EN on BNN today's Market Call...In case you missed Eric Nuttall's comments on Surge today, during BNN's Market Call, here's a summary of what he had to say.
* The financing to buy assets of Enerplus was a good purchase for Surge.
* SGY is a recent, new acquisition for them... they lacked the ability to buy a significant chunk. Surge raised 40M... was asked to increase it to 50M... EN placed an order to purchase the entire 50M... didn't quite get the full amount, but was able to top up their position via the market... now largest SGY shareholder.
* Surge is presently unowned/under-owned by institutions, but EN feels that they will be coming in 2023.
* He has SGY trading at 1.9x CF and notes that the stock should not be trading at sub-2x CF. He places SGY at 36% FCF with $100 WTI and 19% FCF with $80 WTI. As well, he sees the potential for a double in the stock price at $100 WTI... so we're looking at an upside to ~$20, in his estimation.
* Sees Surge paying down debt, increasing return of capital and thus driving a re-rating for the stock.
* It is my understanding from his comments that he now has a seat at the table and now able to influence strategy. He believes that Surge should be maximizing FCF by aggressively buying back stock and that this should be a major theme in 2023... this would drive the re-rating and thus the valuation of the stock.
* His pitch to the board will be... "If you don't see the value in your stock and you don't want to buy it, then why the heck should I?"
I think that about covers it all... Cheers to a great weekend!