RE:RE:RBC Estimate $17.64/boe Netback in 2020.Appreciate the feedback Max.
Seeing as the netback estimate is based on production costs, admin, debt servicing, royalties, taxes (missed listing that one but it is used to determin netback), transport and hedging what other inputs is it missing?
FYI Seven Gen's estimated netback for 2020 is $17.22
18x P/E is based on Oil and Gas industry average (source RBC again).
Net income will likely be close to zero because it will be funneled back into the capital program to grow production.
Maxmoe wrote: I like the results, but it's not quite right. Net back does NOT = net income. Lots of companies have net backs of 17.64 or higher. Much higher. Most of them also have substantial cash flow, and maybe even free cash flow. Unfortunately, very few, I don't want to say none, report net income. That's the biggest flaw, but in addition, 18x earnings is what? The average for the entire tsx? Most producers report losses at the earnings line. Lastly, I've never been a big fan of RBC research for its unbiased opinions, but if they have a net back forecast, they must have an eps forecast. What is it? My cynical comment would be RBC is using flattery to fish for underwriting or some other fees. But yes, if pipe hits 16000 boe/d sooner rather than later and lays out the path to 30 or 35k than the stock is going much,much higher. Be long or be wrong baby, yeah!