RE:Yangarra Resources Continues Growing
This commentary is regurgitating old info and is relying on the corp presentation which is now out of date. YGR has not issued a press release in response to the current issues of oil pricing and its impact on capex. If you talk to them (Gurdeep) you can get a better feel of what is going on in the trenches.
Capex stopped about a month ago and without a quick rebound in oil prices, drilling and completions will remain on hold (3 DUCs). Production will decline about 35% over the year but the company will remain cash flow positive at today's prices due to low blowdown costs ($11/boe) and good AECO prices.
The author of the commentary is also ignorant of the longer term impact from the oil price war combined with covid-19. GDP is rapidly going negative in all countires around the world. China saw GDP fall by 40% in February. Europe is in the midst and Canada/USA are now beginning the freefall.
Crude inventories are building and there is a risk of production being shut-in due to lack of storage capacity. In 2016, Bakken Sour prices went negative for a short time when market egress was unavailable and storage was full. World inventories could increase by 2B bbl in the next few months. How long will it take to drain those down when OPEC+ was only talking a 4Mbpd overall cut and US tight oil might drop 1Mbpd...= 400 days!
The worst is yet to come. Expect WTI to go below $20 once the shutdown of the US economy raises unemployment over 15% and the panic ramps up to an even higher level than today.
Monetary stimulus is having no impact and fiscal stimulus, like Trump's $1000 give-away, won't even touch the tsunami on the horizon. This is already being called a recsssion and it will make 2008/9 look like a cake walk.
Is YGR oversold? Compared to historical metrics - absolutely. Can it go lower - absolutely. But, its still the best of the worst.