RE:RE:RE:RE:RE:RE:RE:Perspectivemasfortuna wrote: HeavyBanana wrote: To preface things on "demand destruction" and prices going too low (presumably meaning below $75) equating to a much longer time frame for debt reduction and share buyback sounds logical but it has a built in assumption that demand destruction caused by a tipping point high price per barrel would create a price shock to the downside that goes significantly below $75 before the company has lowered debt significantly.
To the extent that a runaway price per barrel to the upside would bring on demand destruction, it does not form a steep and direct line to sub $75 per barrel par se.
In todays oil fundamentals, demand destruction would likely normalize price per barrel back to the range between $75-90.
So let's reap in the massive cashflow if and when oil prices run away to that demand destruction tipping point and enjoy everything in between just as well within the $75-90 range that is all but a given for the foreseeable future.
I think Baytex gets bought out well within the next two years and it will likely manifest itself in the period between now and any perceived tipping point to demand destruction one can conjure up.
Last July oil was at $120. This July oil was at $63. It might not go down in a straight line but it was pretty darn close.
According to mgmt figures, debt is 2.6, the debt target is 1.5. They produce 1b fcf at 75 wti. At 75 wti and 50% shareholder returns, it will take 9 quarters to reach the debt target.
It's 20m a quarter to pay the existing dividend. That 180M. So there's roughly 800M to buybacks. The float will be around 750M when they hit the debt target.
They're are also planning organic growth in the "modest single digits". Call that 5%. So fcf is going to grow along with the production growth.
I think 9 quarters is a high side timeline because I think oil will average greater than 75 over the next 9 quarters
20 bucks by end of 2024. Production should exit at 165ish a day. Debt is likely nearing 1.5B. Sharefloat is under 775. Anything is possible. We'll need Investor sentiment on our side, but it's possible