Valeura Energy Inc. VLERF

EV and FCF best measures

[goldwatch69]

I'll start by saying that risk averse investors, that being institutions, big money and smart money investors look for two consecutive profitable quarters. Cardinal rule for ROE investors.

The September presentation shows VLE well below peers using EV.  A guesstimated projected EV assuming US$500 million market cap and US$200 million cash with no debt would be US$300 million. Compared to EBITDAX of an annual  estimated US$400 million without Wassana, the ratio is 3:4 or .75... when peers are sitting at an average of 2.1 according to the presentation.

To put it into perspective, VLE should be around 3 times US$500 million market cap in the short term as more earnings reports come in. Even at US$500 million, that's CAD$675 million market cap or a $6.75 share price, close to the Auctus target.  Triple that to bring VLE up to peer level... and that's without Wassana.

Using 2 x estimated FCF of US$200 million, we get US$400 million market cap,  CAD$540 million and a $5.40 share price. 

Enter Paramount.  It's said that Paramount is attractive at 4 times FCF and 22 cents of profits for every $1 of share price capital. It does come with a 5% dividend. Regardless, with VLE growing, 4 x FCF is a good guesstimate.

At 4 x FCF, we get 2 x $5.40 = $10.80 a share.  Using ROE of say 25 cents for every $1 of share price capital, we would have a US$8 share price or CAD$10.81

Hard to tell which angle investors are looking at.  4 x FCF vs double or triple EV to match peers.  Clearly either way, VLE is still ridiculously undervalued. Short term SP should be north of $5, anywhere between $5.40 and $6.75 and next year's SP,  over $10.  We may even see $15 to $20.

And that's without Wassana.  This is why the stock is going up.

[Carbonbull]

thank you , well articulated. the only number not addressed is the end of life remediation liability , and the expected date of remediation. this should be come clear in year end NI 51-101 report with the caveat that management expects to be able to further push back the time thru drilling which is supported in current price environment.  I do beleive that $10 is possible next year , with an

[goldwatch69]

Thanks, Carbon. Liabilities are a long way off and the market is starting to recognize that. These fields are different,  no real way to estimate how much oil they contain. Sean indicated as such in the latest video presentation.   As they continue infill drilling, they keep getting more out of these fields. The previous operator thought they had a shorter life yet this

[Carbonbull]

You are most probably right on the life of the field , the more important question will NS start to recognize this fact or will the company continue to be burdened with QP opinion which is clearly starting to look silly. I wrote in an earlier piece how RE arrive at volumetric measures , but do not have any way of measuring reccharge , a poor proxy is resevoir pressure. if this field does extend