Share price expectations $65 Is in course with the five years plan to pay off the debt. Yes, 5 years to pay off the debt! That's about 400 million a year in cash flow or about 72 cents per share. At a pe valuation of 5 that's $3.60 a share. If oil averages $65 in 2022 I see about $3.60 a share. Debt will still be about 1.1 billion with $65 oil at the end of 2022. If oil somehow manages $75 next year that's an extra 13 million dollars a month with hedging, that brings us to about 95 cents per share in earnings, at a 5 P/E ratio that's about $4.75 if the market can brush off the debt. Keep in mind that's a yearly average. You have to factor in the dips. If oil somehow manages $70 for the year with a 5 P/E ratio that's about $4.25ish.
$65 isn't enough to change things. $70 gets us above $4 but it will take $75 to get us near $5. That's a yearly average and I just don't see oil stayin that high.
So when people say anything above $65 is good they don't realize that's the current trading range form $3.30 to $4ish. Not exciting in my books. $80 oil is an extra $225 million per year, maybe $5 and change if that ever happens. $90 oil means possibly $7 plus a share.
Ask yourself, are you still content with $65 oil? It's going to take $90 plus oil for 12 months for this to double! You wants facts and I just alluded to them. Terrible hedges mean they only get an extra $13 million per month for all their barrels. A huge chunk is hedged at $68 to the upside. That's terrible.
I guarantee you this stock is $3.50 in December 2022 if the oil price is $65.