RE:RE:RE:RE:What happens if oil stays in the low $50s long term?The problem is you are ignoring reserves.
Debt to cash flow doesn’t mean much when you have to devote a significant amount of cash flow each year to replenish reserves.
YGR only has 4 years of PDP.
BNE is over 8 years. YGR’s decline rate is more than double that of BNE, and that is before adjusting for oil cut.
Its the debt to PDP that really counts, as it is a measure of true discretionary flows available.
A company with marginal PDP, by necessity, has to allocate more of FFO to capex for production maintenance.
On a debt to PDP basis, YGR and BNE both have about the same - $8 per boe of PDP. The difference again, is that BNE has a higher oil % and wider netbacks, so adjusted for oil cut and netback at steady state production, YGR is actually higher debt on a PDP basis.
CJ is a good example of this - 10 years of PDP. And look at the maintenance capex, it’s one of the lowest decline rates in the CDN space.
Despite you you and Stockfy coming here to pump YGR VS BNE, you both fail to account for:
-opex costs are artificially low because of the pace of growth. When you adjust out the growth that’s been fueled by YGR punching their leverage ticket in the last 2 years, opex is likely over $10/ boe vs $6.
- reserves. Never any mention of the fact that YGR’s PDP is only 4 years. Thus a far lower discretionary amount of FFO available per $ of FFO.