RE:RE:RE:RE:RE:RE:RE:How do we rate against - ATH, etc? Hey Kav.
Since you posted your comments here, I will respond here. might sound a little harsher than intended but you keep skipping History on your way to the Physics lab.
Strongly disagree on pretty much all of your BNE points. They will have some issues while settling into a new shareholder base. They had to ditch the federal program money before they could grow, pay a dividend or adjust their lending syndicate. A new CEO is changing a few things now and likely started the transition to a new shareholder base. But they don't have any major underlying issues other than some gas exposure. It's not the operating business. I don't really care about share prices in the past 12 months. I am not running a mutual fund here. I did sell some around 13.00 before buying back in but the best I did was 3.60 with YGR last year - not exactly a home run. Both stocks are deep value right now on cash flow metrics, I just think YGR is a lower quality company until they prove otherwise. Other than ARO, BNE completely laps YGR on every metric. Initially I bought a fast growing, high tech driller who discovered a new approach to frac through the biotubated bla, bla, bla. They didn't get it done.
On acreage quality, oil weighting, drilling inventory, decline rates, free cash flow, track record and just plain respect from their peers - BNE blows them away. YGR puts out an awesome presentation showing how profitable the company is and magically the debt didnt drop for a long time. Hmm. BNE drills a well for 2.5-2.9 million per well. 75-90 million keeps production flat including facility spend and free cash flows about 75-80 million at 85.00 oil. This year they may add a dozen wells for a growth wedge. If prices dictate.
YGR spends 4 million or more per well with a huge decline rate in a gas driven reservoir. They gas out. They drill or shrink dramatically. Every year. Shame about the warm winter. It's hurting BNE too, just not as much. YGR is still below annual pre- pandemic production levels. A lot of their cash flow is from flush production which makes them vulnerable to service cost inflation. They have to keep spinning.
The last two times someone asked Nuttal on BNN about YGR his response was basically that the management team was too promotional and he didn't believe their reserve numbers. A year or two later they restated their type curves and lowered the reserve numbers. Maybe he was right?
when asked about BNE his usual response was they were too small and he couldn't buy a big enough piece. Otherwise a great company. Management and acreage has never been an issue. Debt was a little high, too much hedging was required by their lenders and ARO was too high - sure. BNE also paid out 1.4 billion in dividends, still has decades of inventory and paid debt down by 149 million Q3 to Q3. ARO was also adressed. With average prices they are a cash flow beast. YGR has never paid anyone a nickel. Ever.
18-20 months ago I cut and pasted a forecast from Hydra Capital on YGR thinking it was a nice research/promo piece, well laid out and logical. He showed that the return to drilling was going to ramp things up in 2021/2022. After speaking with management he was forecasting a huge production increase - approx. exit production in 2021 of 12,500 boe/d and exit of 14-14,500 for 2022. Somewhere in there they would be starting a big fat dividend. They missed that exit production BY A YEAR. As far as that goes YGR cut their forecast this summer too and then (twice) lowered the debt threshold at which they would start any return of capital. From 150 million, to 100 now 80. Then there is the creeping mgt dilution. Notice how many shares are out now? Clearly the board is holding them accountable. Hydra no longer refers to YGR. Swing and a miss.
a year ago BNE forecast production and nailed the mid point. No surprises, nice and dependable. The new CEO and the share structure is the biggest issue. It will work out. Or not - and I will buy something else. I said it before I might trade YGR occasionally but will not hold it long term again. I will give BNE a longer leash because they deserve it.
I expect the cold weather hit production in January for both companies. I bet BNE still nails their annual guidance. YGR?
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