Good, the bad, the ugly from Q1The Good
I think it is an easy trap too cut back on capex too much...just to pay a token dividend.
High capex in 100 plus oil and 8 plus ng is acutally strength.
Obe on the shale curve still had too spend lots in 2022 to make up for the low 50M capx in 2020 during covid. Think it was 50m too lazy too look but I know 2020 was crazy low capex. Going to have to have the piper at some point when you cut back on drilling for a year.
Gear energy is trying opposite apprach of OBE...they are going crazy low capex...their producton actually declined alot on oil basis and ng makes them look better.
Gear is also drilling cheaper wells that produce instantly but not much in 12 months...dont lower corporate decline curve drillng the cheapies.
This is what is interesting about the direction OBE will go. What do they likely up the capital budget too.
Hard me too guess as it depends on if they do cheapie viking to get short production burts for realtively low capex compared to cardium. I have always felt OBE would spend 200-220m this year.
They could though make it 170-190m if they scale back Cardium drilling and do more viking development.
The bad
Wow did they run up their accounts payable to an insane f*cking number. Lol they must owe precision drilling millions....its smart on OBE's part to run that number up.
Instead of waiting to have debt already refinanced before gunning the capex...Obe did it anyway and suppliers "finance" it until pays it down over springbreak.
Why I list this as a bad thing...is OBE currently doesnt have crazy space on their debt faculty....over the next 6 weeks...OBE likely will go down % more then other peers because of how exposed it is too an oil drop. Remote that anything happens in next 6 weeks...but it is still risk...and on any bearish days investors punish the risk.
The Ugly
Nothing ugly. OBE has had such a horseshoe with luck.
I expect OBE to be extra rollercoster like both on up and down movements over next 6 weeks.