Gear Energy Ltd T.GXE

CAPEX...

[lovehockey]

...should be and will be reduced. First quarter of 2022 they were averaging Capex at $2.8mln a month,, the entire year of 2021 it was $2.4mln a month. In 2023 they reved it up to $6mln a month. Considering where the price of oil is sitting now versus end of 2021/early 2022 it is clear that Capex will be reduced as there is no point of maintaining this ridiculously high Capex when the oil price is being held down. Looking at the production numbers from 2021 I am not seeing any significant increases even though they are spending extra $3+mln a month. Currently they should maintain the dividend for another year or two with Capex being lowered. Capex increase should only be attached to the price of WCS going above $70.

[Roscoe747]

At $70 WTI, GXE will have 18% FCF. (FFO - Maint Cap, ARO = FCF). Mgmt has already stated they will adjust CF as necessary depending on revenues. ABS, King of SA states that the physical and financial oil markets will start to close the gap between them in the next month or two. The cunning SPR ploy is in for some fun with a medieval, western educated, absolute monarch who kills those individuals

[navajojoe]

" At $70 WTI, GXE will have 18% FCF. (FFO - Maint Cap, ARO = FCF). " ======================================================= That is quite the claim considering GXE's own presentation shows almost no FCF at $70 WTI.

[daddyMac9]

I belive you're interpreting that slide incorrectly (pg 7 of the May investor presentation). At $70 WTI gear is forecasting $62M FFO by December-23 YE.  If prices average $90 they would be debt free by year end.   Debt actually declined by $2.9M in April-23 although oil prices were higher than now.   Lots of moving parts (SPR releases, WCS discount, Cdn dollar exchange

[navajojoe]

 " If prices average $90 they would be debt free by year end. " That's going to be a tall order considering we are trading below $70, and have averaged about $75/76 so far this year. They paid down debt in April because they spent almost nothing on capex. If they hadn't paid down debt, that would have been a disaster.

[masfortuna]

Why would not paying down debt be a "disaster"?  Oil companies since I have started my journey investing have historically held a certain amount of debt. Being debt free is an anomaly in this sector. Anyhow the solution is simple. If you don't wat to invest in energy, then don't invest in energy. This clown has been talking about cutting the divy since November at the very

[navajojoe]

Once again you are misrepresenting my position. I have never said that they would cut the dividend, only that they have been borrowing to pay it. In other words, as debt increases, the value of the shares decreases. So is receiving a dividend enough to offset the decrease in EV?

[navajojoe]

They can probably cut back capex to the level of last year, but they can't cut it back much further without seeing production drop. That wouldn't be taken well by the market.