RE:NERGY TOP PICKS in E&P, OFS and MIDSTREAM SECTOR
Not a surprise that AltaCorp has Tidewater as a top pick. They were co-manager for the $75m debenture financing in July 2019. Probably hoping for more business with Tidewater.
They have an analyst who covers Tidewater, but I have not seen their latest company report. I am surprised by their estimated 2020 EBITDA ratio of 4.8. As a very rough estimate Tidewater had $25m in EBITDA in Q3/2019. The refinery should add around $100 million per year in EBITDA, basd on past performance - I think the Tidewater estimate in their presentation is probably very conservative.
Allowing for further revenue increases from Pipestone and other assets still ramping up, it seems likely 2020 EBITDA should be in the range of $200m, and possibly higher. With 335 million shares and $200 million EBITDA, the ratio would be only 1.7X at $1.00 per share and 2.5X at $1.50 per share. At 4.8x EBITDA of $200m share price would have to be around $2.85.
The next quarterly report will be really interesting and will show how the first 2 months with Prince George went. I am looking for evidence that they are on track for $50 million EBITDA per quarter.