GREY:TBTEF - Post by User
Comment by
PUNJABIon May 14, 2015 12:16am
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Post# 23726960
RE:RE:RE:Trying to figure out the math...
RE:RE:RE:Trying to figure out the math...TBE has a high decline rate & some of their heavy oil has high operating cost. With a drop in capex I was expecting a drop in production. At average WTI of $ 57.18 for the 2015 it is expected that there will be a drop of about 1000 bbl/day per quarter which will drop the average annual production to about 17500. First quarter the drop was about 1272. While the production is taking a hit the production mix is improving.
Maintaining high level of production does not make sense at these lower prices when a portion of production is not producing positive cash flow. During difficult times the best approach is to manage ones recourses effectively. I think that projected price of $57.18 for WTI 2015 is conservative. And with this low projected price if they can reduce their debt & continue to pay a dividend which yields 15 % for the remaining year and the total payout does not exceed 80 % then it is not a bad approach.
The company had a choice they could have reduced or eliminated the dividend & use the money to fund capex to increase production or reduce the debt.
When the last quarter results came out. I was expecting drop in production in the first qtr & no dividend. I did not expect a drop in debt either. Oil prices have bounced off the lows since then.