Baytex SPI have been reading some of the posts about past s and what we can expect with Baytex sp in the future. I am n expert in O&G but there are a few basic considerations that should be applied. More importantly, they need to be considered as a whole and not individually.
#1 INFLATION- Over the last 8 years since baytex hit its $52 high, the buying power of $1 C has decreased. If we apply a 2.5% annual historical inflation rate, and IGNORE this years's projected inflation at 6.5%, we still hit a 23% compounded total. That means that $52 is actually $65 in today's dollars. A reminder that I used 2.5% and it appears that we will have much higher annual inflation numbers over the foreseable future.
#2 Shares Outstanding - Baytex has 5x the amount of shares than it did in 2014. A lazy approach would simply be to divide the inlation adjusted by sp by 5 ($13) to give an idea of the future sp. Baytex is also is delivering 50% more oil to market than it did in 2014. Simple math should give us a $26 per share number as a max however...
#3 Growing Production - Baytex is increasing their production. Owning wells in the Clearwater area bodes well for Baytex as they appear very cost effective. What levels will baytex reach over and above what they are producing at this point? What production will they achieve in 5 years? 10 years? And what will the price of oil be at that time. These will affect the sp as well.
#4 NCIB - Baytex is buying back shares. the max purchase is 10% of the float (it's a little more complicated but...). If Baytex can reduce their share count by 100 million shares which would equate to $700 million in today's market, the above totals would change as well. At this point, it would appear difficult for Baytex to put aside $350 million per year x2, BUT with oil at $100 and the debt being reduced dramatically every quarter, I cannot see why $90 million per quarter could not be put aside if my FF/FCF estimates are accurate. They have already started buying back shares and I do believe that 100 million shares in 2 years is a distinct possibility.
Conclusion: "Sp in 2 1/2years" - $26. If they buyback 100 million shares- $34
IMHO