co-operative board, and they could get started sooner. We'll see when they give some details on their new strategy. I expect something in the next several weeks. Link to comment Share on other sites More sharing options...
yzstevie Posted June 4, 2018 Share Posted June 4, 2018 New update is out. The good: 50M for 2300-3500 bbl/day of Cardium light oil. The bad: no more disposition for the Viking... Link to comment Share on other sites More sharing options...
constala Posted June 4, 2018 Share Posted June 4, 2018 Viking news is so disappointing. No country for decent M&A bids ! So it is true what a fellow portfolio manager said the other day....Canadian Oil Producers is where value money goes to die. Link to comment Share on other sites More sharing options...
SharperDingaan Posted June 4, 2018 Share Posted June 4, 2018 Overall positive, and a lot implied. Viking. They spudded a bunch of new wells in April, which by now should be close to completion. The fact that Viking was withdrawn implies that these wells were successful, and that they were getting (in part) a flowing boe multiple. The buyer (in the area?) wouldn't pay up for the incremental production because they could drill it for less? If higher prices (net of differentials) are expected (reasonable), selling Viking later should result in higher proceeds. Cardium. Incremental production is being sold via royalty to service incremental debt. Production level and the low 20K cap cost of these wells also implies short payback periods. Not much to argue. FFO/EBITA disconnect. Hard to imagine the PR wasn't closely reviewed before it went out. To us it implies that 2019 production is not going to be materially hedged further, and that they expect higher prices. Again, not much to argue. All in all, a good release. SD Link to comment Share on other sites More sharing options...
Uccmal Posted June 4, 2018 Share Posted June 4, 2018 Viking news is so disappointing. No country for decent M&A bids ! So it is true what a fellow portfolio manager said the other day....Canadian Oil Producers is where value money goes to die. Thats rich :-). I hold a few hundred shares of Pennwest in one of the registered accounts. I couldn't bring myself to hold more. Its simply too hard. I am having a hard enough psychological battle not throwing in the towel on the 35,000 shares of Whitecap I hold. With the dividend, Whitecap covers my cost of capital (3.75%) more or less. I could have sold it two weeks ago and made $40k but you know... its going to go up even more... It has to.. Right. I could have reinvested it right back in this week and pocketed the 40 k (30 post tax). This is very frustrating. My f**cking crystal ball seems to be broken. The thing is that WCP is probably best run smaller E&P in Canada, they are profitable, growing, responsibly hedged, and the managers hold alot of stock. And it is still hard to hold, knowing all this. Sometimes I think it would be easier to completely quit value investing and just put all my money into BAM and let them do it for me. After all, the BAM execs have most of their money in BAM. Link to comment Share on other sites More sharing options...
Joe689 Posted June 4, 2018 Share Posted June 4, 2018 Disappointed as well. Viking sale was part of the unlock value plan. Well, it failed. Today, we jump up capex for Cardium drilling. That was also supposed to be part of the unlock value plan. Still early obviously, but market doesn't see any value unlocked. Should we wait *yet another 6 months? The plan of this company has changed several times and with execution that is average at best. I think it is time to demand merger sale of entire company to someone that the market can trust and ride them up. Link to comment Share on other sites More sharing options...
SharperDingaan Posted June 5, 2018 Share Posted June 5, 2018 It is highly likely that Viking and PR are going to be sold. Just not right now, and hopefully for more than we could get today. In theory, higher share valuations later; so make your own timing estimate and discount accordingly. The reality of course is that if you think the current 'up' cycle will continue for a while (reasonable), the smart thing is a bid for all of OBE and sell Viking & PR to pay for it. OBE doesn't get to 'later'. Day traders are frustrated because there wasn't a Viking sale, & there isn't going to be a 'buy-back' to sell into. So take advantage. SD Link to comment Share on other sites More sharing options...
StevieV Posted June 5, 2018 Share Posted June 5, 2018 I thought the announcement was a positive. In my view: Significant sale at a good price > No disposition > Selling Viking and/or PR at a bad price. They need to accelerate drilling in the Cardium. It would be best to do that by a disposition at a good price. But, better to do it by financing than to not do it at all or fire-sale a property. Link to comment Share on other sites More sharing options...
Pelagic Posted June 5, 2018 Share Posted June 5, 2018 I thought the announcement was a positive. In my view: Significant sale at a good price > No disposition > Selling Viking and/or PR at a bad price. They need to accelerate drilling in the Cardium. It would be best to do that by a disposition at a good price. But, better to do it by financing than to not do it at all or fire-sale a property. Agreed. I also see it as a positive signal about the new BoD, I believe the old board would have been tempted to sell the Viking at a mediocre price. The goal all along was to put additional cash toward their Cardium asset, an asset sale at a reasonable valuation would have been ideal, but taking on a little debt isn't all bad and leaves them with the option of selling the Viking or developing it more in the future. EBITDA guidance that they put in the announcement looks attractive. $360M of debt with a 1.5 debt to EBITDA ratio gets us around $240M in EBITDA. Link to comment Share on other sites More sharing options...
Joe689 Posted June 18, 2018 Share Posted June 18, 2018 Would have thought we would have responded by now with the shift in strategy. Afterall, we are fully hedged almost till 2019 when the new production comes on. 2019 models will show this thing even more under priced. I guess we need to wait till execution. Again wait. Did not like the BTE merger today either. Another terrible deal. Very few players interested in CA M&A it seems. Link to comment Share on other sites More sharing options...
Joe689 Posted June 27, 2018 Share Posted June 27, 2018 Anyone still hanging around with this dead money? Shame that our cash flow won't improve substantially until Q1 because of the hedging and when our new production comes fully tied in. Nonetheless, it will jump markedly. That is IF the oil market is still strong come Q1. You would think with strong spot pricing, and our land position, we could come up with something to improve our cash flow BEFORE Q1. Link to comment Share on other sites More sharing options...
Joe689 Posted September 7, 2018 Share Posted September 7, 2018 Nice graph here. No one would know it as we sit near yearly lows, at < 30K per flowing low decline barrels. After guidance of another 3K come Q1, that would put us at around 26k per flowing. Talking my book, but if anyone is out there, this would be a nice value buy right now with not too much risk. Got to like the risk/reward right now. I averaged down *again. Link to comment Share on other sites More sharing options...
Cardboard Posted September 7, 2018 Share Posted September 7, 2018 Sorry but, I don't see how you are at below $30,000 per flowing unless you are talking USD. I am getting $42,000 CAD at $1.22 CAD/share. And yes, I do include in their liabilities the very large office liability. Need to compare apples to apples with peers. Cardboard Link to comment Share on other sites More sharing options...
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