Valuation..way to hit 25-30 dollarsTo get to a 25-30 dollar valuation for OBE, doing what the three year plan says is the plan, to grow to 50k boe...isnt that best way to achieve a future valuaion of 25-30 dollars.
That why I say I agree with current management. Smart idea. It's going for homerun.
Realistically in with lack of interest in sector, I think OBE getting to 50k boe and having the FCF to pay a 3 dollar divy at that point...is more likely path to hit 25-30.
Spending less capex in 2024 and 2025 may be able to speed up shareholder returns but it would be capped and limited too an extent. That isnt the best way to go for homerun return. Return from today that counts....doesnt matter if you bought this decade ago.
Lots of the reason OBE will have FCF to pay a large divy and get a good valuation will be economies of scale of having 2 business units producing 25k boe.
Sacfrice abit of short gain for greater long term gain.
But I agree with OBE doing buybacks when they can for next two years.
In 2026, if the plan is sucessful, I think company looks at splitting this into two or some kind of transaction.
One would think a seperate Peace River company at 25K Boe of production would be worth 15-18 dollars and light oil side (cardium, viking)...10-12 dollars...both could pay 1.50 a year in divy feasible but Peace River should trade higher multiple due to exploration potential.
The potential to split OBE into two in 2026 could be a reason OBE reamains queit on merger front in cardium.
It kinda messes up the roadmap here if they take on more debt but I guess if price is so cheap who knows.
But I suspect cardium valuations have to drop steeply from current rates before OBE considers anythng.