RE:RE:Nothingmatters Heres just a quick mental excercise with relative valuation (Current shares outstanding vs. BJs dilution scenario)
As per the company’s newest news release
Assuming unhedged, breakeven of 43, with each $5 increment of WTI above yielding 70M in cashflow
If WTI averages $65 next year
65-43=22
22/5=4.4
4.4 x 70= $308M in cash flow
Using a 4x EV/CF Multiple that small cap peers are trading around, and assuming net debt is where it is currently ($383M)
(530,675,391 x X) + $383,000,000 = 4 ($308,000,000)
530,675,391X = $849,000,000
X = 849,000,000/530,675,391
X= $1.60/share
Same scenario, but as Blackjack suggested, they issue new shares to cover net debt
(shares issued at .78, todays closing price) $383,000,000/0.78 = 491,025,641 new shares
((530,675,391 + 491,025,641) x X) + 0 = 4 (308,000,000)
1,021,701,032X = $1,232,000,000
X= 1,232,000,000/1,021,701,032
X= $1.20/share
So yes, dilution very much has consequences in regard to shareholder value...
masfortuna wrote: Ok so assuming we have an additional 400 million shares purchased at today's sp by someone and then use it to pay down the debt, would the company not be worth 400 million shares less? You don't pay off the debt for free is all I am saying. The loss goes down to the shareholders as their shares are now worth 400 million less whatever value they had before. It's called basic dilution Blackjack...Tech companies and biopharma plays do it all the time to pay for expenses since they usually have no revs.
Mas