RE:RE:Free Funds Flowsclarda wrote: agnostic wrote: In the past months I read several posts on this forum speaking about Free Funds Flow of $100 million at US$80 WTI.
Now in the 2023 guidance I read $45-50 million Free Funds Flow at 74.8 WTI. Using the sensitivity to oil price would add an extra (5.2÷0.73)×2.147 = $15.3 million to arrive at US$80 WTI, if I understand it correctly (not sure if the 0.73 needs to be included). So that gives about $60-65 million Free Funds Flow at US$80 WTI.
Why this big difference with the $100 million mentioned on this forum? Is it because CAPEX is larger in order to grow production? Do we know how much CAPEX would be needed just to keep production stable?
Or is there another reason?
PS: also reading nb of shares now already at 37,329,901 ...
According to their budget for next year at $75 oil they would generate Funds flow of aprox $170 to $175 million. IF you add $5 to the $75 estimate to get $80 it adds aprox $10 million to the Funds flow which would then be aprox $180 to $185 million for next year. Capex for this year is aprox. $80 million which we assumed would be around the same next year in our calculations resulting in Free Funds flow of aprox. $100 to $105 million for next year. Now that they have increased capex to aprox $120 to $125 million it reduces funds flow by aprox. $40 to $45 million resulting in Free Cashflow of aprox. $45 to $50 million and a debt of aprox. $125 million by end of next year.
Even with all this extra capex they are not increasing production by a lot. Considering that in last years budget with aprox. $120 million more debt than they have now they said they could maintain production with Capex of aprox $55 to $60 million this doubling of the Capex budget without a lot of increased production does not seem to make a lot of sense.
The increased Capex also does not allow them to pay down debt very quickly as they are still forecasting debt at $75 oil to be around $125 million by the end of next year. What i was expecting is the same Capex as this year and for them to use the $100 million in Free funds flow to quickly pay down debt in the first half of next year and then start to pay a 50 cent to $1 annual dividend by the middle of next year when debt should have been down to aprox. $100 million. With a $1 annual dividend at that time they would still have enough Free cashflow leftover at $80 oil to keep paying debt down by aprox. $5 million per month.
Personally i am not interested in an oil company that spends huge on Capex while not increasing production much and not paying down much debt either. I wanted debt to keep being reduced at the rate it was this year and then keep reducing it while paying a nice dividend.
I am selling my shares.
Why would anyboy think that Capex would be the same as last year? What do you currently buy that has the same price as last year? Costs for everything has gone up and every producer is having to deal the same thing. Probably signals that we should be invested in OFS instead of the producers, but it is not like Bonterra is an outlier with having to deal with inflationary costs.