Where is Joseph?
Looks like he took his meager profit in CJ and plugged it into highly levered BNE. Maybe a case of looking at past prices and hoping for reversion to the mean?
BNE has good assets, high insider ownership and they had a strategy of not hedging which I tend to like. However, they have a lot of net debt or $342 million which equates to $26,000 per boe/d.
Apparently that they can generate $50 to $60 million of free cash flow at current strip and will use it to reduce their debt which would help. However, for that you pay right now $43,000 per flowing.
CJ on the other hand has higher cost but, half the decline rate so free cash flow is relatively similar. Net debt is $259 million which equates to $12,600 per boe/d. And for that you pay $28,000 per flowing right now.
Now Joseph will likely say that they are different beast but, why not YGR or IPO who are in the same Cardium play?
YGR has $11,500 of net debt per boe/d and sells for $32,000 per flowing while IPO has $10,600 of net debt per boe/d and sells for $24,000 per flowing. Both of these companies have similar to much better assets and have much stronger balance sheets giving them the flexibility to be among the few who will grow production this year.
I am hopeful that BNE succeeds as we are not that many anymore buying Canadian energy these days. Canadian oil prices of Q4 2018 were an aberration but, it seems it has created a long term effect on risk consideration for crazy differentials to return.
Again not to bash BNE but, it seems you can get cheaper, safer deals right now.