Birchcliff Energy Ltd T.BIR

The worst investment in O&G patch?

[mrmomo]

Looks like Birchcliff has claimed and will probably claim the title of the worst investment for anyone to have made among the O&G producers in the Canadian energy sector.......for 2023. There were some "Notable Mentions" among Birchcliff to claim the Top Doggy spot BUT taking everything into consideration, Bircliff's extremely poor performance this year CANNOT be beat by anyone. And there are VERY VALID reasons why this is.......and NG pricing isn't the thing to lay all the blame on. A big contribution to this small & embarassing feat was made in large part by the ill concieved decisions made by Birch mgmt. And unfortunately for s/h some of those decisions weren't in the best interest of s/h, and if they were, they weren't carefully & logically thought out in sound manner.

So what does all this mean? Well, if Birchcliff doesn't get boughtout for cheap, like Pipestone is in the process of doing, and just FYI, Birchlciff is in worse shape than Pipestone & in more distress than them as well, then my friends.....expect Birchliff mgmt to be forced to slash their more than generous divvy (if not eliminate it altogether!!) IF NG pricing stays stagnant at these low levels by year end. Before you say anything regarding the divvy being "safe" because mgmt said so, it MAY be the case for the rest of 2023 (at GREAT cost for s/h btw!) BUT i doubt very much that will be the case for 2024. So look for mgmt to indicate or give some signs soon to the market, investors and their holders, that the divvy will be cut/slashed/terminated by end of 2023.

If Birchcliff mgmt is smart, they would be looking around for a "suitable" merger partner to "diversify" (yeah i know i hate that word to these days,....but for totally different reasons lol) their production & lower company/capital risk. Because if they don't take some serious "proactive" actions now and try to wait it out hoping things will turn around or maybe pray for Jesus to save them, then 2024 might even worse for the company than 2023 was. And you could potentially see their share price get beat down at or near $5.

So IF i were Birch mgmt i'd be on the phone quick to either Kelt, Nuvista, Paramount, Advantage, WhiteCap, Arc & even Tourmaline ........and see if anyone picks up!

Just MY 2 cents worth............

GLTA

[TouchDown12]

Not a bad 2c's... but i don't agree. I think BIR is a Div. play and an unhedged play at the same time. So if you think divy is stable AND you think NG drfits up.... then you are buying both. Since BIR has dropped 10% over the last week, and seasonal strenght for the group is heading our way, then likely the weakness is short-term. I have been a buyer under 8. BTW - I think your

[mrmomo]

"I think BIR is a Div. play and an unhedged play at the same time." So is Peyto, so that's a mmot point. And Peyto is much more indebted than Birch. What it comes down to is the ability to both service the debt & payout the divvy. Birch MAY be able to service their debt BUT they cannot afford the present divvy payout levels. Also, i don't fault Bir for being unhedged and

[RJboxer]

All valid points if you are looking in the rearview mirror. Should they have hedged at much higher gas prices? Not only yes, but hell yes. Should they have moderated the divvy increases? Again, yes. But these factors are already built into the current depressed share price. Winter is in front of us, and the odds of another warm winter in the northern hemisphere are much lower. This is what makes

[mrmomo]

"All valid points if you are looking in the rearview mirror." Yep.....you are correct... it's a statement made for 2023 ....mostly......BUT i did say that IF NG remain at these levels for 2024 Birch would be in deep trouble. Anyone without any significant hedges will be. "Should they have hedged at much higher gas prices? Not only yes, but hell yes." Yep.....at above

[barneyj44]

Don't believe Birchcliff is in such dire straits as you make out Mrmomo.  There was a time during Covid that they were close to falling off the cliff but not so now as $$ millions of debt was paid down during  the last NG run all  thanks to being unhedged. I hold Whitecap so a merger with them I would relish to no end.

[mrmomo]

"Don't believe Birchcliff is in such dire straits as you make out Mrmomo." To each his own. It's your prerogative to believe what you want to believe. I base myself on facts & figures, what are you basing yourself on? I don't think its a strech or debtable that Birch will be in deep trouble if NG prices remain this low..... "There was a time during Covid that they

[Elchico1973]

It's when I hear all the crying when I like to buy.  I got a fair bit yesterday.  This will bounce.

[kavern23]

I don't own Birchcliff but I have followed them and read on them once a year...wtf happened here? My mouth dropped reading their presentation...no hedges....but this part... 213M dividend payment, 270-280m capex, 360M adjusted fund flow thus equaling 123m -133m over free cashflow.  Basically taking on 123-133m in new debt for the year of 2023.  Maybe I am too honest when I post and

[downwithdotcom1]

ANSWER : its very straight forward-dividend was decided when nat gas was TRIPLE the current price..note the CEO called this the dividend policy for 2023 and it looks like he wants to keep his word.  YES-at these prices, debt is being used for the divi almost dollar for dollar. BUT...take a look at the plans for 2024/2025-BIR's OUTPUT will continue to increase and they could sustain the

[mrmomo]

wtf happened here? Hello Mr. Kavern23, this is easy enough to answer. What happened here is the "artifiical" collapse of NG prices AND horrid decision making. That's what happened. As the NG pricing issue is pretty much out of their hands or control, the second was probably more devastating though. VRY bad decisions or choices were made that adversly affect the stock price Teo of

[PlutusofCrete]

Damn...BIR is going bankrupt. Lol. 

[barneyj44]

Good post Mrmomo, maybe these operators need to cut back production to get the price up like Opec has and not over produce.  I know Birchcliff is doing that now was wondering if other operators are doing the same. Tonken said the "road to hell is paved with hedging" so don't think us share holders have to worry about that. In good times we paid a good chunk of our debt down

[Skylar1]

Bir done much better than the hedged producers in 2022 , Jeff made the right call not to hedge , yes they should have hedged in 2023 and waited to be debt free to interduce the dividend but winter in almost here gas price will rise and they are not hedged . Big money to be made the next couple quarters and they can drop or cut dividend.  I've been adding all year. GLTA

[mrmomo]

"Bir done much better than the hedged producers in 2022 , Jeff made the right call not to hedge" Of course we're NOT talking about 2022 but 2023 & 2024. My post indicates that quite clearly. "yes they should have hedged in 2023 and waited to be debt free to interduce the dividend" A resounding YES.....at least modestly some hedging at insane levels beyond $6+ NG

[RJboxer]

You are enttitled to your opinion, but when you are looking out into 2024 and repeatedly use the word IF, I discount much of what you are saying. I'm investing today on real numbers.

[Oldnagger]

What is going to make Birchcliff great again ? The fact that most of the other dry gas producer's hedges are running out. No hedges , no drilling until forward prices improve dramatically !!

[robert41]

Mr momo is bang on I have mentioned this many times here in the last year I loved Bir and its philosophy when times were good but Jeff's ego got in his way. Another run NG is imperative for Bir as Jeff has stated they need $3 plus gas to maintain debt reduction and the divi. Management clearly dropped the ball but Jeff promised this divi for 2023 let's see what he promises for 2024