RE:RE:Market is completely missing this oneAlready made my wager in the market, not going to waste my time with you beyond this:
Low rate wells become ARO when the rate of flow becomes uneconomic vs the cost to produce.
The price moving from $65 at acquistion to $90 today dramatically increases the marginal value of a lot of low rate wells, and enables recompletions and workovers to make economic sense.
ARO is deferred by many years, while many more years of positive cash flow is acquired.
Second, the mid-high rate wells generate massive amounts more cash flow to pay for the declining ARO obligation, for more years, thus derisking.
75% of existing production is hedged for 2022, still leaves 25% exposed to market prices. Further SOIL is still increasing production, which is all unhedged upside.
If expected cash flow from assets = $564M, and ARO = $200M, there is very decrent residual benefit for shareholders. That is at $60 - $65 WTI for next four years.
In the Mid 80's there is an extra $250M in cash flow over the next five years.
At $90 there is an extra $330M in cash flow over next five years on existing production, and hundreds of wells that pay out in 5 months.
Share price is trading lower than WT exercize price, so that residual divided by 30 M shares outstanding is about $20 per share.
Of course, the warrants will get exercized at $3.20, bringing another 13.4M shares, and $43M in cash in the door, so $15 per share, plus all low cost growth company gets over next 10 years.