RE:The question is...Debt reduction is not that slow at $80. At the current price of $81 WTI and $25 heavy spread (this is likely to fall throughout the year), BTE is clearing $600 million free cash flow with $450 million going to debt reduction. That puts us at $800 million debt by Q2 and ~$500 million debt by December.
That's pretty damn good. Each $5 increase in WTI price results in $140 million additional FCF.
So yes, $91 WTI would see just under $900 million in FCF per year with approximately $650 million going to debt. We would reach the $400 million debt floor in a hurry.
BTE is a monster with high leverage to oil price accompanied by strong organic growth of its assets. Remember that we were hamstrung last year by $50 hedges on half the production. Those are gone, so $81 WTI delivers much more cash flow this year than $96 WTI did last year.
This is a great WTI price for BTE and a great share price to buy.
JohnnyDoe wrote: What do you expect the price of oil us going to do?
If it stays at 80, it's a long slow climb to get to the 800 then 400 debt marks. If it jumps to 90 the pace of the climb quickens considerably. If it tops 100, we're heading to yhose numbers very quickly.
Personally i think oil climbs. It's not just the Americans that had SPR releases. There won't be further SPR releases in 2023. And China is reopening.
All the analysts are making calls on the price of oil. There are more calling for 100+ than stable at 80.
Seems everyone wants their dividends. So do I. I've positioned for it for two years. I also hold a lot of Cardinal and scoop up a nice monthly cheque from them. BTE needs to hit that 400 number with less than 500M shares out. Doing that results in a dividend that is sustainable into the 60s. Even though I hold a lot of Cardinal I am nervous about the stability of the dividend. I'll take the cash, but they raised it too high too quickly imo.
I'll take hitting the 400 target somewhere in 2024 and a quarterly dividend of 20 cents and be quite happy
As long as that path is viewable, I'll hold.