RE:RE:Kelts Evaluation verses Tamarack Valley EnergyTamarack Valley Charlie lake is about twice the size of Kelts, they need about 400 million a year just to service the debt and pay a dividend they can not afford.
I can't imagine that TVE is not in the penality box with that kind of debt load so i think the stock is trading at a depressed price. Their Heavy oil trades at a 30% discount compared to light and about 60% of their oil is heavy.
In Q4 2022 TVE had 196 million in adjusted funds flow, they spent 125 million Capital Expenses that left them with 71 million dollars to pay their interest costs and dividends costs etc. TVE has said they have a capital budget of 425 million in 2023 I am not sure that is enough?
So really when you think about it TVE will spend 425 million to maintain 68,000 boe of prodution, and slightly grow production.
Kelt will pay 285 million to maintain 34,000 boe of production, but you know that includes wembley/pipestone wells they are drilling to produce an additional 7000 boe a day in 2024. To accomondate the 25 Mmcf of plant explansion.
2023-2024
Its all about Torque, in 2023 with 34000 boe Kelt has 285 million to invest in Capital growth, if in 2024 they may have 45000 boe/day of production, so that is about another 30% FCF or about 85 million dollars (370 million Capital).
2024-2025
So in 2025 when they have another 50 Mmcf plant for Wembley that will add (14,000 wembley + 5000 other corp boe). So 2025 plan on 64000 boe and Adjusted Funds Flow around will increase by about 40 percent growth, and Adjusted Funds Flow would end up in the range of 520 million a year.
With less than half the shares of TVE and rapidity ramping production from here, i think Kelt should be trading at a big premium to TVE. How long will it take TVE to get rid of all that debt a pretty long time. If oil prices drop,TVE has to stop exploration to pay the down debt and pay their shareholder dividend.
Kelt is a way safer investment than TVE, will need a major capital injection to survive if oil prices do not return to 100 WTI, if they do return to 100 WTI they have a lot of upside and could rapidly fix their balance sheet and increase production.
IMHO