RE:RE:Algos and AI dropcre8value4me wrote that was one of the most unexpected selloffs in all O&G stocks, it defy's logic not sure what tommorow brings but if it continues to fall the bottom is not anywhere in site yet.
Extra scary because if people are not comfortable being long the weekend it will be a nuclear event!!
Today will pale in comparison if there is no catalyst to prevent it which I can't see one at the moment!
JMHO GLTA
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Ohh my god this is terrible. An extra scary Nuclear event with no bottom in site. Were you not the one who only a week ago was calling CJ an ATM. The Creme de la Creme. Telling people to hold long and strong and forget about the day to day noise?
And then along come a nice little correction in the shareprice although we are still wll over 50% higher than we were at the beginning of this year and you and some otheres here you are piss@ing in your pants.
The same cycle repeats itself on oil stock message boards time after time. When prices are climbing posters are counting their profits and calling for higher and higher oil prices around the corner. Funny how most posters get caught up in all the profits coming in at high oil prices and seem to forget that oil prices can tumble just as fast and far as they rise. And when the eventual tumble comes the panic starts just like clockwork.
That being said at the current time oil is still well over $100 per barrel a price that all oil stock investors would have loved to have had over the last 7 or 8 years when oil was in the $50 to $60 range.
The day to day ups and downs of a stock are not what count in the long run. What matters for the future direction of this stock is looking to see how much profits this company will make over time. Of course that is tied to the future price of oil which nobody knows for sure. Although we dont know the future we do know what has happened in the past and that can give us a good guide to where this company stands.
At the end of the first quarter CJ had debt of aprox. $147 million. Assuming an average oil price for the second quarter of aprox. $108 per barrel CJ likely had a quarterly Cashflow of aprox. $110 million before capex. Capex was heavy in the first quarter so should average around $20 million per quarter in the last 3 quarters. That would leave CJ with around $90 million in Free Cashflow in the second quarter. Add the $12 million from the exercised warrants and CJ should have brought in aprox. $102 million in Free Cashflow in the second quarter. Subtract that from the debt and CJ should have aprox. $45 milliom in debt at the end of this month 10 days away.
With oil prices around the current level of $104 CJ is currently generating Free Cashflow of aprox. $315 million per year after capex. In the third quarter the 5 cent monthly dividend will cost them aprox. $24 million per the quarter. With the low capex they should have Free Cashflow for the third quarter after dividend of aprox. $60 million.
All this means that at current oil prices in less than 3 months from now CJ will be debt free while paying a 5 cent monthly dividend. They will then be debt free and generating aprox. $2 per share in Free Cashflow per year per share. At the current shareprice that is an aprox. 30% Free Cash return.
Where are oil prices headed from here. Hard to say. Right now the market is in panic over higher interest rates and a possible recession. At the same time Lower oil prices should increase already high demand and supply according to most analysts is still tight and can not be increased easily. If i were to take a guess i would say that oil prices may drop some more with the current market panica until it becomes apparent that their is still huge demand and limited supply and oil prices should
stabilze and hopefully rise again.
At $90 oil CJ should still generate aprox. $240 million in Free Cashflow after capex or aprox. $1.50 per share or an aprox. 21% return at current shareprices. In fact they should be able to pay the 5 cent monthly dividend all the way down to $55 oil.
And that is why CJ is actually The Creme da la Creme of oil stocks and even at current and lower oil prices is still a soon to be debt free ATM. currently paying an 8.5% dividend with a quarter of their Free Cashflow.
Time to buy some more.