Kelts Evaluation verses Tamarack Valley EnergyCompare TVE to Kelt
If you take a look at Tamarack Valley Energy, TVE they are forcasting 68-72 thousand boe day. The enterprize value of TVE is about 3.5788 billion dollars. They are carrying 1.356 Billion in debt.
TVE has 561 million shares and they pay a 15 cent dividend a year so they are paying 84 million dollars a year in dividends, and 265 million in debt servicing costs.
Kelt has a marketcap of 943 million enterprise value with zero debt and has only 193 million shares. So TVE enterprise value is roughly 4X that of Kelt with roughly twice the production.
The sustainability of TVE you really have to be concerned about with 1.356 billion in debt. The company needs almost 400 million just to service the debt and pay a 15 cent dividend, that it really cant afford!
TVE capital budget of 425 million compared to Kelts capex of 285 million dollars.
So Kelt capital spend is 67% of the Capital Budget of TVE, and Kelt will average about half of their production, and has zero debt. Kelt does not have 400 million is servicing charges to the debt and to the shareholders.
TVE and Kelt are both big into charlie lake, TVE has about twice as much land there.
But TVE has nothing like Oak and Wembley/Pipestone, and Pipestone is ready for full field development, Kelt also has production behind the pipe in Pipestone waiting for plant.
TVE is not there yet and they have balance sheet issues before they could proceed with any kind of project like this. TVE is very capital constrained because they have to maintain a higher production level, and they have client and debt servicing of 400 million.
So kelt appears to be trading at a huge discount when you compare it to TVE, and TVE shares are weighted down by a mountain of debt.
Also kelt has way more upside with it current fiscal framework, no dividend payments, low cost company framework, a CEO that doesn't take a salary.
The stock is trading way to cheap and it should be at least 10 dollars if you think it should be valued at 1/2 the value of TVE. However i think with Pipestone, Charlie Lake, and Oak plus progress, pouc etc it could be value at 60-75% the value of TVE and be worth 15 dollars a share.
TVE share price also is likely depressed because of the huge debt load the company is on its plate. So Kelt could be even cheaper than i think.
IMHO