Post by
blackdog on Oct 04, 2023 1:55pm
Time to buy?
Interesting times we live in.
The share value oscillates; mostly in my view on the usual suspects shorting and covering among themselves; it is all about commissions I guess, but who are their clients? No real buyers willing to take a plunge, so let’s review where we stand:
- Management’s plan to re-start the dividend is on track. Indeed, it is presented with WTI U$74 and we have been well above that for Q3 and will sustain this through Q4. Production is forecast at 14K BOE a day but I have heard it is substantially above that.
- Q3 results should be impressive, and if there is not an announcement on the dividend I will be shocked. Re-instating the dividend will be a key event. In their March presentation they forecast a dividend at WTI US$75 of a nickel/share/mo. At WTI US$95 this rose to between 8 and 9 cents.
- FFF is projected with a substantial “discretionary” allowance in their capital allocation going forward. This could go for the cash needed in any of the mergers mooted; could go to capex to increase production; or could be added to the dividend. Some of it will, I am sure, be retained as a cushion to guarantee that the balloon payments on the term debt can be made. In the March presentation this discretionary allowance was CA$40M (twice the value of the dividend) at WTI US$75; and at WTI US$95 it was CA$74M. This has to go to adding value for the shareholders. It could well be just added to the dividend; if nothing better emerges. Anything better had better be much better; i.e. add to share price and have good potential for increasing the dividend in very short order.
- Mergers will, if they happen, be accretive and mostly equity swaps. Any draws on the bank line will be very short term.
- Overall debt will decline. The term debt is predictable; FFF means the company can pay its own way. I have high confidence that they will do so and aim for zero debt by the time the term debt is discharged.
- Any calculation of fair value shows the stock undervalued today. What will these say with Q3 numbers?
- WTI goes up and down; but there is every sign that supply is shrinking and demand is increasing. The world may be a very uncertain place right now, but energy drives it and demand is not going to go away. For a bunch of reasons, supply from various sources might. There is a crunch coming; and even in Mr Trudeau’s Canadian regulatory kingdom, price will reflect this.
- Oh, and by the way, Mr Trudeau seems to have reached his best before date. And with him will go a lot of his vindictiveness and stupidity on the Western Canadian energy industry.
I have been sitting on all the cash that PNE has been sending me; and today seemed like a good day to put it to work. My conviction is that it will make me a nice Christmas present.
Comment by
kavern23 on Oct 04, 2023 9:57pm
Time to buy is when stockhouse is empty as everyone has lost so much their nuts are inside their stomach...market hasnt tapped out yet...not close.
Comment by
Maxmoe on Oct 05, 2023 2:18pm
Pity the fool that sold gassy to buy oily. His cajones are tangled in that chain around his neck.