PNE Projected Funds Flow - 12 Month StripBased on the current 12 month strip price (Ceteris Paribus) of 3.53, PNE's 12 month (Aug-Jul) funds flow is projected to be $54 million or $ 0.16/share.
Currently the stock is trading at 2.5 times funds flow. Traditionally oil & gas companies are traded at 6-10 times funds flow. After annual CAPEX of $13-15 million, the company would have enough money to wipe ut all of its debt in early 2022. The bulk of the term debt $30 million is owed to a shareholder (AIMCO) and is not due until Dec 2024.
I would expect that PNE will take the excess $41 million and pay down a portion (up to 50%) of the term debt in 2022 and the bulk of remainder would be likely be spent on an acquisition in order to reach an economy of scale that would produce a small profit at low gas prices ($1.75-$2.50) and a large profit at higher prices ($3.50-$5.00). I believe once this economy of scale is reach management will feel the company is stable enough in typical prices to initiate a dividend (1 person of course will argue this point). I would assume that the dividend will be set at a reasonable payout ratio. 35% of the stock is owned by insiders... I believe this is where they anticipate getting a regular return on their investment.
I'm looking forward to the day that the company has no debt (2023) and excess cash for both acreative acquisitions and a stable dividend. I think manangement should be commended for a job well done during a very difficult 7 years!!!
Looking forward to great things ahead.... all summer long and into the wintewr of 2021-22!!!