Freddie/JD Capex, Divy, Buybacks opinionGood morning, I would have to agree with JD on the order at these prices
How I would allocate $800M FCF/year
1. Debt $400M
2. Divy $198M (this gives you rough $0.35/share)
3. Buybacks $125M (allows you to buyback 15-20m shares each year)
4. Capex $54M (put this additional to Clearwater that gives you another 36 unhedged wells per year...of course who knows if you can even get the rigs/people)
5 Reserve $23M (for other nice to have items)
1a. As the debt goes down you save interest increasing FCF
3a. As the share float decreases your % Dvy/Shares out increases
4a. As Clearwater ramps you increase FCF
This would all result in further increases to the divy.
Certainly lots of opinions on it...but I go back and forth on how I would allocate the funds daily LOL.
I think the biggest challenge though in CAPEX is actually getting more rig time/people. The Baytex teams was VERY smart to secure rigs early.