RE:RE:THIS is good analysis from Estevan Outsiders Let's talk about condensate for a minute. With the TMPL expansion scheduled for completion by year end. There should be a growing production of heavy dilbit crudes in Western Canada (up to 590 kbpd of additional pipeline capacity) with a condensate concentration of 30% say we are looking at an increased demand of almost 180 kbpd of condensate.
That increased demand will be on top of the 200 kbpd or more of condensate that is currently needed by imports from the USA . Together there will be enough condensate demand to effectively double current Western Canadian production. Enough to preferably keep all producers happy for a very long time !!
EstevanOutsider wrote: Condensate typically weakens during the summer months as viscosity requirements of heavy oil dissipate given hot liquid is easy to push than cold liquid which becomes more molasses-like in the colder months. It is not unusual to see C5+ trade at a discount in the summer but it is a a couple dollars wider than normal due to some refinery maintenance. By the autumn viscosity requirements intensify and more blending is required of bitumen per TC Energy/Enbridge regs.
Overall I expect Pipestone to remain free cash flow positive, even after a heavy year of growth capex and delineation spending to tie in the likely-to-be-lucrative eastern acreage to our battery, surely enhancing the overall value of the company and appeal to multiple suitors.
I believe by the YE 2023 Pipestone may be sold for $4-$4.50 per share. If oil goes back above $80 and gas firms above $3 it will be more like $5-6 per share.
Regardless whether M&A or not, Pipestone is a free cash flow positive story and a producing E&P.
Unlike some others like Kelt, Crew, which are both going to be FCF negative on the year.
Cheers.