Good ol' Cut-Off assertion
I think we are all prepared to admit that we were expecting a better quarter. Sure, we weren't expecting wild EPS because we understand cash flow, but none of us were expecting a net loss.
Without diving into the numbers, as I haven't had the chance to do so, I have been considering what the financial will look like on an annual basis:
1. With it being offshore, the oil is sold in cargoes, so already we are expreiencing how that can present itself in financial presentation. The big chunk of inventory was sold after period-end which may have made the difference in the net income (again, I'll run the math to see soon). Depreciation is a factor of time -- if it was depreciated based on revenue recognition that could also reverse a good chunk of the loss.
2. Taxes. Correct me If I am wrong but they pay taxes in August and May. So Q2 and Q3 every year are going to be impacted by this. However, Q4 and Q1 should look amazing, no? (Then in Q2 2024 people are going to be mad FCF was affected by paying taxes...)
3. Both 1/3rd of their bbls of inventory was sold and Debt was repaid after the period. Which means debt remains on the official books and the inventory is recorded at cost and not and the realized price. The 340Kbbls was sold for US$91 btw.
So overall, my expectations of Valeura have not changed. Still making cash, debt free now and Wassanna coming back (which will hardly impact Q4, which was expected for anybody who undestands how slow these processes are). With no change, this company is undervalued. With organic growth potential, this company is way undervalued, and with the acquisition(s) possible with the cash, who knows.
Still, like Suppe11 said, making a loss at $87.5 oil is just not right. With the oil they sold after, is would have been positive. Alas, unless you care enough to understand and/or run the math, it does not look good on paper.
Cheers