Scotia Howard Weil Energy Presentation March 8/23OBE's CEO gave a presentation today at the Scotia Howard Weil Energy conference.
Parts that stood out for me.
1. They drilled 11 new wells in the Viking. That is it for the current budget. The existing Viking infrastructure will accomodate about 3400 boe/day. These new wells will not take them to that 3400 boe/day limit. They will not increase this infrastructure. If they were to get an good offer to purchase this asset, they'd sell it.
2. The exisiting Peace River infrastructure will accomodate about 12,000 boe/day. They are currently at around 7000 boe/day. Translation - lots more room to grow to fill existing infrastructure.
3. They are still in the process of increasing their liquidity so as to be able to buy back their shares. (ie they have not yet obtained additional lending capacity to start buying back shares) As they previously stated, they must maintain 65 million in liquidity - ie they need to have 65 million space in their line of credit before they can buy back shares (I believe this is a requirement of their long term debt). They were at about that level in their Q4/22 release, and apparently still are.
4. At current prices, Cardium and Peace river seem to be equally attractive for capex.
5. They are not going to issue any shares at current "dirt cheap" prices.
6. If oil prices improve they may increase their budget in the second half of this year. As of what they know today, all extra budgeted capex would be spent in the peace river.
7. Expect some Clearwater results in Q1 results. They expect to provide an outline of the Clearwater play's potential in the Fall.
8. They are one of three main Bluesky companies. They have had Bluesky wells produce at about 1000 boe/day. Bluesky is much easier to see on seismic, and is thicker than the Clearwater formation. In SL's view the Clearwater is overhyped. OBE does not distinquish between the attractiveness of the Clearwater and the Bluesky. ie, OBE has a lot of Bluesky formation to drill on its land, and has been doing so for a long time. They hope to be able to drill clearwater formation holes from the Bluesky pads. Translation - expect OBE to increase heavy oil production from current 7000 bpe to 12000 boe provided oil prices hold (or increase) from current levels - thereby filling their existing infrastructure.
9. They expect about an 8% growth rate in 2023 (mid point to mid point). If they buy back 10% of their shares, then that would mean an increase of about 20% on a per share basis.
10. If the share price remains attractive, they will be aggressive in buying back shares when they get the extra liquidity to do so (ie get access to more money, either from borrowing or internally generated). Translation, a price in the C$10's is an attractive price for SL (note - this is important because there will be a threshold price at which OBE will stop buying back shares - we don't know that that number is, but its greater than the current share price!)
You can watch this presentation yourself by going to OBE's web site, and looking for their presentations and events page. Click the details button for this presenation.