Post by
red2000 on Feb 22, 2023 4:30pm
Jeff still convince...
https://www.bloomberg.com/news/videos/2023-02-22/goldman-sachs-currie-on-global-commodities-outlook-video
My view :
For the past several years, it was not necessary to have a good balance sheet to attract investors. If a company requires capital, its managers only get to raise their hands and the investors flocked, as much for a new debt as for new actions of company. Capital was plentiful and inexpensive.
My view is simple at this point, actually US $ is too high, if they increase again rates, don't be surprised to see OPEC+ cutting production.
Why ??? Demand will collapse because of a mid recession instead of a small one.
And US and Cdn O&G cie will do the same, especially with less CAPEX !!
Postponed payment of the actual debt, wait for a reduction of rates end of 2023, to refinance, like Baytex is going to do (my call).
Solid balance sheet is the key !! Like Baytex is doing !
But what about real evaluation of O&G cie like Baytex, in this rates hike pattern...
For sure, O&G shake the fundamentals of capitalism. Billions of $$$ of Free Cashflow without decent multiple ratio to compare with other sectors of the economy, with less cashflow.
If they stop the rates hike, US$ will pull back and CAPEX will stay high because a mild recession will not reduce demand !
Ouf, time for a drink !
For sure, it's again a bad feeling to own O&G cie !! But look at the future feeling !!!
GL Longs !
Comment by
David01montreal on Feb 22, 2023 5:17pm
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