RE:Question If CJ had no hedge book at all what share price rannge would you expect to be seeing today? $15 to $18 or above $20 or ??
Cj 's hedge book was quite good for q1 and Q2. The spreads they had hedged saved their a$$ and at 65 dollar oil their swaps and collars really didn't come into play. At these higher oil prices is what causes the headwind. IMO The share price today is undervalued by 50%. Going forward over the next 6 months if oil continues to increase it will continue to put pressure on the share price. So compared to a company that is not hedged I see a 100% gain as for CJ I see 50%. This will change in the new year as CJ,s hedges roll off
Given the current situation what multiple of free cash flow do you see as fair for CJ?
Thats a hard question as it is hard to guess how much free CF they have.
Do you think that (as I do) that despite the hedge obligations CJ has another couple of dollars of upside if WTI were to stay range bound for some time at say $68 to $75?
Yes, IMO If you are a buy and hold investor this is a good investment, given time this company will most likely increase 100 150% providing oil stays strong. But I think there are other companies that will out proform CJ in the next 6 months.