Post by
AliNaimi on Feb 09, 2021 10:54pm
GXE's huge torque to $60 oil
Gear's heavy oil has huge torque to higher oil prices and at $60 oil with tighter differentials GXE is spinning of a 40% FCF yield. This FCF gives GXE a stellar balance sheet of 0.5x debt to cash flow. With accelerated growth FCF will increase further setting up 2022 as a monster FCF machine. GXE should start to move much higher like other heavy oil players ATH CJ and MEG. With high insider ownership management team will be more aligned with investors then other names. In Canada the OG sector is coming out of 7 year thaw where pipeline egress is good until 2030(at least) with no need for Keystone XL. Differentials are narrowing and heavy oil is in short supply with two new pipelines coming on in the next two years juicing these heavy oil stocks further. Investor who have missed huge recent moves in this sector can still participate with GXE as $60 oil is the sweetspot for oodles of FCF generation.
Comment by
Nic777 on Feb 11, 2021 9:21am
Totally agree. Mexico isn't selling as much heavy oil as it used to so GXE, ATH and MEG is the place to be as an investor. I have big positions in both GXE and ATH thus my portfolio is highly torqued for the remainder of 2021 and beyond.
Comment by
AliNaimi on Feb 11, 2021 2:01pm
I looked at Eric Nuttals modelling on TVE (his Top Pick pump on BNN) using these same metrics GXE could buy back all its shares and debt in three years as well as TVE. ($60 oil -$10 discount WCS and unhedged modelling) GXE has far more torque to higher oil pricing than his TVE pick! GXE stock price should start to move much higher with results in 2021.