RE:Over $500,000,000 Free Cash and the HedgeI think it requires a deeper analysis than that. Investors are not blind. They know there are hedges, but that's actually the essence of the problem.
Stock prices are partially pricing in a significant oil recovery into the WTI 70s or beyond. The macro for oil looks extremely bullish right now, more than I've seen in about two decades.
So CPG comes out with a quarterly report showing heavy hedging since the last report and it caps that upside that was already partially priced in. They are happy with their $500M in cash, but that's not a lot for a company of their size and there are much better opportunities elsewhere in the Canadian oil patch where management has not hedged so much or have hedges rolling off.
As oil shoots higher this summer and fall, this is likely to languish.
MarkDRichards wrote: I'm wondering why the stock price ticked down in a response to oil price decline. The flucuating price of oil won't impact their anticipated free cash becaue of their hedging strategy, as if they were not hedged.
"The Company is expected to generate significant excess cash flow of approximately $525 to $650 million in 2021 at US$55/bbl to US$65/bbl WTI for the remainder of the year, providing an increased opportunity to further enhance shareholder value."
"These hedges primarily consist of swaps with an average price of approximately CDN$65/bbl."
I see you guys compaining about executive compensation and loss on a disposition. While those are things that certainly exist, the free cash of over $500,000,000 means this company can easily pay down the debt, buy back shares and eventually boost the dividend.
With no aquisitions planned they will be pulling in significant cash this year. The bull case, especially over the medium-to-long term is strong. I'm long on this one and I haven't seen anything to make me want to review my position.