RE:Reading between the linesTHey said they would make an announcement in Mid Dec 2022 - so they were committed to doing so, and this did so.
They put off doing it in Nov, until mid Dec.
Now they have put it off again until Jan/23.
There can be no doubt they have put it off because the oil price is lower than their internal forecast.
The 64$ question, is why does it matter?
Earlier in the year they gave a very preliminary forecast for 2023.
It assumed 260-270 capex, and production of 37-38,000 boe
That target should be unaffected by oil prices.
Oil prices will affect the compostion of that 37-38,000 boe
It was
Mid-point of 2023F guidance range: 13,850 bbl/d light oil, 9,200 bbl/d heavy oil, 2,835 bbl/d NGLs and 69.8 mmcf/d natural gas.
This will change if they redirect frunds from heavy oil to light oil development. Not by a lot.
They used WTI $95 and AECO $6
If they apply $75 WTI to this capex, then their Funds Flow, and Free Cash flow will be lower.
We can already estimate the lower funds flow, so thats no secret.
What we don't know, is their internal intentions for the free cash flow.
My guess is they want to make a pledge to use their free cash flow in a way that is free cash flow dependant.
What I mean by that is they need a certain amount of free cash flow in their 2023 forecast, to do something they want to announce.
ie, they can't make that announcement with $75 WTI
What might that be?
It could me several things. One of which could be a specified monthly dividend.
Alternatively they could simply be unclear about how they are going to spend their capex - ie, how much to the heavy oil business, and how much to the light oil business.
But, and the reason I say But, is they have already made some decisions about how to deply capex in 2023. They told us they will be drilling Viking wells (light oil) in Q1/23.
Another maybe, is maybe they are waiting for more heavy oil results before deciding their 2023 heavy oil capex. They do have some step out holes - like the hear peavine one. If that hits like BTE's maybe that will make a capex change.
Also today, BNE came out with their 2023 plan. They used the current WTI price of $74 ish, and gave sensitivity for each $1 change. But their is no commitment to a dividend they have to make sure they can cover.
Capex can always be adjusted up and down over the course of a year. We've seen OBE adjust it upward several times this year.
However you can't reduce a dividend once its announced - without tanking the share price.
Once you start a dividend, you need to be able to keep paying it. You can increase it, but you can't decrease it.
Internally they may also be thinking that when they do start a dividend, they want to hedge to protect it. It would be very unfortunate to hedge 2023 at today's oil prices.
If ever there was a year for oil to trade higher, its 2023. The oil demand growth is in India, China, and elsewhere in the developing world. India is growing fast, and China is just returning from hibernation. The US SPR (and global oil inventories in general), are now depleated. The 2023 increased demand from BRICS et al is going to be pulling from an oil pool that isn't there.
The US Fed has pretty well finished its rate hikes, and the US economy is holding or growing (not tanking).
US shale is having trouble replacing its declines - no matter if you believe the US monthly production numbers or not - US total oil inventories declined in 2022. That happenned because the US was not producing enough oil.
Oil prices are primed for a jump in 2023. You don't need to listen to analysts for that conclusion - common sense will get you there. If there is not enough of something, the price goes up.
OBE seems to have something they want to say. But that something requires a higher oil price........
Food for thought