The Long Game For fear of stating the obvious it's been a sad start to 2024. We still see a couple of large retail investors (?) who want out at pretty much any cost. Still no short to speak of but the lack of buyers is keeping the stock on its' downward trajectory. What little money that is coming into the sector is not looking at YGR or its' peers for that matter. 2023 redux
I invested in YGR due to its' low production cost, pretty much non existent ARO and growth profile. Production costs remain in check as does ARO (at least up to Q3) but growth under current commodity pricing is off the table as far as I am concerned (or it should be).
No way I see the board approving anything other than the sustaining capital needed to keep production flat in the 11500 - 12500 range. Given well costs of $2M for 1 mile and $3M for 2 mile I can see a capital program of $70M with $60M being allocated to drilling and completion. The remaining $10M going towards land land an equipment.
Current strip would see YGR cash flow $90M -$100M based on 12000 boe with 40% liquids. NG prices will remain depressed for much of this year with some relief coming in late Q4 with with Coastal Gas Link ramping up to feed LNG Canada in 2025. For YGR an improvement in oil production is far more important than the price of NG. If they car hit 2600 -2800 boe/day my cash flow projection will be met or exceeded. This will become clearer after Q1 drilling results are known.
long story short no return of capital in 2024 but a solid drilling program this year will set the stage for 2025 and the ever elusive divi or ncib.