anyone check out the SLB report last week?Two most important data points were (IMHO):
infill drilling in sweetspots running into well interference (between parent and child wells) problems.
54% of current capex required to offset natural decline (across all plays)......in two years that number jumps to 75%.
when the shale bubble pops (12-36 months), unless there is a material fall in global demand for crude, we're going to see significantly higher prices and sentiment will be very different as we flip from a perception that the world is awash in oil, to one where we are undersupplied. when the shale plays (in aggregate) plateau, look for a return to $80+ WTI. BNE should be generating almost $300 million in revenue and more than $100 million in FCF (asssuming 70-80mm capex, $5 diffs and a constant exchange rate) in that price environment.
what kind of return would you get from a $20mm buyback at around $7/share, that you can put back to the market as a bought deal in a few years in a much stronger pricing environment? 3...4...5 bagger? enough to pay off a huge chunk of debt and increase the dividend by a factor of about 20.