RE:More colour on the reportThanks for the great summary Joseph. I think your price target for low 50's oil is likely fair for a low 50's oil price, and low 1.00's AECO.
If you adjust h1 production, for trucking overages, freezoffs and other 1 offs, i think we would have seen productions coming in closer to 12800.
Given those adjustments, and back end capex, 2019 avg looks closer to 12750, approx 450 boe/d lower, or 3.4% decline.
Since natural decline accounts for ~22%, BNE's capex program of 55-57mm covers about 85% of the decline. This is suggesting that 63-64 mm is probably a sustaining level considering fixed (maint) and variable (wells) portions of capex.
From this we can derrive a FCF figure of $28.5mm per below, with $52.50 WTI /$3.00 EDM/ $1.50 AECO.
| WTI Price | 52.5 | | | |
| diff | -3 | | | |
| exchange | 1.32 | | | |
| | 65.34 | | | |
| Quality dis. | -3.25 | | volume | $$/ Day |
| Realized | $62.09 | | 7900 | $490,511.00 |
| | | | | |
| AECO | $1.65 | heat adj. | 23850 | $39,352.50 |
| NGL’s | $25.48 | | 890 | $22,679.51 |
| | | | 12765 | $552,543.01 |
| | | /boe | | |
| Revenue | $201,678,200.11 | $43.29 | 68.86% | Total Liquids |
| COP: | | | | |
| Gorr @ 4.1% | $8,268,806.20 | $1.77 | | |
| Crown @ slide | $13,512,439.41 | $2.90 | | |
| OPEX | $66,626,917.50 | $14.30 | | |
| SG&A | $5,824,031.25 | $1.25 | | |
| decomm | $1,346,000.00 | $0.29 | | |
| SBC | $1,836,000.00 | $0.39 | | |
| Finance | $15,400,000.00 | $3.31 | | |
| COP | $112,814,194.36 | $24.21 | /qtr | |
| Cash Op netback | $92,046,005.75 | $19.76 | $23,011,501.44 | |
| Less: Sus. Capex | $63,500,000.00 | $13.63 | | |
| | | /share | $78,208 | |
| BNE FCF | $28,546,006 | $0.86 | $7,136,501.44 | |
Keep in mind that the development costs are only applicable to proved undeveloped and probable reserves. So the FCF figure above is only applicable to 64mm boe out of 102mm. that FCF figures translates into a FC netback margin on those reserves of $6.13 / boe at current spots.
PDP reserves of 38mm boe (an 8.5 year RLI at current production) require no development capex, and carry a higher netback, adjusted for F&D cost. Thus the cash netback of $6.13 above is adjusted for ~$12.25 /boe of F&D, and you get a netback margin of $18.38 / boe on their PDP reserves.
This gives you a total cash flow of:
PUD+P: 64mm boe x 6.13 = $392mm
PDP: 38mm x 18.38 = $698mm
For a combined nominal total of $1091mm.
Less:
face value debt of -$310mm
Decomm exp. of -$155mm
Net CF to Equity = $625mm
Or $18.25 / share in future dividends.
On a present value adjusted basis, The case could be made for $8-$12 depending on your discount rate.
But keep in mind that this is at $52 oil. There is optionality value in the equity structure for the operating leverage to moves above 52, to say, $60, over the next 21 years of their reserves.
On that note, I would estimate that a large portion of the values in several of the US names still have a high component of this accrued in their equity.