RE:Light Oil, AECO at C$3, Banks, PDP, Below 3x CF and Profits
stockfy wrote: Another profitable quarter. This must be the 14th profitable consecutive quarter for YGR.
YGR has zero WCS exposure. YGR produces only light oil which means Edmonton mixed sweet pricing for its oil that will remain at almost C$70 per bbl in the next quarters.
YGR received AECO at just C$1.06 in Q3 2019, AECO closed at C$3.10 yesterday, see psac, and YGR is completely unhedged. This price difference is huge. Those who can't realize this simple fact are extremely myopic and must not buy stocks.
Also YGR's production in Q4 2019 will be higher than in Q3 2019, according to the operations update because 4 new wells will be completed in Q4 2019.
This big AECO price difference coupled with the increased production sequentially adds almost C$10 million cash flow per quarter even if light oil and NGL pricing remain flat sequentially.
So cash flow in Q4 2019 will be almost C$29 million and annualized operating cash flow will be about C$115 million, so leverage will be much less than 2 times based on annualized Q4 2019 operating cash flow.
And AECO will remain above C$2.50 or could even exceed C$3 in Q1 2020.
And AECO will remain elevated in Q2 2020 and Q3 2020 thanks to the recent implementation of TSP (see PEY's report) and the fact that storage levels in Alberta are at 5-year lows.
YGR's operating costs per boe remain the lowest ones in the energy patch. YGR has an exemplary business model that makes it a takeover target either by energy funds or by bigger peers.
NGL prices dropped significantly YoY and YGR received C$23 from C$40 last year, but NGL are just 20% of the total production and NGL pricing will change in a few months because the export terminal in Ridley island has already started to introduce feedstock, see the news:
https://www.jwnenergy.com/article/2019/5/bcs-first-propane-export-terminal-starts-filling-operations/
RIPET has come online at a crucial time for the Canadian energy industry, providing domestic natural gas producers with much-needed access to tidewater and more attractive global pricing," he said.
Propane from British Columbia and Alberta will be transported to the facility using 50-60 rail cars per day through the existing CN rail network. The terminal is expected to ship 1.2 million tonnes of propane per annum (which is equivalent to approximately 40,000 bbls/d of export capacity).
Banks left YGR's credit line unchanged during the latest review, which is another strong vote of confidence.
Thanks to the strong drilling results from the wells of 2019, Reserves and PDP and 1P will be significantly up YoY once they are out in early 2020.
YGR currently trades less than 3 times its annual cash flow, which is extremely low.
And auburn still talks about the debt. Give me a break...