GREY:VFGGF - Post by User
Comment by
ofirmeon Dec 31, 2013 2:19am
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Post# 22047474
RE:cash flow
RE:cash flowI think $60M is overly conservative. in the assumption of 3,400 bbl/d and netback of $55 you will
be close to $67M andf that is conservative (in my opinion...). if you assume that waterflooding
is a disaster (unlike everything else in the area and the first projects...), than you might be right.
The key here is that waterflooding can increase the netback and keep capex low.
This will become in 2014 all about the free cash flow and not the gross.
If you assume $65M - $40M (capex) - $10M (interest) you get $15M net. if you increase the netback
and you do not require even $40M capex, the margin goes up to doble that.
Good hedging at $95 could carry them to well over $65 netback and if the normal response
happens with the waterflooding, you will have large majority of oil flowing out of there by end of
2014.
Anyway, good luck to us and to the company.