RE: RE: RE: RE: RE: OPC Production & Share Price RJust to recalculate, if opti needs $55/bl to break even at full rates. $55 X 60,000 refined = $3.3 million/day.
So at $80 oil we need; 3.3 million/80 = 41250 bl/s/day refined to break even. That's 49500 bls/day of bitumen.
That is not including hedging, but if only 3000 barrels are barrels are hedged at $67, then take away $13 X 3000 = $40K/day . Soo to make up that 40k loss, add $40k/$80 = 500 more barrels/day. So that now brings us to a little more than 50 K bitumen/day to break even. I don't think that this an unreasonable expectation for year end.
Next year if oil is $90, and the hedges are gone, break even could be 3.3million/90 = 37000 refined or 44000 bitumen. So I'm not sure where you are getting 58 k bls/day from.
If we could get close to $90 oil next year, that makes us roughly ..say..20k barrels/day (X 35%) of profitable oil average for the year. That equates to 20k/day X 90 X 360 X .35 = 227 million or 81 cents/share gross. So 50 cents eps after taxes is not out of the question. I would also expect some interest write offs as well.
Now, lets assume in one year, the plant is running at capacity, creditors are happy, credit rating improves significantly, debt is refinaced at lower interest rates, share price is up significantly profit margins improve as debt is refinanced. Debt principal becomes a non issue, share price contiues to rise and next thing you know were sitting at a 50% debt equity ratio. Profits pour into the expansion, asset value increases and away we go!
Even if opti did not expand, and did not pay off the principal, we'd have at least a 50 cent dividend. So it's not uncommon to have a divedend earning of 5% of share price. That would put the stock price at $10, maybe even $16 dollars if the divend equated to 3%. 16 dollars put the equity value at 4.4 billion so now the company has a 50% debt equity ratio. To re-affirm these numbers, the valuation of the assets can be seen in my previous posts. I used CNQ as an example of what operational bitumen assets could be campared to. Since then, CNQ is up 20% so that even puts my numbers higher. If I remember correctly , we should be able to value the 800 million proven at at least $5/bl now so that's 4 billion right there. The debt and upgrader assests will cancel and the probable reserves will add up to 60 cents X 1.4 billion....so another billion or so.
Plus add expansion potential and proven reserve increase potential and we can double all of this. In six years, having 2 billion debt might me too little of debt! This is not praying, these assets will not sit idle, they will be run to max capacity for the next 40+ years while oil prices continue to climb.....you are in la la land if you think otherwise.
Giver