RE:RE:moemoney:management using $75 dollars for 5 year outlookDrBill1 wrote: Drunk@noon, thank you, you made me think. Why? Why, is management low-balling so much. As they are dealing with the future, a little safety margin can be understood, but so much.
I went back over the last 2-3 years. Guess what is missing: Hedging Strategy.
In prior presentations (for a long time) management had a Hedging Strategy chart (or paragraph). Not even discussed now. I wonder: did they screw up the Hedging Strategy and are trying to cover it up, leaving a lot of flex to cover poor results? If so, they may easily need a $5/barrel cushion.
I have no proof that this is the case, but I am very suspicious, because this projection smells.
If you look at the current corp presentation, the details on the hedging strategy are on page 25.
Using 75 wti is no big deal. It's a conservative number and probably a safe average. The corp deck covers off additional cash flow using higher numbers. There's 1.4 B additional "excess" cash flow over 5 years at 85 wti.
I follow baytex pretty closely. They're projecting out 3 5 years using 75 also. You just have to read up on the cash flow sensitivities