Good numbersConsidering Q4 condi averaged $53, to come up with is surprisingly good as far as I can see.
I'm looking at 2019E cash flow like this
Q4-2018 adjusted CF $0.93 ($3.72 annualized) - @ 352.6m shares = $1,311 bill
that was achieved using condi avg. $53.57/bbl
so far in Q1 we have:
Jan condi avg $64.46 and Feb $68.43 = simple avg. Q1 so far $66.45 - tha's a 24% premium over Q4-2018
let's say condi prices hold (mind you, trend is up), you get 1,311 +24% price increase = 1,625 bill
maintenance etc capex budget is 1.25 bill
that leaves, at recent condi prices $375 mil free cash flow - they could buy back 10% of the outstanding shares with that, or pay down debt
then of course we have Q4-2018 higher than average realized NG prices, which have since declined, but that's so far been roughly offset by the big jump in AECO in Jan/Feb 2019, so, being lazy, I'm gonna call that a wash
as for production levels, I think they're simply lowballing - they deferred 7 wells from Q4/18 to Q1/19 (or was it H1/19?), anyway, I think they're being ultra conservative with their production estimates
as for the reserves, I'm far from knowledgable on the valuation methods, but aren't they done more or less on a mark-to-market basis? If that's the case, then with the low year-end WTI/condi/NG prices, not surprised that there's no growth - would be curious to see what the reserve volumes are, relative to past, rather than reserve $$ - anybody with some info on this - that would be appreciated
so overall, even if prices just stay FLAT and production averages 200+, they're likely to trade @ roughly 9.0 x Free Cash Flow (375ml FCF/352ml @ 9.62/sh closing today) and roughly 2.1 x Operating Cash Flow (1,625 bill/352ml shares @ 9.62/sh closing today)
In the end, cash is king, and if these guys don't screw up operationally, this company will be spitting out lot of it, if WTI goes any higher than $51 that we've been averaging in Jan/Feb; I'm betting WTI will average at least 60-65 in 2019 so that leaves further 20-25% updside from my 1.625 bill CF estimate above; if they pull off 2019 with 1.95bln in operating cash flow, we won't be trading at 10 bucks, I'm pretty sure, given that most of the Capex is largely done with for now
my 2c