RE:RE:RE:RE:CJ JohnnyDoe wrote
sclarda wrote: Sirlostalot wrote
Hello Sclarda, thanks for the detailed post, you obviously have a good grasp of this company and their numbers. Just wondering would the free cash flow numbers 370M not already have the capex/base div amounts removed , wouldn't total cash flow be more along the lines of ~22k bod x $95 ( wti/wcs ?) x365 which would be double that 370m ... even though they are unhedged Iam sure their is still some significant discount to realizing full wti price. Is this way off base ?
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Yes in my previous post i stated that CJ would need all its Free Cashflow for Capex, Dividends and Bank loan repayments. That was my mistake. The $370 million estimate at $95 oil is the Cashflow they would bring in before capex. That equals aprox. $92.5 million per quarter in Cashflow. From that you have to you allow for capex of $35 million per quarter, 5 cent monthly dividend which costs CJ aprox. $24 million per quarter and $31 million per quarter for the next 2 quarters to get the debt down to zero as they have stated they will by year end. Assuming oil stays around $95 until year end, Between capex, dividend and debt repayments it appears that CJ will be using up all its Cashflow for the next 2 quarters for these purposes.
Of course everything depends on oil prices. A $10 rise or drop in oil prices from the present level will make a huge differance in Free Cashflow. As we throw around these big numbers of $425 million in Cashflow and $295 million in Free Cashflow at $100 oil what we should remember is where CJ stood for many years. Looking at the 2017 year end report in that year CJ ended up with debt of aprox. $225 million Cashflow of aprox. $84 million and Capex of aprox. $66 million leaving aprox. $20 million in Free Cashflow. That year they payed out aprox. $41 million in dividends. So they ended up the year with aprox. $21 million more spent than came in. 2018 and many other previous years were the in the same ball park.
Right now debt is down to aprox. a quarter or less of those levels and soon to be zero and we just had Cashflow in the last quarter of aprox. $128 million and $86 million the quarter before that for a total Cashflow in the first half of the year of aprox. $215 million and if oil can hold this range we will have Cashflow for this year of over $400 million or aprox. 5 times that for the years of 2017 or 2018 and many previous years.
Its a totally new situation for CJ which has always been a good company but struggled like all oil companies for the last 7 or 8 years of low oil prices and high debt. Assuming CJ pays off all their debt this year as they stated, next year if oil were to drop to the $80 range CJ would still have Cashflow of aprox. $305 million. They could drop capex back to $100 million and still have Free Cashflow of aprox. $205 million for next year or aprox. $1.25 per share at $80 oil with no debt to pay off. So unless we have a huge collapse in oil prices a soon to be debt free CJ will be doing quite well and bringing in a lot of Free Cashflow at these and even lower oil prices.
At the same time CJ currently has a market cap. of aprox. $1.5 billion so i wouldnt say the company is dirt cheap right now as it has been for the last two or three years especially during Covid when the market cap was around the $50 million range. How things have changed in a couple of years.
Good luck to all.
I'm still not understanding what you are trying to communicate. I'm still reading that you're saying capex is one of the ways that cash flow will be used. That's confusing. Free cash flow is net of capex. You're right when you say the company will use all of its money on capex, dividends and debt repayment, but you're confusing the issue with how you are using cash flow.
idk, maybe it is me but I'm just not sure how you are arriving at the numbers you are..
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Why is it confusing? The company itself calculates things that way. In looking at the just released second quarter report CJ states that they had Adjusted Funds flow which is what i term Cashflow of aprox. $128 million. They spent aprox. $25 million on capex leaving aprox. $103 million of Free Cashflow for the last quarter. From that FreeCashflow you have to deduct dividends, and loan repayments.
What i am trying to convey is that if oil stays around the $95 range for the second half of this year CJ will use all of its Cashflow or Free Cashflow to pay dividends Capex and loan repayments. There has been a lot of speculation on this board about the dividend doubling or more in the next while. For those who think that there will be a large increase in dividends shortly you will likely be out of luck as if the company is serious about paying off all debt by the end of this year there will only be enough Cashflow to pay the current dividend, Capex and debt payments.