RE:RE:RE:Metrics per share Again, all sound arguments here. The longer BTE takes to fix the balance sheet/share count, the greater chance that they will get caught with their pants down in a market with a cascading oil price and outsized debt.
Oil is volatile. A clean balance sheet goes a long way to weathering the storm when energy prices tank as investors flock to those safer names. Recall WCP in the recovery out of the pandemic. It was the market's darling.
And yes, the multibagger setup has been a large part done by the market placing BTE in the penalty box relative to peers, but also partly because of their torque to higher energy prices relative to those same peers.
JohnnyDoe wrote: riski wrote: These are some good points, Johnny. It's been slow and frustrating.
I think the falling fcf problem is not unique to BTE though. Inflation has ravaged the fcf metrics for companies across the board sparing some of the oilsands operators somewhat. Traditional E&Ps are suffering as inflation appears to be a cumulative 25-30% over the past 3-4 years. That comes right out of fcf.
I think BTE was genuine with their estimates of fcf at the time of the Ranger acquisition, but the operating costs have run away on them like they have for everyone. Capex is much higher than they were anticipating.
Relative to peers, the metrics remain very good here. It is the best value in the O&G market. Yes the ratios you have referenced don't look great compared to immediate pre-acquisition, but the missing context is the added Ranger production. Production ratios were signficantly improved immediately and getting better as more shares are bought back. Production is the engine that drives a company creating significant torque as they continue to produce cash that the can buyback shares with and reduce debt.
This is one of the few multibagger opportunities that remains in the O&G market and all the others are super junior with the elevated risk of losing everything if oil tanks. An intermediate E&P with multibagger potential is going to eventually draw a lot of attention from institutions across the board who want that upside without the risk of bankruptcy which will re-rate the price closer to peers.
We are close now.
JohnnyDoe wrote: The company has a few per share metrics in their deck. Production per share and fcf per share.
I think these stats are an illusion and what I really don't like is I think it is a deliberate illusion. The fcf has gotten worse since the Ranger deal. When the Ranger deal went down, they were talking 1B fcf at 75 wti. They're nowhere near that now.
Fcf per share. If every month you buy back shares (using our money), you're changing the denominator and therefore the fcf/share ratio should improve.
Is the fcf/barrel improving or worsening? Because that tells you something
Debt. The debt to EBITDA ratio is basically stalled. You have to go back 9 quarters for hit to have been worse.
This share price is in the tank because for 9 quarters they have done sweet f$k all with respect to debt ratios. Meanwhile the majority of the cdn oil patch has cleaned up the balance sheet. IR will tell you "our balance sheet has never been better" which may be true, but if you push on that, relative to cdn peers, the balance sheet isn't cleaned up which is why the share price is in the tank.
I agree there's an outstanding multi bagger potential here that isn't present in many other plays. Part of the reason for that is because the share price has really lagged in the past year.
Nuttall can kick out fcf %age charts at 80 all he wants and it looks great if bte is first on his graphic. But he's been kicking that out for a while now and the share price hasn't really gone anywhere. Why? Debt. And the never ending climate alarmism that might kick the price of a barrel to 60. And the looming election of Trump which could also kick it to 60.
The debt overhangs. If the price of a barrel drops to say 65, sure we're profitable. Can probably continue to pay the small dividend. But it'll take a decade, if ever, to pay the debt.
And it seems to me that every quarter since Ranger, there's a reason why the projected didn't really become reality. They desperately need to post a Q where the fcf was at or ahead of target. If they don't post a very solid Q this Q, I will have misplaced my hand and not sold prior to the change in the capital gains tax.