14,000 BOED in Oct sets the table for huge Q4 & FCF!!! Headline production number of 14,000 BOED in October is a significant milestone.
BNE has not just restored pre-covid production at 14,000 BOED Bonterra has surpassed pre-covid levels significantly. Even with unplanned downtime and a fire at an NGL fractionation plant BNE BEAT street CF expectations by a penny! BNE has reduced debt by $20 million from the highwater mark in Q1/21 and is now below YE2020. Heading into Q4/21 with 14,000+ BOED @ $80-85 wti and $5 AECO will generate significant FCF. I would forecast YE21 debt should be around $285 million after Q4.
The market pushback on BNE by critics suggested BNE could not deliver this production surge to 14,000 BOED with their low cost 1-mile wells, Capex, cost and productivity were constantly doubted(wrongly) and comparison were made to Yangerra or OBE. YGR has spent more on capex then BNE yet has shown a major lack of any growth, certainly not in the same league as BNE going from 10,000 to 14,000 BOED YTD.(remarkable approx.40% growth in 9 months) On top of that there should be about 30+ million YoY debt reduction 2021 exit.(Without forced bank hedging that would be more than double $60+ million) Next year debt reduction will be eye popping as will CF @ $5+ per share at strip! Some falsely believed comparing YGR/OBE Q2/Q3 to BNE Q2/Q3 would surge those stocks or crater BNE's, in fact after each Q the reverse is true.
That being said I don't believe OBE is a good comparison to pure Cardium player BNE, especially now with more PROP ( probably should have been called POOP as nobody wanted it) BNEs peers have always been WCP, CPG, YGE and perhaps TVE.
Haywood had a report out today stating:
We continue to see BNE as a small-cap beta play on improving oil prices
in 2021. While carrying higher-than-average debt on the balance sheet,
improving commodity price expectations in 2021 should place BNE as a
top-quartile stock given the share price has historically been a high-beta
play on a recovery in oil prices. Moreover, we could see sentiment
towards the name improve as debt levels normalize towards 2.7x at
YE21.
Haywood sees a positive sentiment change for BNE heading into YE21, I believe they are correct and the stock price will push much higher over next two months.