MEG Energy Corp T.MEG

MEG's 2017 budget

[shambano1]

remember as of q3 they had 100,000 cash in the bank or close to this figure.

now maybe it has gone up a little form then due to higher oil prices but I doubt in any significant way.

let's say they end 2016 with 150,000 in cash on hand.

now what will be their capital requirements for 2017.

1-NG prices are starting to climb to serious numbers on the expectation for a cold winter and increase in NG demand for heat and exports to Mexico, and LNG exports as well.

2- as far as I know MEG has not hedged their NG requirements for 2017.

3-so we can expect an uptick in energy operating costs in 2017, how much I'm not sure.

4-sustaining capital without expanding production is around 150 million I'm guessing basically to keep things flat at 83-85K BPD

5-expanding production by 10-15K BDP will require another 100 million or so.

6-so total capital for 2017 might come in around 200-250 million, of which they have 100-150 million by 31-dec-2016

7-oil prices have had a nice jump but companies won't rely on prices staying high forever due to many factors which I won't get into, so if I was in the companies shoes, I'd start to think of raising some money just as a buffer to protect expansion  plans which will also have the effect of lowering costs at the same time and improving CF.

BOTTOMLINE

expect a share offer either around 8 or maybe 9 if we are really lucky and oil prices continue to go higher.

F.D I'm have sold some covered calls options but I still have a long position and zero short position.

if we start to see shorts climbing again, it might be a good indicator that an share issues will be coming  in the near future.

DYODD