Bonterra Energy Corp T.BNE

Trading this week

[blackdog]

As has been mentioned, the share price is surprisingly range bound and much of the trading is anonymous.

I note that, perhaps also surprisingly, the short positon at end Sep remains almost unchanged at 572K shares shorted; a small increase but little trading or covering. 

It is my contention that someone has been churning Bonterra for some time, trying to keep a lid on its price.  See Vivian Krause and her fine work on this issue.  There are groups that brag about using their great wealth to purposefully discourage investment in Western Canadian Oil and Gas; so as to deny Canadian companies access to capital and investment.
 
If, at the end of the next short position reporting period at mid-month, we find that the short volume trade has spiked (yet again) without the overall position changing, this would be further evidence and tentative conclusions might be drawn.
 
On the other hand, those with the courage and wherewithal to buy now are getting what (in my view) will (someday) be an seen as an outstanding bargain.

[Hendrick3]

A lot of denial going on in the BNE camp today. First of all before Monday's announcement you were way over levered and very low cash flow at current prices. Essentially you are in a boat load of financial trouble. After Monday's announcement, the only thing that has changed is instead of one escape hatch from bankruptcy, you have two (government debt and OBE merger). After today you have

[blackdog]

I don’t discount the challenges that Bonterra has in front of it, and you are entitled to your own choice of metrics and opinion, but from public info (Reuters reports dated 26 Sep; data from 30 Jun):   Market cap: OBE: $38.96M ; BNE $38.40M Earnings per share: OBE $(10.79); BNE $.09 Cash flow/share: OBE $(7.42); BNE $2.78 Operating margin (189.92%); BNE 11.25% Net profit margin OBE (203.62%)

[Hendrick3]

The number you got wrong was the cash flow/ funds flow for OBE which was $1.50/$1.99 per share for year ended 2020. The other numbers were all affected by non cash write offs largely related to old oil assets such as Peace River. 2q is actually very telling because it is a great test to see who performs best in a low oil price environment. Let's wait for 3q. I am betting funds flow from

[blackdog]

In my view the Obsidian offer is dead and if you want to discuss Obsidian, go to their board and fill your boots. But you have suggested a number I used was wrong, which prompted me to check my work.   I copied the number I used earlier from Reuters technical reports: Yep, that number is what Reuters uses; so no typos there.  But these are mostly algo reports, and the underlying input

[Hendrick3]

The difference between cash flow and funds flow is working capital changes which can be quite volatile hence most oil companies use funds flow as a key metric as it takes out the accounts receivable and payable fluctuations which are not really a great indicator of what the company is doing. Look at most E&P sector reports and that is the lead metric.  You are right that 2020 has not

[blackdog]

So, now that we know what you are using as a metric.  From each company’s financials, for the twelve months ending 30 Jun 2020:   Free cash flow/share:  OBE $1.59; BNE $2.07 Funds flow/share: OBE $1.99; BNE $2.16   Remind me again what your point is…   You are correct that Bonterra is not in great shape; but my due diligence says that Obsidian’s offer is not well-grounded

[Hendrick3]

Finally you got the numbers. My point is that the numbers per share are fairly similar but BNE is trading at 2.5 times OBE.  Normally stocks trade at some multiple of funds flow but the relative values are way out of whack with BNE carrying a huge premium. Also the last quarter showed a significant difference in OBE's favor which shows OBE seems much stronger in a lower price environment.

[2020oilgamble]

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[Hendrick3]

I absolutely agree with your last two points. I disagree that adding more debt is a ticket to success. You don't know yet whether your lending group is going to extend the debt. You are correct that OBE's biggest problem is the scattered leadership of Front Four. That's why the deal was proposed. No more debt for BNE and replace Front Four with some real leadership. 

[blackdog]

Bonterra's debt would just have been added to the total of the proposed business combination and BNE's better cash flow (now and potentially) would have then been diluted as it helped cover the debt that Obsidian already has; the higher operations costs of Obsidian; the costs of integration that would have been necessary; and the dead weight of the Peace River and Viking properties that

[Canamex]

Well said black dog.     

[2020oilgamble]

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