Bonterra Energy Corp T.BNE

Time to buy?

[blackdog]

Interesting times we live in.

The share value oscillates; mostly in my view on the usual suspects shorting and covering among themselves; it is all about commissions I guess, but who are their clients?  No real buyers willing to take a plunge, so let’s review where we stand:

- Management’s plan to re-start the dividend is on track. Indeed, it is presented with WTI U$74 and we have been well above that for Q3 and will sustain this through Q4. Production is forecast at 14K BOE a day but I have heard it is substantially above that.

- Q3 results should be impressive, and if there is not an announcement on the dividend I will be shocked. Re-instating the dividend will be a key event. In their March presentation they forecast a dividend at WTI US$75 of a nickel/share/mo.  At WTI US$95 this rose to between 8 and 9 cents.

-  FFF is projected with a substantial “discretionary” allowance in their capital allocation going forward. This could go for the cash needed in any of the mergers mooted; could go to capex to increase production; or could be added to the dividend.  Some of it will, I am sure, be retained as a cushion to guarantee that the balloon payments on the term debt can be made. In the March presentation this discretionary allowance was CA$40M (twice the value of the dividend) at WTI US$75; and at WTI US$95 it was CA$74M.  This has to go to adding value for the shareholders.  It could well be just added to the dividend; if nothing better emerges.  Anything better had better be much better; i.e. add to share price and have good potential for increasing the dividend in very short order.  

- Mergers will, if they happen, be accretive and mostly equity swaps.  Any draws on the bank line will be very short term.

- Overall debt will decline. The term debt is predictable; FFF means the company can pay its own way.  I have high confidence that they will do so and aim for zero debt by the time the term debt is discharged.

- Any calculation of fair value shows the stock undervalued today. What will these say with Q3 numbers?

- WTI goes up and down; but there is every sign that supply is shrinking and demand is increasing. The world may be a very uncertain place right now, but energy drives it and demand is not going to go away. For a bunch of reasons, supply from various sources might. There is a crunch coming; and even in Mr Trudeau’s Canadian regulatory kingdom, price will reflect this.

- Oh, and by the way, Mr Trudeau seems to have reached his best before date.  And with him will go a lot of his vindictiveness and stupidity on the Western Canadian energy industry.
 
I have been sitting on all the cash that PNE has been sending me; and today seemed like a good day to put it to work.   My conviction is that it will make me a nice Christmas present. 

[kavern23]

Time to buy is when stockhouse is empty as everyone has lost so much their nuts are inside their stomach...market hasnt tapped out yet...not close.

[Maxmoe]

Pity the fool that sold gassy to buy oily. His cajones are tangled in that chain around his neck. 

[Flush11]

nice post Dog. too bad only a sentence or two show up unless you click on it. I was looking to raise a bit of cash from pretty much everything I own, procrastinated two weeks and missed a fantastic buying opportunity. I don't post a lot of negative items, I typically just grit my teeth, sell and move on. So it is easy to label me a pumper - but I really like BNE. The value proposition is